The high-level dialogue marking the inception of the Annual State of Renewable Energy (ASRE) 2025 in Islamabad has sparked a critical conversation about Pakistan’s renewable energy future. Experts have called for a coordinated policy approach, emphasizing the need for greater alignment between economic and energy policies to unlock the country’s full renewable energy potential. This push for a structured transition strategy, coupled with investment incentives and infrastructure modernization, could significantly reshape the sector’s landscape.
The ASRE 2025 Inception event, hosted by the Sustainable Development Policy Institute (SDPI), brought together a diverse group of experts from government, industry, and international organizations. The discussions highlighted several critical areas that need immediate attention. Aqeel Jafri, Director Policy/International Cooperation, PPIB, stressed the importance of increasing the share of renewable energy in the grid while promoting Distributed Generation (DG), battery energy storage systems (BESS), and pumped storage hydro projects. Jafri’s emphasis on affordability as a major challenge due to rising electricity costs underscores the need for planned capacity additions to avoid further financial burdens.
Engr Ubaid ur Rehman Zia, Head of the Energy Unit at SDPI, pointed out a striking dichotomy in Pakistan’s renewable energy sector. While utility-scale progress has been limited, with no financial closure of an RE project since 2021, the decentralized solar PV market has emerged as a global success story. Pakistan is now one of the biggest Asian markets for Chinese PV products, a trend expected to continue. Zia’s call for improved regulations to bring these consumers into the government system highlights the need for policy reforms that can harness this decentralized growth.
Dr. Khalid, Research Fellow, SDPI, raised concerns about the stagnation at the utility scale due to already installed capacity. He emphasized the shift from an energy accessibility crisis to an affordability crisis, advocating for careful capacity expansion, early retirement of low-utilization power plants, and reassessment of Power Purchase Agreements (PPAs). This shift in focus could lead to more efficient use of existing resources and a leaner, more cost-effective energy sector.
Faran Rana, Associate Program Officer, IRENA, provided a global perspective, noting that while global energy transition investments exceeded $2 trillion in 2023, developing economies like Pakistan received only 10% due to high financing costs and macroeconomic risks. This disparity underscores the need for innovative financing mechanisms and risk mitigation strategies to attract more investment.
Ms. Naila, Project Manager, Agora Energiewende, discussed institutional and regulatory hurdles slowing Pakistan’s RE growth. She emphasized the need for greater transparency, long-term planning, and competitive market mechanisms to enhance investor confidence. Irfan Ahmed, Renewable Energy Expert, highlighted grid modernization and wind energy potential, noting that while Pakistan’s installed wind capacity stands at 1,845 MW, actual peak utilization remains around 1,200 MW due to curtailment issues.
Ahad Nazir, Associate Research Fellow, SDPI, stressed the need for economic feasibility to drive Pakistan’s renewable energy transition. He recommended modernizing energy infrastructure, optimizing transmission efficiency, and strengthening the RE value chain through local manufacturing, assembly, and warehousing. Nazir’s suggestion for the next ASRE Report to assess the economic feasibility aspect of RE investments could provide a more comprehensive understanding of sectoral opportunities and challenges.
This high-level dialogue sets the stage for a transformative period in Pakistan’s renewable energy sector. The call for a coordinated policy approach, coupled with the need for investment incentives and infrastructure modernization, could catalyze significant growth. The dichotomy between utility-scale stagnation and decentralized success highlights the need for targeted policy reforms. Addressing affordability, improving grid stability, and enhancing investor confidence through transparency and competitive market mechanisms will be crucial.
The global context provided by IRENA underscores the need for innovative financing mechanisms to overcome high financing costs and macroeconomic risks. Modernizing the grid and optimizing transmission efficiency could unlock the full potential of Pakistan’s wind energy resources.
As Pakistan navigates this energy transition, the insights from the ASRE 2025 Inception event will be invaluable. The ASRE Report, with its evidence-based insights and forward-looking policy recommendations
