Powering change: How Pakistan is crowdfunding its energy revolution

Business Standard

19 hours ago

Sometimes, the most tragic events can bring forth goodness. That's the hope of Najam Fasihi, 47, a Miami-raised surgeon at Virginia Hospital Center in the suburbs of Washington, DC.
On a 2023 trip to visit relatives in northern Pakistan, disaster struck. Driving along the Karakoram Highway through the foothills of the Himalayas, a landslide hit one of their vehicles, killing his sister-in-law instantly. Her six-year-old daughter, who had been sitting in her lap, was left with a serious head injury.
Later, with his niece safely back home in Atlanta, Fasihi decided to do something to preserve his sister-in-law's memory: Pay for solar systems to provide electricity for two blacked-out clinics they'd visited on the three-hour hospital dash to the provincial capital of Gilgit that night.
'We wanted to give them something that can't be be taken away,' he told me. 'Something hard and fixed.' An appeal on the fundraising platform GoFundMe raised $45,710 in a matter of months.
He's not alone. Across Pakistan, a grassroots energy revolution is reshaping the grid, and offering a possible model that could transform similar fast-growing, energy-poor countries in Asia and Africa. Some 16.6 gigawatts of solar panels were imported last year alone, sufficient to provide about 13 per cent of grid power. To say this came out of the blue is an understatement. In its latest system plan released last year, Pakistan's electricity regulator expected less than a third of that amount to be installed, in total, by 2034.
Panels have gone on the roofs of schools, orphanages, mosques, medical clinics, and homes. In the smallest of towns, you can find a vendor who'll sell you a system capable of powering three fans, six lights and a mobile-phone charger for as little as $600. That's almost a basic necessity in a country where rolling blackouts can last 15 hours while summer temperatures soar above 50 degrees Celsius (122 degrees Fahrenheit).
This isn't being done out of environmental concern, but cost. A small solar system will provide its owner with electricity for as little as ₹8 (3 cents) per kilowatt hour, compared to ₹70 per kilowatt hour for grid power, according to Khurram Lalani, founder of Resources Future, an energy advisory firm based in Islamabad.
It has taken decades of mismanagement and bad luck to get to this point. Energy has been a brake on Pakistan's development since its independence in 1947, thanks to meager domestic sources of power. Each time growth has started to rise, a more energy-hungry economy has started sucking up more imported coal, oil and gas, depleting Pakistan's foreign exchange reserves and sending the rupee tumbling. It has received 24 bailouts from the International Monetary Fund, more than any other country.
Attempts to fix this have only caused further problems. In the 1960s and 1970s, the great hope was hydroelectricity from the Indus river and its tributaries. The Tarbela and Mangla dams provided more than a third of the country's electricity in the 1980s, but they've been silting up for decades. Both now hit 'dead level' — the point at which water is too low to provide irrigation flows or significant power generation — on an almost annual basis.
In the 2010s, former Prime Minister Nawaz Sharif tried a different tack — building a series of Chinese-financed coal power plants. Even setting aside the climate and health impacts, that was a disaster. Pakistan was left with more than $15 billion in debt to the Chinese developers, which the government has struggled to service as the rupee fell to about a third of its value at the time the deals were arranged.
With bills going unpaid, the Chinese plant owners have repeatedly threatened to shut down electricity supplies unless they get their money. Pakistan has asked China to restructure the loans, but has only succeeded in prolonging the agony. Just addressing legacy debts will add at least another ₹3.23 per kilowatt hour to bills, local media reported this month.
The only way to resolve these problems without default is to charge locals yet more for their electricity. Bills rose 155 per cent between 2021 and 2024, leaving many households spending more on electricity than on rent. Local industries pay about twice as much as competitors in the US and India. Protests against the rising cost of power have attracted thousands to the streets. In Karachi, mobs have attacked the offices of privately owned utility K-Electric Ltd. and assaulted employees amid disputes about unpaid bills and illegal power lines.
The solar boom of recent years is bypassing this broken system altogether, with takeup from both households and commercial users, including the textile sector, Pakistan's biggest export earner. Nishat Mills Ltd., which supplies Gap Inc. and Hennes & Mauritz AB, has more than 35 megawatts of solar connected, several times more than Tesla Inc. has at its Nevada Gigafactory.
Interloop Ltd., which sells activewear to Adidas AG and Nike Inc., has another 25 megawatts up and running. Service Industries Ltd., the country's biggest footwear exporter, gets 40 per cent of the power at its shoe factory from solar. Lucky Cement Ltd., the biggest cement producer, gets 55 per cent of its power from solar, wind and waste heat recovery.
That's helping improve margins across the economy. The benchmark KSE-100 Karachi stock index was the world's best performer last year, as slowing inflation driven by falling energy costs allowed the economy to recover.
There's a model in this for other developing countries. Energy is an essential component of economic growth, but many nations with fast-growing, young populations are desperately short of it. Solar offers a shortcut solution. South Africa has managed to halt a similar energy crisis over the past few years, in part thanks to a flood of imported panels.
Batteries may be the next shoe to drop, allowing consumers to shift the electricity produced by their panels into the evening, too. Combined solar-battery systems in Pakistan will pay for themselves in between three and six years at present, according to Haneea Isaad, an analyst at the Institute for Energy Economics and Financial Analysis, a pro-energy transition group.
There's one looming downside to all this. Those who can afford the upfront costs are increasingly quitting the grid to generate their own power — but not everyone is so lucky. Paying off the colossal liabilities taken on for Pakistan's failed experiment in coal power will fall increasingly on those with no alternative, making a fix even less likely.
Pakistan, moreover, still needs a functioning electricity network, not least because its continued development will eventually put far more demands on the system. If the country wants to find indigenous sources of power for the millions of vehicles currently run off largely imported gas and oil, it will need to electrify them. That will require a grid robust enough to charge them all up. Currently, the entire country of 248 million people has just eight public charging stations.
Getting there will require vision. Pakistan's ministry of energy and its powerful electricity regulator need to come up with far more ambitious renewables deployment plans. They should also drop counterproductive ideas like an 18 per cent tax on imported solar panels proposed in the latest budget.
International institutions must also step up. The IMF has blocked planned sales tax exemptions for electric vehicles, the local Express Tribune newspaper reported in February. It needs instead to be laser-focused on the way clean energy can cure an import dependency that has hooked the country on bailout cash. China, one of Islamabad's key allies, has a vital role to play, too. It has far more to gain from turning Pakistan into an import market for its solar industry than continuing to squeeze it to bail out failed Belt and Road coal generators.
The extraordinary growth of Pakistan's solar sector shows how the technological and economic barriers to renewables have already been solved. What's needed now is a comparable revolution in thinking.