Politics

It’s a complex situation with conflicting factors influencing solar panel prices in Pakistan. Here’s a breakdown:
Factors that could make solar panels more expensive in Pakistan:
* Proposed 18% Sales Tax on Imported Solar Panels: The most significant recent development is the Pakistani government’s proposal in the Budget 2025-26 to impose an 18% sales tax on imported solar panels. This is explicitly aimed at promoting local industry, but it will directly increase the cost for consumers in the short term, as Pakistan heavily relies on imported panels.
* Changes in Net Metering Policy: The government has revised net metering regulations, reducing the rate at which it buys back excess solar power from consumers (from Rs 27 to Rs 10 per unit). Additionally, the allowed solar capacity for consumers has been reduced. While this doesn’t directly increase panel cost, it reduces the financial incentive and payback period for solar installations, potentially making them less attractive and thus, in a broader sense, “more expensive” in terms of return on investment.
* Economic Factors: General economic instability, currency fluctuations, and inflation in Pakistan can impact the cost of imported goods, including solar panels and associated equipment.
Factors that could keep solar panel prices stable or even lead to decreases:
* Global Price Trends: Globally, solar panel manufacturing has seen significant advancements and economies of scale, leading to a general downward trend in panel prices over the long term. Pakistan has greatly benefited from this, with a “sharp fall in solar panel prices” contributing to the recent solar boom.
* Increased Local Manufacturing: The proposed 18% tax on imported panels is intended to boost local manufacturing. If local production scales up and becomes competitive, it could eventually lead to more stable or even lower prices domestically as reliance on imports decreases.
* High Demand and Adoption: Pakistan is experiencing a “solar boom” with rapidly increasing adoption rates, driven by high conventional electricity prices. This high demand could encourage competition among suppliers and potentially lead to more competitive pricing, especially for locally manufactured goods if the industry matures.
* Government’s Commitment to Renewable Energy: Despite recent policy changes, the Pakistani government has stated that promoting renewable energy remains a priority and aims for a significant portion of its electricity to come from renewable sources by 2030. This long-term commitment could lead to other supportive policies that offset the impact of the import tax or net metering changes.
Current Situation and Outlook:
As of June 2025, the proposed 18% sales tax on imported solar panels is a direct indication that prices are likely to increase. While global trends lean towards decreasing solar panel costs, the local tax policy will counteract that for imported panels. The impact on the overall cost of a solar system will also depend on the balance of system (BOS) costs (inverters, mounting, wiring, installation labor), which are also subject to local economic conditions.
In conclusion, it is highly probable that solar panels will become more expensive in Pakistan in the short term due to the proposed 18% sales tax on imported panels. The long-term outlook will depend on the success of local manufacturing initiatives and whether other government policies emerge to support affordable solar adoption.