ISLAMABAD: Experts on Friday called for a coordinated policy approach, urging greater alignment between economic and energy policies to unlock Pakistan’s full renewable energy potential.

Speaking at a dialogue marking the inception of the Annual State of Renewable Energy (ASRE) 2025, the experts agreed that a structured transition strategy, investment incentives and infrastructure modernisation would be essential for ensuring a stable, cost-effective and sustainable renewable energy future for the country.

The ASRE 2025 Inception event hosted by the Sustainable Development Policy Institute (SDPI) brought together leading experts from government, industry, and international organisations to discuss the future of Pakistan’s renewable energy sector. The discussion focused on critical policy reforms, infrastructure development and financial mechanisms needed to address emerging challenges and accelerate the country’s energy transition.

Director Policy/International Cooperation, PPIB, Aqeel Jafri,who chaired the panel, outlined government priorities in RE development, stressing the need to increase the share of renewable energy in the grid while promoting Distributed Generation (DG), battery energy storage systems (BESS) and pumped storage hydro projects. He highlighted affordability as a major challenge due to rising electricity costs, emphasising that planned capacity additions are crucial to avoid further financial burdens.

Mr Jafri also pointed out that generation synchronisation between the north and south was a key government priority to enhance grid stability and ensure a more efficient and reliable power supply.

Engr Ubaidur Rehman Zia, Head of the Energy Unit at SDPI, emphasised that the ASRE Report remained a flagship initiative in Pakistan offering critical insights to policymakers, industry leaders and investors.

He mentioned that Pakistan was going through two key trends in its renewable energy sector. He said at the decentralised stage particularly the Solar PV market, Pakistan is the leading success story across the world.

He further highlighted that this trend would further continue in coming years and what is needed for the government is to bring these consumers on the government systems through improved regulations.

Dr Khalid, Research Fellow, SDPI, highlighted key concerns, noting that Pakistan’s renewable energy sector is struggling at the utility scale due to stagnation caused by already installed capacity.

He emphasised the shift from an energy accessibility crisis to an affordability crisis, stressing the need for careful capacity expansion, early retirement of low-utilisation power plants and reassessment of Power Purchase Agreements (PPAs).

He also pointed to transmission limitations, the surge in non-performing market volume (NPMV), and the need for investment in green hydrogen and RE-linked opportunities.

Faran Rana, Associate Programme Officer, IRENA, provided insights into global renewable energy financing, stating that in 2023, global energy transition investments exceeded $2 trillion, yet developing economies like Pakistan received only 10pc due to high financing costs and macroeconomic risks.

He noted that Pakistan’s Weighted Average Cost of Capital (WACC) for utility-scale projects remained between 15-20pc, making investment difficult.

He called for strong fiscal incentives and policy stability to attract international and domestic investors.

Project Manager, Agora Energiewende, Ms. Naila discussed institutional and regulatory hurdles slowing Pakistan’s RE growth.

Published in Dawn, March 8th, 2025