PAKISTAN is in the midst of a people-led energy revolution. As of August 2025, the country has imported 49.7 GW of solar panels, a figure that now surpasses the on-grid installed capacity. Driven by increasing electricity prices, every day more of these panels are being installed on rooftops across urban neighbourhoods, industrial zones, and rural areas.

While these solar installations have drastically advanced Pakistan’s renewable energy portfolio and brought it to the global spotlight, they have also reduced electricity off-take from the national grid, shifting the burden of capacity payments from expensive power plants to the remaining consumers. As a result, tariffs have increased further, prompting more consumers to leave the grid. A vicious cycle has thus been set up.

The implications of this cycle extend beyond the grid as well, as its benefits are not shared equally across society. The solar revolution has allowed middle- and upper-class consumers to enjoy cheap electricity while the economically downtrodden are left to bear the burden of previous electricity contracts, many of which were undertaken in the first place to meet the former’s high consumption peaks, particularly from air conditioning loads.

The way forward, however, does not lie in the discouragement of rooftop solar, but in its wholehearted embrace. Far from being a threat, distributed solar can become the foundation of Pakistan’s energy transition — if we reimagine how the grid is managed. The shift needed is conceptual. The grid must move from being a one-way delivery system to a dynamic platform that intelligently coordinates millions of distributed solar resources. This requires a different kind of infrastructure — not poles and wires, but digital control, market signals and flexible assets which can coordinate effectively. Such a set-up is called a virtual power plant (VPP).

A VPP is an aggregation of distributed energy resources — such as solar panels, batteries, electric vehicles, and smart appliances — remotely managed through an energy management system to act like a single power plant. It monitors generation, storage, and consumption in real time and optimises the collective output by sending control signals to charge, discharge or curtail resources in response to grid conditions and market prices. In doing so, VPPs provide capacity, energy and ancillary services, ease pressure on transmission and distribution networks, support renewable integration, cut reliance on fossil fuels and allow consumers to actively participate in energy markets while gaining financial benefits.

The solar energy revolution is both a crisis and an opportunity.

For Pakistan, which already has one of the highest growth rates in rooftop solar globally, the conditions for VPPs are ripe. In 2025 alone, more than 60,000 electric bikes were sold, a figure that is expected to reach 100,000 by the year’s end. Battery imports are projected to exceed 8 GWh by 2030. At the same time, the competitive electricity market reform promises to do away with decades of government monopoly on the grid, allowing bilateral trade between consumers and sellers. These are all basic components of a VPP.

In a competitive market, rooftop solar generators can pool their resources into VPPs and bid excess electricity into the market, offering not just energy but also grid services. Households and commercial units can become energy traders, promoting greater autonomy, consumer freedom, and decentralisation. People can inject cheap electricity into the grid in critical times through their batteries, or even by changing their consumption patt­erns, for example, by charging electric vehicles at nig­ht when the grid is und­­­erutilised.

Globally there are many examples of successful VPP set-ups. One of the largest VPPs is ope­-

­­rated by Next Kraftwerke in Eur­ope, aggregating more than 12 GW of solar, wind and biogas capacity across multiple countries. Similarly, Australia’s national VPP trials included around 7,000 households and demonstrated how home batteries could deliver reliable frequency control to stabilise the grid. These examples show that with the right incentives and digital infrastructure, even small-scale producers can collectively become a source of generation and reliability for the grid.

The solar energy revolution in Pakistan is both a crisis and an opportunity in disguise. If we continue to let things be, the burden on the lower economic classes will increase. However, if we tap into this new reservoir of renewable electricity through incentive-driven markets and flexible VPP set-ups, we can harness it as a stabilising force for the grid. Whether it becomes a disaster for vast segments of our society or a breakthrough for all depends on the choices we make now.

The writer is a public policy and energy expert pursuing doctoral studies at Lums.

Published in Dawn, November 8th, 2025