Pakistan Cuts LNG Imports as Solar Power and Batteries Reshape Energy Security

Pakistan sharply reduced its liquefied natural gas imports last year as millions of households and businesses turned to solar panels and batteries. The shift marks a fundamental change in how the country approaches energy security.

The South Asian nation is redefining energy independence not through climate policy, but through economic survival and risk management.

From Crisis to Solar Boom

Pakistan’s electricity prices soared by as much as 155 percent over three years after the government removed subsidies under pressure from the International Monetary Fund. Russia’s invasion of Ukraine in 2022 sent global gas prices spiking, exposing the country’s dangerous dependence on imported fuels.

Extended power cuts became routine. Cities faced blackouts lasting several hours daily, while rural areas lost power for up to 12 to 14 hours each day.

Desperate consumers found an alternative. Chinese solar panel manufacturers were flooding the market with cheap equipment. The Pakistani government temporarily removed tariffs and sales taxes on solar imports. Electricity bills that exceeded rent payments made solar panels a practical investment, not a luxury.

Record Solar Adoption

The response was extraordinary. Pakistan imported approximately 17 gigawatts of solar capacity in 2024, making it the third-largest market for Chinese solar panels. By mid-2025, the country had imported another 10 gigawatts.

Of the roughly 50 gigawatts imported in recent years, around 34 gigawatts has been installed across rooftops, farms, and factories. Payback periods of three to six years made the economics simple for households and businesses facing chronically high electricity prices.

This was not a government program. Individual consumers, small business owners, and manufacturers made independent decisions based on financial survival. Solar installers multiplied, technicians learned through practice, and entire neighborhoods transformed as neighbors watched the results.

The grassroots transition happened largely outside official energy planning frameworks.

Batteries Complete the Shift

Battery storage followed solar’s rapid growth. Pakistan imported approximately 1.25 gigawatt-hours of lithium-ion batteries in 2024, with another 400 megawatt-hours arriving in early 2025.

Despite import taxes adding roughly 50 percent to costs, batteries made economic sense. They store cheap daytime solar power for use during expensive evening peak hours when grid electricity traditionally costs more.

This peak shaving capability fundamentally changes what utilities must manage. As more consumers install solar-plus-battery systems, the evening demand spike that required expensive natural gas plants begins to flatten.

Utility-scale peak electricity demand fell by 2,000 megawatts during summer months as citizens increasingly powered themselves.

The LNG Problem

The demand collapse hit Pakistan’s long-term gas contracts hard. The country signed liquefied natural gas agreements with Qatar in 2016 and 2021, and with Italian energy company Eni in 2017. The deals were negotiated from extreme weakness.

Pakistan’s poor credit rating meant Western energy companies refused long-term commitments. Qatar agreed to supply large volumes, but at terms heavily favoring the seller. The contracts included take-or-pay clauses forcing Pakistan to accept or pay for specified quantities regardless of actual need.

By 2025, the mismatch became unsustainable. Pakistan’s LNG consumption fell to its lowest level in five years, averaging around 914 million cubic feet per day in the year ended June 30, 2025.

The country faced mountains of contracted gas it no longer needed. Distributed solar had accelerated a structural transition that planning documents had projected would take decades.

Canceling Deliveries

Pakistan formally requested to defer long-term LNG deliveries. In November 2025, the government cancelled 21 Eni cargoes scheduled for 2026 and 2027. In December 2025, Pakistan and Qatar agreed to divert 24 additional cargoes from 2026 for resale on international markets.

The Economic Coordination Committee approved diverting 35 long-term cargoes combined from QatarEnergy and Eni. The scale of diversions is comparable to Pakistan’s total annual LNG arrivals in recent years.

The government announced plans to sell surplus cargoes internationally starting January 2026, though contract terms limit Pakistan’s ability to profit from resales.

Domestic Sources Take Over

Power Minister Awais Leghari announced in March 2026 that approximately 74 percent of Pakistan’s electricity now comes from domestic sources including solar, wind, nuclear, coal, and hydropower. The government aims to increase this to more than 96 percent by 2034.

Hydropower generates about 40 terawatt-hours annually, nuclear plants produce roughly 22 terawatt-hours, and domestic coal contributes around 12 terawatt-hours. Combined with rapidly expanding solar capacity, this diversified base protects Pakistan against the kind of energy shocks that devastated the country in 2022-2023.

Leghari assessed that even if LNG supplies were completely disrupted, the impact would be limited to one to two hours of load shedding during peak summer evenings in a worst-case scenario.

The transformation reflects a fundamental lesson. Pakistan’s reliance on imported LNG forced extended power cuts when international supplies became unavailable. Today, domestic generation provides protection against import disruptions and price volatility.

The Inequality Challenge

The solar boom creates new problems even as it solves old ones. As affluent and middle-income consumers install solar systems, they reduce dependence on the grid. But utilities must still maintain expensive infrastructure for remaining customers.

Lower grid demand forces utilities to spread fixed costs across fewer customers, driving tariff increases that push more people to abandon the grid. This financial spiral threatens those who cannot afford to leave.

Approximately 10 percent of Pakistani households lack electricity entirely. Many others live in apartments or rent homes where rooftop solar is impossible. Low-income families face greater difficulty accessing upfront capital for systems regardless of favorable payback periods.

Capacity payments to power plants exceeded PKR 2 trillion (approximately $7 billion) in 2024. These payments, required under long-term agreements with independent power producers, must be recovered through tariffs charged to remaining grid customers.

As distributed solar reduces overall demand, these costs punish those unable to afford their own systems. Officials proposed reducing buyback rates that utilities pay for excess solar power from approximately Rs 27 per kilowatt-hour to Rs 10 per kilowatt-hour, aligning distributed solar compensation with utility-scale rates.

Ahead of Schedule

Pakistan established a target to generate 60 percent of electricity from renewable sources by 2030. The rapid deployment of distributed solar has positioned the country to exceed this goal well ahead of schedule.

Clean energy already comprises over 42 percent of grid-connected capacity, with more than 50 percent of total electricity generation coming from clean sources as of 2025. When off-grid distributed solar systems are included, the renewable share becomes even larger.

If current trends continue, Pakistan’s renewable energy share could exceed 60 percent well before 2030. This acceleration has occurred not through government mandates or large projects, but through millions of individual decisions responding to economic incentives.

Risk Management, Not Climate Policy

Pakistan’s dramatic shift away from LNG imports and toward distributed solar and batteries represents strategic risk management more than environmental policy. The country has effectively replaced expensive, long-term imported fuel contracts with domestic energy sources that diversify risk and strengthen energy sovereignty.

Economic desperation and cost-competitive alternatives drove this transformation, not climate ideology or government foresight. When electricity prices became unaffordable due to import dependence, when foreign exchange constraints became severe, and when alternative technologies became competitive, market forces accelerated a transition that planners had estimated would require decades.

Pakistan’s experience demonstrates that energy security in an era of volatility requires meeting demand through diversified, domestically controlled sources that protect against the vulnerability inherent in heavy import dependence.

References

• Cedigaz: When Demand Assumptions Reverse: Pakistan’s LNG Experience in 2025
• World Economic Forum: Pakistan’s Energy Transition via Solar Power and Batteries
• World Resources Institute: The Perfect Storm Fueling Pakistan’s Solar Boom