The Sustainable Development Policy Institute (SDPI) presented a new study proposing a regulatory sandbox to accelerate residential solar adoption while restructuring Pakistan’s power subsidy regime. The approach aims to combine tariff rationalization with targeted, asset-based support to protect low-income households and encourage industrial participation in the grid.
Speakers at the Islamabad dialogue argued that the existing Tariff Differential Subsidy has become fiscally unsustainable and poorly targeted, with nearly 60 percent of domestic consumers placed in the protected category regardless of vulnerability. Pakistan has spent roughly Rs 4.3 trillion on energy subsidies since FY2011, with peaks of Rs 726 billion in FY2021–22 and Rs 724 billion in FY2022–23, and an allocation of Rs 400 billion for FY2025–26.
SDPI’s model recommends eliminating cross-subsidies and replacing them with direct support for low-income families through provision of rooftop systems. A 2kW solar kit, estimated at about Rs 75,000, could supply up to 10 hours of daily energy for many households, reducing reliance on imported fuels and cutting recurring subsidy burdens while boosting household energy autonomy.
Experts noted that tariff rationalization combined with residential solar would help restore demand and ease the cycle of low consumption and high capacity charges. SDPI researchers argued that rooftop solar is a one-time productivity investment that can lower consumer bills and improve overall sector efficiency when complemented by sensible tariff design.
Panelists stressed the importance of using existing social registries to target support. SDPI highlighted that BISP’s National Socio-Economic Registry, covering millions of households, could serve as the foundation for distributing solar assets rather than cash transfers, ensuring socially protected access to clean energy.
Industry voices urged the government to broaden the subsidy design and consider grid-level storage to maximize benefits. Concerns were raised about households without rooftop access and the need for provincial ownership and community-level delivery models to reach such groups effectively.
Complementary measures, including energy-efficient appliance programs and stronger industrial incentives to remain on the grid, were described as essential to realizing the full gains from a regulatory sandbox. Advocates called for pilot testing to refine targeting, integration of storage solutions, and clear provincial roles to ensure equitable rollout of residential solar across Pakistan.
