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Pakistan's Solar Expansion Reduces Exposure to LNG Supply Shocks, IEEFA Says

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Pakistan's rapid solar power roll-out has helped maintain stable power supplies in the midst of disruption to LNG deliveries resulting from conflict in the Middle East, according to a report by the Institute for Energy Economics and Financial Analysis.

IEEFA said Pakistan's installation of 38 GW of distributed solar capacity since 2018 has reduced daytime grid electricity demand by 6 GW to 7 GW.

Increased contributions from hydropower, coal and nuclear generation have similarly reduced the country's dependence on imported fuels, providing a buffer as global supplies tighten.

This marks a stark shift from the load-shedding and high tariffs the country faced following Russia's invasion of Ukraine in 2022, when intense competition from regional buyers pushed Pakistan out of the spot market for gas.

The report noted that vulnerabilities remain during periods of peak demand and non-solar hours.

Despite the surge in renewable generation, Pakistan still imported seven spot LNG cargoes between April and July, including one priced at $21.88 per million British thermal units, the highest price paid by the country since 2022.

IEEFA thus called for Pakistan to develop a smaller, more diverse and flexible LNG portfolio while maintaining access to competitively priced spot cargoes.

It also recommended further solar deployment and accelerated battery energy storage development to reduce evening peak demand and the need for emergency LNG purchases.

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