According to a report by Express Tribune, Pakistan has halted plans for a $300 million floating solar power project designed to generate 300 megawatts (MW) of electricity, citing the need to reassess the country’s long-term energy strategy. The project, which had the potential to significantly reduce reliance on costly thermal power, was shelved after the Power Division excluded it from the 2024-2034 Indicative Generation Capacity Expansion Plan (IGCEP).
The government confirmed the decision on Saturday, stating that the World Bank had been asked to pause preparations for the project. Originally planned for installation on the water bodies of the Tarbela and Ghazi Barotha hydropower projects, the solar facility was to connect to the national grid by 2027, with power generation expected to commence by 2026.
Feasibility studies conducted in 2021 had highlighted the project’s advantages. The solar plant would have required no new transmission lines due to its proximity to existing hydropower infrastructure. Electricity generated from the project was projected to be cheaper than operating costs for 86 existing thermal plants.
Internal assessments revealed that the floating solar project could have saved over $72 million annually in foreign exchange and recovered its initial investment within five years. With an economic rate of return (ERR) exceeding 42% without environmental benefits—and 51% when factoring in reduced emissions—the project offered both economic and environmental advantages.
However, the Power Division expressed concerns over the project’s lack of an assured power purchaser. Official documents cited challenges in aligning the project with existing power purchase agreements managed by the Central Power Purchasing Agency-Guarantee (CPPA-G).
Critics have suggested that vested interests in thermal fuel imports may have influenced the decision to shelve the project. Despite the promise of reduced costs and environmental benefits, the Power Division decided against recommending the loan to finance the project.
Ironically, just a day before the decision, the Water and Power Development Authority (Wapda) informed the government that the project cost had been reduced to $238 million. WAPDA noted that extending the project’s lifespan to 30 years could lower the tariff to 2.98 US cents per unit, making it the most cost-effective power generation option in the region.
The decision to halt the project could hinder Pakistan’s efforts to expand its renewable energy portfolio. The floating solar plant was expected to pave the way for retiring inefficient thermal plants, reducing overall generation costs, and alleviating the country’s energy crisis.
World Bank data also points to a persistent gap between electricity demand and supply in Pakistan. Although the installed generation capacity is often cited as 43,700MW, operational challenges—such as outdated thermal plants and seasonal hydropower fluctuations—mean the country struggles to meet peak summer demand of 30,000MW.
The Ministry of Energy defended the decision, citing the need to reevaluate energy needs amid significant sectoral transformations. A spokesperson highlighted ongoing efforts to update the IGCEP to reflect changing market dynamics, including seasonal demand variations and the rise of off-grid generation.
The spokesperson emphasized that pausing the project does not rule out its future revival. “Good technical preparation of projects is never lost,” the ministry noted, adding that the government could reprioritize the project once formalities are completed.
This decision mirrors earlier instances, such as post-2022 floods, when development projects were paused to accommodate urgent reconstruction efforts. The ministry assured that the World Bank continues to support Pakistan’s renewable energy transition, and the floating solar project remains a viable option for the future.
