Solar boom meets grid reality as CCP maps reform roadmap for market expansion

Pakistan’s rapidly expanding solar sector is facing mounting structural constraints that could stall investment and limit competition unless urgent reforms are implemented, according to a new market study released by the Competition Commission of Pakistan (CCP).

The report, titled “Unlocking Green Potential: A Market Competition Study of Solar Energy in Pakistan,” presents a broad reform blueprint aimed at strengthening the sector’s regulatory, technical, and industrial foundations. It identifies outdated grid infrastructure, inconsistent policy signals, and weak quality enforcement as the primary barriers preventing the solar market from achieving scale and stability.

At the centre of the Commission’s findings is the condition of the electricity distribution network. The study warns that aging feeders and substations were never designed to accommodate two-way electricity flows from distributed solar generation. As rooftop installations expand, these technical limitations are increasingly triggering voltage fluctuations and restricting the growth of net-metering, effectively turning infrastructure into the sector’s most immediate bottleneck.

To address these operational risks, the Commission has called for accelerated grid modernization, supported by a nationwide rollout of smart metering and digital automation systems. Technologies such as Supervisory Control and Data Acquisition (SCADA) and Distribution Management Systems (DMS) were identified as critical tools to improve system visibility, reduce transmission losses, and manage rising volumes of renewable energy in real time.

The study also links slow progress on electricity market reforms to limited investor confidence. It urges the government to fast-track implementation of the Competitive Trading Bilateral Contract Market (CTBCM), describing it as a key mechanism for introducing competition into power procurement. As a transitional step, the Commission has proposed pilot bilateral contracts for renewable energy supply, particularly targeting industrial clusters and Special Economic Zones where demand for cheaper and more reliable electricity is already high.

Quality assurance has emerged as another flashpoint in the evolving solar market. The Commission warns that the circulation of uncertified and counterfeit equipment poses risks to consumers and system reliability. To tighten oversight, the report recommends the establishment of accredited solar testing laboratories, mandatory compliance with recognized international standards, and the deployment of digital verification systems to track equipment authenticity across the supply chain.

Regional inequality in solar adoption is also flagged as a growing concern. The report notes that most net-metering installations remain concentrated in urban centres, leaving rural communities with limited access to the financial and energy security benefits of distributed generation. To close this gap, the Commission has proposed targeted subsidies, concessional financing facilities, and expanded off-grid solar programmes to support adoption in underserved regions.

Looking ahead, the study places strong emphasis on the role of battery storage as solar penetration deepens. It recommends fiscal incentives for solar-plus-storage systems and policy backing for domestic battery manufacturing, arguing that rapid technological progress in energy storage, largely driven by the global electric vehicle industry, could help Pakistan stabilize its grid and manage peak demand more efficiently.

The Commission has also framed domestic manufacturing as a strategic priority in an era of rising import costs and geopolitical uncertainty. It has proposed the introduction of a Production-Linked Incentive (PLI) scheme alongside the development of dedicated renewable energy zones to attract investment in local solar panel production. The report suggests that targeted tax incentives, improved financing access, and technology partnerships with international firms could gradually reduce reliance on imported components.

To improve sector governance and planning accuracy, the study calls for the creation of a centralized National Solar Registry to consolidate market data, enhance transparency, and support evidence-based policymaking.

The Commission has released the draft study for public consultation, inviting feedback from industry stakeholders before final recommendations are submitted to the government.