When natural gas prices shot up following Russia’s invasion of Ukraine, consumers in Pakistan doubled down on solar, sending installations of rooftop panels soaring.
The question now is whether other Asian nations will follow, as they grapple with a historic energy shock triggered by the U.S.-Israeli war on Iran.
Clean energy advocates tout Pakistan as an example for nations looking to protect themselves from spikes in fossil fuel prices. The growth of its solar industry has helped cushion the country from an energy crisis far deeper than the one it experienced just four years ago.
But analysts say Pakistan’s experience could be difficult to replicate for other countries hit hard by the crisis. Regulatory barriers, the presence of alternative fuels like coal, and the length of the crisis will determine how quickly they can scale up solar.
“It is unlikely that countries will follow Pakistan uniformly,” Nabiya Imran, an energy analyst at Islamabad-based Renewables First, wrote in an email. “Only systems with the same pressure points and supply chain conditions are likely to do so.”
The war in Iran, now stretching into its fifth week, has turned global energy markets on their head. About a quarter of the seaborne global oil trade and a fifth of liquefied natural gas cargoes have been stranded by the fighting.
Asia, which is heavily reliant on oil and gas imports from the Persian Gulf, has been particularly hard hit. Before the crisis, Southeast Asia in particular was expected to be a key market for LNG demand growth.
But the war is rapidly shifting the region’s energy landscape. Bangladesh and Thailand are increasing coal generation. Others are trying to consume less energy, with countries like Sri Lanka and the Philippines instituting four-day work weeks.
It has also prompted renewed interest in renewables as a way for countries to secure their energy supplies. South Korean President Lee Jae Myung called for a rapid shift to renewables during a town hall meeting this week.
“Solar PV is the low-hanging fruit for today’s crisis: accessible, inherently local, and simple to deploy, making it the most geopolitically resilient energy source available,” Vicky Janita, a senior energy systems analyst at Rystad Energy, wrote in an email.
She believes governments are more likely to adopt solar and other forms of renewables as they seek more homegrown energy supplies. “But the speed of adoption in Southeast Asia is unlikely to match Pakistan’s, for structural reasons that differ country by country.”
People powered
Pakistanis struggled with high power costs and frequent disruptions in electricity service for years. Then Russia invaded Ukraine, prompting LNG prices to spike. Nine LNG cargoes bound for Pakistan were ultimately rerouted to wealthier ports in Europe and Asia, where they could fetch a higher price, setting off a cascading crisis that saw Pakistan’s electric grid hit by a blackout.
Russia’s invasion coincided with rapidly falling prices for Chinese-made solar panels, which were made even cheaper by Pakistan’s zero-tariff policy. Pakistan also had a generous net metering program, making it beneficial for consumers to put solar on their homes and sell power back to the grid.
Those incentives helped solar grow from around 5 percent of Pakistani electricity generation in 2022 to more than 25 percent last year. A recent analysis by Renewables First and the Centre for Research on Energy and Clean Air estimates that the country has saved $12 billion in avoided imports of oil and gas since 2018, and could save an additional $6.3 billion by the end of 2026.
“The people-led solar revolution and earlier decisions to invest in nuclear, hydropower and local coal have all played a role in increasing Pakistan’s self-reliance,” Pakistan’s energy minister, Awais Leghari, told Reuters. He said nearly three-quarters of Pakistan’s electricity generation now comes from local sources.
But the very thing that makes Pakistan a solar success story also makes it difficult to replicate. Most solar adoption was done by Pakistani consumers seeking solutions to the country’s creaky electric grid. Many bypassed the formal energy system to install solar on their homes. Analysts said that will be more difficult in other countries.
“If we want to see a good model, I think policymakers really need to think about long-term resiliency of their energy system,” said Ali Izadi-Najafabadi, head of Asia-Pacific research at BloombergNEF.
Other countries have a strong incentive to look to other fuels. Indonesia is the third-largest coal mining country in the world, trailing only China and India. Coal powers much of the grid, and the government subsidizes its electricity rates. Grid supply is also relatively stable.
That means there isn’t much “organic drive” for consumers or the market to demand a higher share of renewable energy, said Katherine Hasan, an Indonesia-based analyst for the Centre for Research on Energy and Clean Air.
Vietnam, Thailand and Indonesia also have relatively young coal fleets backed by long-term power contracts, locking utilities into coal even when renewables are cheaper.
Reform is needed “to level the playing field,” Hasan said. The current crisis might provide the political justification for change. President Prabowo Subianto recently vowed to accelerate the country’s energy transition to shield it from disruptions like those it’s facing now.
But unlike Pakistan, such moves “will be state-led rather than consumer-driven,” Hasan said.
That poses a challenge in countries where government-led action can take a long time to materialize. In the Philippines, permitting complexities and the logistical difficulties of moving panels and equipment across the country’s more than 7,000 islands have raised costs and slowed progress. Installation costs are also higher than in Pakistan, where a market of informal solar installers kept prices low, said Marina Domingues, a Rystad analyst. The shift in Thailand has been similarly sluggish.
“Unlike the very rapid spread of rooftop solar seen recently in Pakistan, Southeast Asia is unlikely to see a similar pace of change, because powerful vested interests in the existing energy system and complex regulatory structures in Southeast Asian energy markets slow down how quickly solar and other renewables can be integrated and scaled,” said Christopher Len, acting coordinator of the climate change in Southeast Asia program at the ISEAS-Yusof Ishak Institute.
Will Pakistan’s boom continue?
Pakistan isn’t out of the woods yet, despite the buffer its solar boom has provided.
The country still depends heavily on Qatar for LNG, and the government has tightened up its net metering policy. That could make the economics of solar less attractive, analysts say.
“Solar is serving as a hedge against shocks that would have been much worse if it had not been adopted at the scale that it has been,” said Imran from Renewables First. “However, the power sector is likely to be impacted if the crisis persists for longer.”
The government also needs to modernize the country’s grid, increasing the number of large-scale solar projects and battery installations, said Ahmad Faruqui, a Pakistani-born economist who tracks the country’s energy system. That could prove challenging if inflation and rising interest rate hikes raise the costs of clean energy manufacturing and solar and wind projects, as they did in 2022.
Yet one thing is already clear, analysts said. The war has changed how renewables are viewed across Asia.
“They are no longer just about climate targets,” Len wrote in an email, “but are increasingly viewed as a way to improve energy security and reduce exposure to volatile global prices for the region’s import‑dependent economies.”
