Pakistani solar boom is shielding it from the Hormuz crisis: new report

Pakistan’s transition to solar power has enabled it to avoid more than US$12 billion in oil and gas imports to date and could save it a further US$6.3 billion by the end of the year, shielding it from Hormuz shipping disruption, analysts have said.

This will “significantly soften the blow from the current energy crisis, which will hit Asia hardest,” said new research published jointly on Tuesday by Renewables First, a Pakistani think tank, and the Centre for Research on Energy and Clean Air (CREA), an independent research organisation.

“Pakistan has spent the last few years quietly building resilience to the very scenario the energy sector most feared: the shutting of the Strait of Hormuz,” they added. “Pakistan’s US$12 billion in avoided imports since 2018 represents not just fiscal relief, but a structural reduction in geopolitical risk exposure that no LNG contract or hedging strategy could have delivered at equivalent scale or speed.”

The South Asian nation imports a large share of both LNG and oil through the Strait of Hormuz, making it very vulnerable to the kind of shipping disruption that has been seen since the Iran war began on February 28th.

“In 2024, and despite reducing its reliance, Pakistan still ranked third globally in LNG dependence on Hormuz-transiting cargoes as a share of total consumption, and fifth for oil. Any sustained disruption to the strait would send immediate shockwaves through Pakistan’s energy system,” the analysts warned.

But solar has been a game-changer. Without its growth in distributed solar, Pakistan would have been “far more exposed” to the supply disruptions and price shocks triggered by the Middle East conflict we are now experiencing, they added.

“Pakistan’s solar revolution wasn’t planned in Islamabad – it was built on rooftops. But as tensions around the Strait of Hormuz escalate, those panels are proving to be one of the country’s most effective energy security strategies – with distributed solar now shouldering a growing share of the country’s electricity needs,” said Rabia Babar, Energy Data Manager at Renewables First.

“The Strait of Hormuz remains one of the world’s most dangerous energy chokepoints, but Pakistan has been quietly reducing its exposure for years. Its rooftop solar boom has slashed its import bill and is now acting like an insurance policy against the oil and LNG shocks rippling out of the Gulf,” commented Lauri Myllyvirta, Co-founder of CREA.

The Iran war and disruptions to shipping routes in the Strait of Hormuz have left Southern Asia exposed to an US$107 billion LNG bet, analysts at Global Energy Monitor warned last week.

Even in a relatively balanced LNG market, disruptions to shipping routes and production can quickly push up prices and tighten access, highlighting the economic and energy-security risks for regions like South Asia, they cautioned.

Regional peers

Pakistan’s energy trajectory is however very different from its regional peers, the research showed, with China, India, South Korea and most other Asian economies having increased their LNG imports at the same time that Pakistan’s energy curve moved in the opposite direction.

Pakistan has grown from under 1 GW of solar PV imports in 2018 to over 51 GW by early 2026,  representing one of the fastest consumer-led energy transitions on record, and one that drove a 40% drop in oil and gas imports between 2022 and 2024, the briefing said.

This is because while western economies erected tariff walls against Chinese solar imports, Pakistan did the opposite, maintaining a zero-rated tax regime on solar PV imports that held from 2013 until mid-2025, it explained.

“The government didn’t plan the revolution, but it left the door wide open,” the researchers stressed. “This grassroots solar surge has gathered pace since the energy crisis of 2022 and has quietly delivered what years of state energy policy had not thus far: falling fuel import dependence, stronger energy security, and a measure of relief from spiralling electricity costs for millions of households.”

The other market driver was a sharp fall in solar manufacturing costs in China, they said, calling it the “invisible enabler” behind Pakistan’s solar energy transition.

New research published by Zero Carbon Analytics on Monday revealed that solar power could help Vietnam avoid a total US$594 million from potential coal and gas imports, as prices for both commodities soar on the back of the Iran conflict.

Other Southeast Asian countries that are currently meeting power demand through imports could also shield themselves from high prices and support future energy security by pivoting to solar and wind, the analysts noted.

(Writing by Sophie Davies)