BR RESEARCH: Solar adoption: An import lull, not a reversal

Pakistan’s solar panel imports have now posted two exceptionally weak months in a row, inviting a question that the market avoided after November: is this the start of a trend, or merely a pause in a market that ran too far, too fast?

According to Pakistan Single Window data, December 2025 solar panel imports fell to just $11.8 million, the lowest monthly figure in roughly four years, ever since solar imports began to register meaningfully in trade data. This followed November’s $20 million, which at the time was already the weakest monthly showing in years. One soft month could be dismissed as noise. Two consecutive record lows warrant closer scrutiny.

For context, imports in the first six months of FY26 now stand at $453 million, down sharply from last year, marking a 41 percent year on year decline in value terms. In megawatt terms, the slowdown is still evident but less severe. Nearly 4,000 MW have been imported so far, a 22 percent decline compared to the same period last year.

The gap between value and volume continues to reflect price normalization and changing inventory strategies rather than a sudden collapse in underlying demand.

Policy uncertainty has undoubtedly injected caution into the market. Yet it is difficult to argue that rooftop solar has suddenly become uneconomic.

Even under less generous buyback assumptions, grid tariffs remain high enough for systems with reasonable self-consumption to deliver attractive payback periods. Nothing currently under discussion renders rooftop solar unviable in a fundamental sense.

A more compelling explanation lies in inventory dynamics. Cumulatively, Pakistan has imported close to 51 GW of solar panel capacity.

Even the most optimistic estimates place on ground installed capacity at around 33 GW. That implies roughly one third of imported panels, in the order of 17 to 18 GW, are still waiting to be deployed. This is an extraordinary amount of embedded capacity by any standard.

The inventory buildup was not accidental. Over the past two years, global module prices collapsed, eventually stabilizing around 9 cents per watt. Importers responded rationally by front loading purchases, betting that prices had bottomed out and that domestic demand would remain strong. That strategy left the market flush with panels. Once warehouses are full, there is little incentive to keep importing, even if installations continue at a healthy pace.

Seen through this lens, the recent import slump looks less like a demand shock and more like a digestion phase. The market is working through earlier purchases. Growth in imports was never going to remain linear after such an aggressive stock build.

This interpretation also aligns with deployment data. The 2025 Nepra State of Industry Report shows no evidence of a solar slowdown. By the end of June 2025, Pakistan’s net metered solar capacity is estimated to have reached 6,485 MW. That represents an addition of nearly 4,000 MW in a single year, compared to about 1,200 MW added in FY24. The acceleration is unmistakable.

Crucially, these figures are not speculative. They are grounded in utility interconnection data and reflect systems that are actually operational. Unless something drastic has changed since June 2025, which it has not, net metered solar adoption remains robust. If anything, installations are still catching up with panels imported earlier.

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There is, however, a nuance worth acknowledging. While near term deployment remains strong, growth rates may moderate going forward. Potential changes to net metering policy could lengthen payback periods and temper enthusiasm at the margin, particularly among smaller residential consumers. At the same time, with panel prices having largely bottomed out, the incentive to import aggressively in anticipation of further price declines has faded.

That combination naturally produces slower import growth without implying that solar adoption itself is stalling. Installed capacity can keep rising even as imports slow, simply because the system is drawing down existing stock.

Two weak months therefore do not, by themselves, signal the end of Pakistan’s solar momentum. They signal a market transitioning from accumulation to absorption. Imports were always a leading indicator, and like all leading indicators, they overshoot on the way up and undershoot on the way down.

Solar in Pakistan is not running out of sun. It is clearing its shelves.