Page 70 - CMA Journal (Nov-Dec 2025)

Focus Section

These products will attract investors who are interested in stations provide a new business opportunity. Pakistan also
environmentally friendly investments. Additional benefits has great potential for producing green hydrogen, especially
from global climate funds include the availability of with low-cost solar power, which later can be utilized in
concessional financing, grants, and technical assistance export markets.
through the global climate funds, including the Green Climate Captive solar plants are becoming increasingly popular in
Fund and the Global Environment Facility, which have been industries such as textiles, cement, and steel to enhance
available to Pakistan. Another tool that shows a promising competitiveness and minimize the carbon footprint. The
future in terms of commercializing and making renewable creation of local production capacity for solar components
energy projects more financially viable and appealing to will provide lower equipment costs, create workplaces, and
private investors is blended finance, in which concessional enhance energy security, which contributes to SDG 8 (decent
funds are integrated into commercial investment. work and economic growth) and SDG 9. Another potential
The renewable energy environment is affected by a number source for increasing private investment is the emerging
of institutions. The State Bank favors green lending and carbon market, where renewable energy, forestry initiatives,
management of financial risks. ESG disclosures and green and enhancement of energy efficiency can attract investors.
financial instruments are guided by the Securities and To achieve the full benefits of renewable energy in Pakistan,
Exchange Commission of Pakistan. NEPRA controls tariffs and policy and financial reforms must accelerate. A clear and
the licensing of renewable energy, and long-term policy consistent competitive bidding system for new solar and
direction is defined by the Ministry of Energy. Effective wind projects should be adopted in the nation to attract
coordination between these institutions is useful in low-cost investment. Enhancing green financing programs
developing sustainable infrastructure, as per SDG 9.4, which of the State Bank, including energy conservation, grid
focuses on improving infrastructure using clean renovation, and green hydrogen, will be required to finance
technologies. Nonetheless, lack of uniformity in policies and more innovative projects. Structural reforms, including
slow implementation tends to slow investment and create better governance, less distribution losses, and rational
uncertainty for developers. tariffs, need to be implemented in dealing with circular debt.
Despite the fact that the renewable energy industry has very Upgrades to transmission infrastructure should be
good potential, several obstacles prevent investment in the emphasized, especially in locations with significant
renewable energy industry in Pakistan. The worst of these is renewable energy, so that new power plants can be
the circular debt problem, which has been accruing over the connected without delays. Tax incentives on manufacturing
years due to inefficiencies, losses, and late payments, now solar panels, mounting structures, and energy storage
reaching approximately PKR 2.3 trillion. Any doubt about devices in the country can reduce reliance on imported
paying the power producers leads banks to be hesitant, and goods and increase domestic manufacturing.
investors will not be willing to put their money into power Stability in regulations is necessary, as it will help investors
producers at will. The capacity to add new solar and wind commit to long-term projects. Large infrastructure projects
power is also limited by the transmission infrastructure. For would help diversify the source of funds by promoting the
instance, numerous wind initiatives in Sindh cannot be use of green Sukuk. The adoption of solar rooftops can be
linked to the grid unless transmission lines are built or new expedited at the household and commercial levels through a
tracks are constructed, despite the additional 50,000 MW of national-level program, decreasing reliance on costly grid
solar potential and more than 60,000 MW of wind potential power, which will contribute to SDG 1. By motivating banks
present in Pakistan, which cannot be absorbed into the and businesses to incorporate climate-risk evaluations, the
current grid capacity. Another risk is policy inconsistency. financial flows of Pakistan will align with SDG 17 and SDG 12
Changes in net metering policies, tariff adjustments, and (responsible consumption and production).
delays in competitive bidding are sources of uncertainty in The Pakistani crossroad is promising. Renewable energy can
the investment environment. Massive upfront costs of be a source of sustainable development in the country
rooftop solar panels continue to be an issue for families and through a clean energy transition with more than 10,600 MW
small businesses despite the long-term benefits. The cost of of hydropower, close to 2,000 MW of wind power, and over
projects and discouragement of investors are also caused by 2,100 MW of combined solar capacity from large and small
delays in the approval process, multiplication of regulations, systems. Renewable energy has the potential to enhance
and bureaucracy. Lack of local manufacturing of solar panels, economic stability, reduce poverty through lower domestic
inverters, wind turbines, and batteries means that Pakistan is energy expenditure, and provide thousands of green jobs.
highly dependent on imports, which exposes it to fluctuating
exchange rates, further deteriorating investor confidence Through better financing frameworks, investment in grid
and slowing down the implementation of renewable energy. modernization, and regulatory harmonization, Pakistan will
be able to transform its power sector and achieve its SDG
Nevertheless, the potential of the renewable energy future of obligations, specifically SDG 1, SDG 7, SDG 9, SDG 13, and
Pakistan is massive despite these challenges. The need to SDG 17. If these measures are adopted, renewable energy
solarize government buildings, including hospitals, schools, investment will become one of the pillars of the economic
and government offices, is increasingly being demanded, and environmental future of Pakistan.
which can save electricity bills and enable governments to About the Author: Dr. Shoaib Ahmed Khatri is an energy systems
allocate money toward societal welfare. Solar rooftop researcher and Assistant Professor at MUET, whose work focuses on
systems are gaining popularity with households and renewable energy modeling, financing frameworks, and policy
industries as a means of saving on electricity costs and reforms that support Pakistan’s clean energy transition. His research
enjoying more control over energy use. With the increase in integrates techno-economic analysis, investment planning, and
the number of electric vehicles, solar-powered EV charging sustainability principles to advance climate-aligned development
and ESG-driven energy solutions.
68 ICMA’s Chartered Management Accountant, Nov-Dec 2025