The solar industry in Pakistan is facing a potential setback as the government considers a hike in taxes and duties on renewable energy products in its upcoming budget. The Pakistan Solar Association (PSA) has launched a campaign called 'Stop the Sun Tax' to protest this proposed increase and advocate for the abolition of customs duties on batteries and inverters. This move comes at a critical time when the country is rapidly expanding its solar energy capacity and aims to reduce its reliance on fossil fuel imports.
The PSA's concerns are well-founded. The current 10% general sales tax (GST) on solar panels is already a burden, and the proposed hike to 18% would significantly impact the industry. This, coupled with existing import duties on solar and battery storage equipment, is hindering the electrification process in Pakistan. The association argues that the country should be prioritizing the reduction of fossil fuel imports, and higher taxes on renewable energy products go against this goal.
The PSA has three key demands. Firstly, they want the government to abolish the GST on solar panels and inverters, recognizing the importance of keeping costs competitive in the renewable energy market. Secondly, they call for the removal of import duties on batteries and inverters, unless it is part of a strategic initiative to support local manufacturing. Lastly, the association seeks more stability in the tax regime for solar and battery storage, ensuring a predictable environment for investors and businesses.
The PSA's President, Waqas Moosa, is leading the charge through various channels. He is engaging directly with the government and regulators, reaching out to the business community via industry associations, and collaborating with non-government organizations and think tanks that share similar objectives. Moosa emphasizes the need for a unified strategy and the recognition of a battery energy storage system (BESS) emergency in Pakistan, highlighting the willingness of international suppliers to support deployment.
One of the critical factors for attracting more investment in battery storage is addressing key questions. Moosa suggests that Pakistan must answer four essential questions: project siting, technical specifications, tariff compensation, and financing. He emphasizes the need for simultaneous work on these areas and aligning policies by the end of 2026. While the PSA has made some progress, there is still a significant amount of work to be done, and the association hopes for collaboration from partners to achieve a unified strategy.
Despite the challenges, Pakistan's solar adoption has been impressive. As of September 2025, over 50 GW of modules had been imported, with 6.1 GW installed through net metering, between 16.5 GW and 26.4 GW deployed behind the meter, and 780 MW in utility-scale projects. However, the country's energy regulator and government have faced turmoil due to policy changes, including a controversial attempt to retroactively adjust net metering rates, which sparked public outrage and led to intervention from the Prime Minister.
The budget for the next financial year is yet to be finalized, and the solar industry's campaign continues. The outcome of this budget will significantly impact the future of Pakistan's renewable energy sector, and the industry's efforts to 'Stop the Sun Tax' are a testament to the importance of stable and supportive policies in the energy transition.
