ISLAMABAD, October 23, 2025:
Experts have called for the establishment of a regulatory sandbox to reform Pakistan’s power sector subsidy regime by integrating solar energy solutions into residential systems and introducing rationalized tariff structures with built-in social protection mechanisms. The proposed approach aims to create a more sustainable, equitable, and efficient electricity framework for the country.
The recommendations were shared during a policy dialogue organized by the Sustainable Development Policy Institute (SDPI) on Wednesday, coinciding with the launch of a new study titled “Redefining Power Sector Economics: A Regulatory Sandbox for Residential Solar and Industrial Grid Integration.”
The study envisions a transformative model for Pakistan’s power sector by encouraging rooftop solar adoption while realigning subsidies to support low-income consumers and maintain industrial competitiveness.
Moderating the discussion, Zainab Babar, Research Associate at SDPI, noted that Pakistan’s power sector faces severe fiscal and operational challenges. She pointed out that the Tariff Differential Subsidy (TDS) mechanism—originally designed to assist vulnerable households—has evolved into a fiscal burden, leading to inefficient resource allocation and widening the financial deficit in the energy system.
Experts emphasized that a regulatory sandbox—a controlled, pilot framework for testing innovative policies—would allow policymakers to experiment with subsidy reforms and solar integration models in real-time, ensuring that new interventions are both financially viable and socially inclusive.
They concluded that adopting such innovative regulatory approaches could accelerate the country’s clean energy transition, reduce the government’s subsidy load, and strengthen Pakistan’s energy security and climate resilience.
Story by Hamza Habib
