According to a report by L The Express Tribune, Pakistan has halted plans for a $300 million floating solar project aimed at generating 300 megawatts of electricity, citing the need to re-evaluate the country’s long-term energy strategy. The project, which had the potential to significantly reduce reliance on costly thermal power, was postponed after the Power Department excluded it from the 2024-2034 Indicative Generation Capacity Expansion Plan (IGCEP).
The government confirmed the decision on Saturday, noting that the World Bank had been asked to halt preparations for the project. The solar power plant was originally scheduled to be installed on water bodies at the Tarbela and Ghazi Barotha hydropower projects, and was scheduled to be connected to the national grid by 2027, with power generation expected to begin by 2026.
Feasibility studies conducted in 2021 highlighted the project’s advantages. The solar power plant did not need new transmission lines due to its proximity to existing hydropower infrastructure. It was expected that the electricity generated by the project would be cheaper than the operating costs of 86 existing thermal plants.
Internal evaluations revealed that the floating solar project could have saved more than $72 million annually in foreign exchange and recovered its initial investment within five years. With an economic rate of return exceeding 42% without environmental benefits – and 51% when taking into account reduced emissions – the project provided both economic and environmental benefits.
However, the Energy Department expressed concerns about the project’s lack of a confirmed power buyer. Official documents cited challenges in aligning the project with existing power purchase agreements administered by the Central Power Purchase Guarantee Agency (CPPA-G).
Critics have suggested that vested interests in thermal fuel imports may have influenced the decision to postpone the project. Despite the promise of cost reductions and environmental benefits, the Department of Energy decided not to recommend a loan to finance the project.
Ironically, just a day before the decision, the Water and Power Development Authority (WAPDA) informed the government that the cost of the project had been reduced to $238 million. WAPDA noted that extending the life of the project to 30 years could lower the tariff to 2.98 US cents per unit, making it the most cost-effective power generation option in the region.
The decision to halt the project could hamper Pakistan’s efforts to expand its renewable energy portfolio. The floating solar power plant was expected to pave the way for shutting down inefficient thermal plants, reducing overall generation costs, and alleviating the country’s energy crisis.
World Bank data also indicates a persistent gap between electricity supply and demand in Pakistan. Although installed generation capacity often tops 43,700 MW, operational challenges – such as aging thermal plants and seasonal hydropower fluctuations – mean the country struggles to meet peak summer demand of 30,000 MW.
The Ministry of Energy defended the decision, noting the need to re-evaluate energy needs amid major sectoral transformations. A company spokesperson highlighted ongoing efforts to update IGCEP to reflect changing market dynamics, including seasonal changes in demand and the rise of off-grid power generation.
The spokesman stressed that stopping the project temporarily does not rule out its revival in the future. “Good technical preparation for projects is never wasted,” the ministry noted, adding that the government could rearrange project priorities once the formalities are completed.
This decision reflects previous instances, such as the post-2022 floods, when development projects were temporarily halted to accommodate urgent reconstruction efforts. The Ministry stressed that the World Bank continues to support the renewable energy transition in Pakistan, and that the floating solar project remains a viable option in the future.