An 86% expansion of rooftop solar capacity in India last year, up from 1.7 GW in 2023, was the result of a surge in residential installations. This was in response to the PM Surya Ghar residential solar programme launched by Prime Minister Narendra Modi in February 2024. According to the latest analysis from Mercom India, residential rooftop solar constituted 74% of the 3.2 GW increase in capacity. The industrial, commercial and government sectors accounted for a further 19%, 6% and 1%.

Noting the ‘overwhelming response’ to the PM Surya Ghar programme was ‘testament to growing homeowner interest in solar adoption’ was Raj Prabhu, CEO of Mercom Capital Group. But he went on to warn that ‘long-term success will depend on stabilising module costs and streamlining supply constraints to support both residential and C&I [commercial and industrial] solar expansion’.

Geographically, the western Indian states of Gujarat, Maharashtra and Kerala led the way in rooftop solar capacity additions, accounting for almost 36%, 20% and 9% respectively. The year also saw a significant increase in rooftop solar tenders, totalling 2.8 GW, up nearly 136% year-on-year. Of these tenders, more than 42% were aimed at adding rooftop solar systems to government buildings across India, says the report.

The 4Q2024 was particularly noteworthy, with 1.3 GW of rooftop solar added, says Mercom India. These figures represented a 64% increase compared to the 791.1 MW installed in 3Q2024, and a 219% rise over the 406 MW in 4Q2023. However, the average cost of rooftop solar systems rose by over 5% quarter-on-quarter and more than 13% year-on-year, notes the report.

As of December 2024, India’s cumulative rooftop solar installations reached 13.7 GW. Gujarat remained the leading state for rooftop installations, accounting for over 29% of the total, followed by Maharashtra and Rajasthan with around 15% and 7% respectively. The top 10 states collectively accounted for over 80% of the cumulative rooftop solar installations, concludes Mercom India.

Challenges in Pakistan’s energy investment landscape

While India celebrates a popular solar energy adoption campaign, Pakistan faces a starkly different scenario. Despite government efforts to attract foreign capital and mitigate risks for new projects, investor confidence in the country’s energy sector remains low, according to the Institute for Energy Economics and Financial Analysis (IEEFA).  

In January 2024, a 600 MW solar project in Muzaffargarh failed to attract any bids, with developers citing Pakistan’s high risk profile and political instability as major deterrents. Even China, Pakistan’s long-standing ally and the largest investor in its energy sector, showed no interest.

China invested nearly $68bn in Pakistan’s economy from 2005 to 2024, with energy projects accounting for 74% of this investment, reports IEEFA. The China Pakistan Economic Corridor (CPEC), part of President Xi Jinping’s Belt and Road Initiative, peaked in 2015 but has since faced numerous challenges. These include security concerns, lengthy permitting processes, frequent regulatory changes and the accumulation of large arrears for CPEC power plants. With an energy portfolio worth $21.3bn, CPEC’s initial phase focused heavily on coal power, contributing 8 GW out of the 13 GW of added capacity, while solar and wind energy combined contributed just 1.4 GW.

As CPEC enters its second phase, unresolved issues from the first phase are hindering progress, suggests IEEFA. In 2021, President Xi committed to halting greenfield investments in overseas coal projects, creating an opportunity for cleaner energy development. However, new Chinese investments in Pakistan have been minimal. Since the COVID-19 pandemic, only $4.86bn of Chinese capital has been invested in Pakistan’s energy sector, with $3.7bn allocated to a new nuclear reactor at the Chashma nuclear power plant in the province of Punjab, which likely will require significantly more funding over time, notes IEEFA.

China has been diversifying its investment interests in recent years, reallocating capital from Pakistan to regions such as the Middle East and Africa. According to the China Global Investment Tracker, energy investments between 2021 and 2024 constituted just 34% of China’s global investment portfolio, down from 40–50% in previous years. China is now prioritising investments in the metals and chemical industries, particularly in countries like Indonesia, which offer regulatory stability and value-add manufacturing opportunities, reports IEEFA.

In the Middle East, China has deepened economic ties with Gulf countries seeking to diversify beyond oil-based infrastructure. Countries like Iraq and Iran have also benefitted from Chinese investments in port development and energy infrastructure. South-east Asia, with its vast mineral reserves, has attracted Chinese capital through policies that promote local value-added manufacturing. Indonesia’s ban on unprocessed mineral exports has incentivised Chinese investment in nickel smelting, crucial for global supply chains in critical minerals.

Pakistan has attempted to attract Chinese investors with tax breaks and special economic zones (SEZs), but deeper issues persist, says IEEFA. Industrial stagnation, high electricity and gas costs, and weak infrastructure continue to hinder competitiveness. The path forward for Pakistan’s energy sector requires addressing these fundamental challenges to regain investor confidence and secure sustainable development, the report concludes.