Stakeholders urge tax cut on lithium batteries to boost renewable energy in Pakistan

enewable energy stakeholders in Pakistan have called on the Engineering Development Board to reduce taxes on lithium battery cells, arguing that high duties are slowing down domestic production and hindering the country’s transition toward clean energy.

According to a statement issued on Friday, Pakistan Renewable Energy Development Forum Chairman Irfan Allahawala said lithium battery cells are currently taxed at around 50%, making local battery assembly less viable and discouraging investment in the sector. He warned that elevated costs are creating a significant barrier for renewable energy adoption across the country.

Allahawala stressed the need for a “level playing field” to attract investors and promote local manufacturing of energy storage systems. He added that reducing taxes on battery components would help lower overall system costs and encourage wider adoption of solar and other renewable energy solutions.

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He highlighted that Pakistan imported approximately 26,000 megawatts (MW) worth of solar panels between 2022 and 2024, all of which require compatible battery storage systems for efficient use. During the same period, lithium-ion battery imports reached 1.25 gigawatt-hours (GWh) in 2024 and are projected to rise to between 2.5 and 3 GWh in 2025.

Stakeholders argue that high import duties not only increase system costs but also discourage the development of a local value chain for renewable energy storage. They believe that policy support could significantly reduce dependence on imported petroleum products and help lower the country’s import bill.

Industry experts further suggest that a shift toward affordable battery storage is essential for stabilising Pakistan’s energy mix, especially as solar energy adoption continues to grow rapidly in both urban and rural areas.

The appeal reflects broader concerns within the renewable energy sector about policy consistency and the need for incentives to accelerate the country’s transition toward sustainable and cost-effective energy sources.