ISLAMABAD: China’s AIKO, a leading clean energy technology company, has signed an agreement with the provincial government of the Pakistani province of Punjab to set up a solar panel manufacturing and assembly plant, Radio Pakistan reported on Monday.

Pakistan imports most of its solar panels from China. The country’s demand for solar energy has been rising in recent years as both residences and businesses increasingly recognize solar power as a reliable and cost-efficient source of electricity.

Currently, only 5.4 percent of Pakistan’s installed power generation capacity of 39,772 megawatts comes from renewables like wind, solar and biomass, while fossil fuels still make up 63 percent of the fuel mix, followed by hydropower at 25 percent, according to the National Electric Power Regulatory Authority (NEPRA).

“Punjab’s Minister of Industries and Commerce, Chaudhry Shafay Hussain and the Chinese company AIKO’s South Pacific Region President Alex Heng signed the agreement,” Radio Pakistan said, reporting on the deal to set up the solar panel manufacturing and assembly plant in Punjab.

“The provincial minister highlighted that AIKO’s solar panel factory will cater to the local market and also contribute to exports.”

Hussain said the provincial government was also planning to collaborate with energy companies to convert 7,000 tube wells to solar energy and provide solar panels to low-income households.

Pakistan’s Alternate Energy Development Board last year finalized a 10-year policy for the manufacturing of solar panels and allied equipment. The government hopes, with Chinese help, to install about 9.7GW of renewable energy power generation systems across Pakistan by 2030.