South Asia’s Industrial Revolution is switching off gas

By David Fickling

OMER ASHRAF isn’t losing any sleep over the impact of the Iran conflict on his fleet of energy-hungry cement plants.

The Chief Financial Officer of Pakistan’s Fauji Cement Co. installed its first solar array in 2019 at Jhang Bhatar, about 50 kilometers west of the capital Islamabad. There are now 69 megawatts (MW) of panels across the company’s five main sites, at least twice what Tesla, Inc. appears to have on the rooftops of its gigafactories in Nevada and Texas.* They contribute about 23% of the company’s electricity, with a further 35% coming from recovering waste heat from its coal-fired clinker kilns.

The cost is just five to six rupees (about two cents) per kilowatt hour, around a fifth of grid prices, Ashraf told me. On-site gas-fired generators are available as back-up, but are barely used these days, given the cheaper options. There won’t be a major impact from the situation in the Strait of Hormuz, he said.

He’s not alone. In Pakistan and India, once key customers for the Persian Gulf’s liquefied natural gas exports, energy-hungry industries have been rapidly shifting away from both gas and grid power to make use of cheap, abundant solar energy.

Bangladesh, for years South Asia’s economic success story, made the opposite bet. That was the wrong decision. With the world’s largest LNG terminal, Qatar’s Ras Laffan, shut down and suffering extensive damage from Iranian attacks this week, a fifth of global supplies are now offline.

Solar’s advantages are most apparent in the textile business. Since the Industrial Revolution spread through England’s cotton mills in the 18^th century, garment factories have been many countries’ first step toward development. Clean energy is speeding the process.

India’s apparel plants now derive about from renewables, according to a recent study by Moody’s Corp. affiliate ICRA ESG Ratings. Large factory roofs make installation of solar arrays straightforward.

Plenty are already surging ahead of rich-world companies in their clean power ambitions. Pakistan’s Nishat Mills Ltd. and Interloop Ltd., which supply Gap, Inc. and Hennes & Mauritz AB, respectively have 35 MW and 25 MW of photovoltaic panels, comfortably on a par with Tesla. Bengaluru-based Gokaldas Exports Ltd., whose customers include Adidas AG, from solar, biomass and other clean sources.

Green motivations aren’t completely absent. Fashion companies have for many years been under pressure to clean up their supply chains. That trend is being accelerated by the European Union’s Carbon Border Adjustment Mechanism, which came into force this year and adds a sort of tariff onto imports equivalent to the carbon price they’d have paid if manufactured locally. Exporters who build out renewables will spare themselves those levies.

But the payoff in power bills is sufficient to justify the switch. Solar provided electricity equivalent to in the year through March 2024, the most recent available data, according to Renewables First, a pro-energy transition group. This has left the country with less need for imported LNG.

About 35 gas shipments are now being diverted every year because they’re not needed, said a recent report by AKD Securities Ltd., equivalent to about a quarter of typical import volumes. This has already spared Pakistan on imported LNG and oil and could save a further $7 billion this year, wrote Lauri Myllyvirta, co-founder of the Center for Research on Energy and Clean Air.

Countries that threw in their lot with LNG are in a tighter spot. Bangladesh, whose 4,000-odd garment factories are key suppliers for the global fast-fashion industry, has been far slower to switch to renewables. Just (GW) of solar has been connected nationwide, compared to as much as . Import tariffs for photovoltaic equipment of deter businesses from deploying rooftop power. While Pakistan’s LNG imports have shrunk since the Ukraine war, Bangladesh’s have almost doubled.

With the crisis in Hormuz and diesel for back-up generators, the country’s utilities are now scrambling to get their hands on coal, which as gas on the grid. Those shortages, combined with the effect of energy-related inflation on garment worker wages, will erode Bangladesh’s longstanding cost advantage over rival apparel factories elsewhere in the region.

It’s a far cry from the banal truisms used to market gas to emerging economies. As missiles flew across the Persian Gulf and buyers scratched around for alternative supplies, Shell Plc’s hailed the fuel as a “stabilizing force in the energy system.” About 70% of demand growth out to 2040 will come from Asia, Shell wrote, “because it is versatile, flexible, and reliable.”

That’s a remarkable assertion amidst the chaos of 2026. In future, gas producers are going to need more than platitudes to convince customers they’re worth the risk. n

BLOOMBERG OPINION

*Tesla doesn’t disclose figures for its rooftop generation. We estimated a figure of about 13 megawatts at each facility, based on 2026 satellite photos of the plants.