Proficiency in SQL is vital for Power BI developers because it enables them to query, filter, and manipulate data from relational databases. SQL allows developers to optimize data retrieval processes, write complex queries, and manage large datasets effectively. When connecting Power BI to external data sources, SQL skills ensure that developers can pull the right data and structure it correctly for reporting. Understanding SQL enhances data integration and helps developers work more efficiently with backend systems, improving the overall performance of Power BI solutions.