ENERGY PARADOX
Pakistan is now producing more electricity than it consumes. As of March 2025, the country’s installed power generation capacity stands at 46,605MW, a figure that far exceeds actual consumption needs.
During the first nine months of FY2025, national generation reached 90,145GWh, while consumption lagged at 80,111GWh, creating a surplus of nearly 10,000GWh. Yet, despite this surplus, many regions continue to face scheduled and unscheduled power outages -- a frustrating contradiction that reflects the state of Pakistan’s transmission and distribution infrastructure.
The seasonal mismatch between supply and demand is even more revealing. While summer demand peaks at around 32,000MW, winter consumption drops to 12,000–13,000MW, leaving a glut of unutilised power ranging from 7,000MW to 14,000MW, depending on the time of year. Instead of serving consumers, this excess capacity results in capacity payments -- fixed charges paid to power producers regardless of usage. These payments now burden consumers with electricity costs exceeding Rs15 per unit, even for electricity they do not receive
In response, the government has taken an unconventional approach by earmarking 2,000MW of surplus power for cryptocurrency mining and artificial intelligence (AI) data centres, in an effort to monetise unused capacity. Such innovative measures offer only a temporary solution; the real challenge -- and opportunity -- lies in modernising the national grid. The objective should be to reduce transmission and distribution losses, improve equity in supply and create a flexible infrastructure that can efficiently integrate renewable energy in the years ahead.
With surplus generation already available, the wiser course of action is to focus on resilience, reform and reinvestment -- stabilising what exists before building what is not yet necessary.
Pakistan’s distribution companies (DISCOs) can transform surplus capacity into actual service delivery. Rather than acting as passive transmitters of electricity, DISCOs must evolve into active agents of efficiency and accountability. This includes investing in grid automation, reducing transmission and distribution losses -- which hover around 17–18 per cent nationally -- and improving bill recovery through smart metering and targeted customer engagement. By upgrading their technical infrastructure and reforming governance practices, DISCOs can ensure that electricity reaches end-users reliably and affordably.
Decentralised planning and performance-based management can enable DISCOs to align their operations with local demand profiles and renewable integration targets. If empowered and held accountable, DISCOs could shift from being a bottleneck to becoming a bridge between surplus generation and sustainable consumption -- a critical link in Pakistan’s pursuit of energy resilience.
Power sector reforms and infrastructure upgrades are needed to reduce the cost of doing business and attract long-term investment, particularly in energy-intensive sectors that depend on consistency and affordability
Power sector reforms and infrastructure upgrades are needed to reduce the cost of doing business and attract long-term investment, particularly in energy-intensive sectors that depend on consistency and affordability
While solar energy is important for Pakistan’s long-term sustainability, a temporary pause or recalibration in its rapid expansion may be necessary to ensure the energy transition is both effective and economically viable. In recent years, Pakistan has witnessed a notable increase in solar adoption, particularly through utility-scale projects and rooftop solar installations by households and businesses seeking relief from rising energy costs. Rooftop solar, in particular, empowers consumers to generate their electricity and reduce dependence on the national grid, but it also introduces new technical and financial challenges for power utilities.
Adding more solar to the grid without addressing structural inefficiencies could worsen this financial strain. Pakistan’s existing transmission and distribution infrastructure is not equipped to handle the variability and decentralised nature of solar power, particularly in the absence of energy storage and smart grid systems.
DISCOs are also struggling with revenue losses and lack the readiness to integrate large-scale rooftop solar through net metering. Until grid stability, pricing reforms and institutional capacity catch up, an unrestrained push for solar could create more challenges than solutions. Therefore, the shift to solar should proceed with caution, guided by system reforms and infrastructure upgrades to ensure it delivers long-term, equitable benefits.
Ultimately, it is structural reform that holds the key to a stable and sustainable energy future for Pakistan. By modernising the grid, empowering DISCOs, reducing inefficiencies and designing fair and forward-looking tariff structures, Pakistan can transform its surplus into a strategic asset. System upgrades such as smart grids, energy storage and real-time demand management will not only improve reliability but also create the flexibility required to integrate renewable energy sources in the future safely.
To turn surplus generation into a true national advantage, Pakistan must rethink its power sector not as a production problem but as a delivery and governance challenge. Investing in smarter infrastructure, empowering DISCOs through decentralised reform and phasing in renewable energy with grid readiness in mind can pave the way for a more resilient and inclusive energy system. Without these foundational changes, the paradox of power abundance and power outages will persist -- eroding public trust and stalling economic progress. The path ahead demands not more megawatts, but smarter megawatts that are delivered efficiently, equitably and sustainably.
Power sector reforms and infrastructure upgrades are needed to reduce the cost of doing business and attract long-term investment, particularly in energy-intensive sectors that depend on consistency and affordability. A reformed and responsive power infrastructure will not just stabilise the present; it will energise the economy for decades to come, making Pakistan more resilient, competitive and climate-ready in a rapidly evolving global landscape.
The writer has served at the Energy Conservation Fund, NEECA. He can be reached at: energyexpert.pkgmail.com