Solar surge reshapes Pakistan’s power sector: report

KARACHI: The Pakistan Electricity Review (PER) 2025 was launched here on Saturday, providing an in-depth analysis of the country’s power sector performance during fiscal year 2024 (FY24), and highlighting the trends, decisions and disruptions that shaped a pivotal year.

Renewables First presented the review, focusing on a deepening crisis: falling demand, soaring capacity payments and an overstretched, inefficient grid.

While many of the sector’s structural challenges persist -- from outdated planning to the mounting circular debt -- 2024 was remarkable for the rapid acceleration of rooftop solar.

Spurred by a record-breaking 16 GW of solar PV imports from China, households and industries nationwide installed thousands of systems in pursuit of cost relief and greater reliability.

As of March 2025, 4.9 GW of net-metered solar capacity had been installed -- a figure that does not include behind-the-meter setups, which remain untracked. It is a quiet revolution, driven not by state policy but by people taking energy into their own hands.

“This wasn’t just another year; it was a shift,” said Manager Data -- Energy and Climate at Renewables First Rabia Babar during the webinar. “Consumers are telling us something, loud and clear: the system is not working for them, so they are building their own.”

However, as more people turn to solar, the national grid is beginning to feel the strain. Transmission bottlenecks remain a major issue, particularly in transferring power from southern generation zones to demand centres in the north. These limitations forced the system operator to rely on expensive RLNG plants, pushing the energy purchase price up to Rs1.3 trillion, with RLNG alone accounting for Rs568 billion -- more than 50 per cent of the total.

One of the most concerning trends is the continued rise in capacity payments: fixed payments made to power producers simply to keep their plants operational, regardless of whether electricity is purchased. These payments rose by 29 per cent in FY23, and again by 46 per cent in FY24, reaching Rs1.9 trillion. The primary cause: underutilised generation capacity, particularly from newly commissioned coal and RLNG plants.

During the panel discussion, the challenges of this new dynamic were brought into focus. The surge in rooftop solar has created momentum -- but not without consequences. Dr Dinita from Ember Asia highlighted the encouraging trend of consumers driving the energy transition but stressed that this bottom-up momentum must be matched by robust top-down planning to ensure long-term sustainability. She noted, “While countries like Thailand and Vietnam are making commendable progress in solar PV adoption, the pace and scale of growth in Pakistan remain unmatched in the region.”

Addressing some of the challenges associated with distributed energy resources (DERs) integration, Ernst Kuneman of Agora Energiewende added that DERs can help defer costly investments. If deployed in a coordinated manner, they can reduce peak demand and help ease grid congestion.

As the Review notes, the electricity sector remains under pressure -- but it is not static. Households are acting. Industries are shifting. And the cracks in the old model are becoming increasingly visible. FY24 may not have fixed the system, but it made clear that change is already under way -- whether the system is ready or not.