Solar uptake, slowdown stall FY25 power growth

KARACHI: Power generation remained largely flat in the fiscal year 2024-25, as rising solar adoption and reduced industrial activity continued to suppress on-grid electricity demand.

Official data shows total power generation reached 127,160 GWh during FY25, almost unchanged from the 127,165 GWh recorded in the previous fiscal year.

In June, power generation increased by 2.0 per cent compared to the same month last year and rose by eight percent on a month-on-month basis.

The average fuel cost of power generation fell by 2.0 per cent over the year. In June alone, it declined by 9.0 percent year-on-year (YoY) but was marginally higher -- by 1.0 per cent -- compared to May.

“Solarisation has reduced the on-grid electricity demand in the country, as it has seen substantial growth,” said Head of Research at Sherman Securities Farhan Mahmood. He added that industrial users had increasingly shifted to self-generation due to lower coal and oil prices, further reducing grid dependence.

He noted, however, that electricity consumers continued to bear the burden of low demand through capacity payments, which ranged between Rs12 and Rs15 per unit during FY25.

Hydropower generation remained steady during the fiscal year. Generation from regasified liquefied natural gas (RLNG) fell by 6.0 per cent, while power from local coal increased by two percent. Generation from imported coal rose sharply by 80 per cent, but nuclear power declined by three percent. Both gas and wind-based generation dropped by 2.0 per cent each, while solar power increased by 15 per cent. Electricity generation from furnace oil plunged by 79 per cent.

In terms of cost, nuclear power became 35 per cent more expensive, while the cost of local coal-based generation rose by 10 per cent. Generation from furnace oil became 12 per cent cheaper, electricity from imported coal declined in cost by 5.0 per cent, and RLNG power generation cost dropped by 1.0 per cent.

Hydropower retained its position as the largest contributor to the national energy mix, accounting for 31.4 per cent of total power generation. It was followed by nuclear at 17.7 percent and RLNG at 17.5 per cent. Local coal contributed 12.2 per cent, natural gas 8.8 per cent, and imported coal 7.1 per cent over the course of the year.