Key Highlights

Pakistan’s power sector is undergoing a structural transition where electrification is accelerating through distributed solar, even as grid-based indicators suggest stagnation. In FY25, grid electricity demand grew just 1.7% YoY despite 5.3% consumer growth, reflecting a clear shift toward decentralized energy adoption. Distributed solar, equivalent to nearly 46% of grid electricity in FY25, has begun reshaping demand patterns, shifting peak loads and reducing reliance on centralized generation. However, legacy system design hasn’t adapted: transmission bottlenecks, underutilized capacity, and a volumetric revenue model continue to drive inefficiencies and rising costs. As a result, Pakistan’s power system is no longer generation-constrained, but structurally misaligned, requiring a transition toward flexibility, grid enhancement, and planning frameworks that account for a bi-directional, decentralized energy system.