Electricity demand, by its very nature, almost never goes backwards. Short-lived dips may occur in extraordinary times—pandemics, wars, or recessions—but over the long run, consumption only climbs.
Pakistan’s official power generation numbers, however, paint an unusual picture: grid generation has stagnated for years, even as installed capacity has multiplied.
July 2025 (FY26) tells the story again. Power generation slipped to around 13.6 billion units—the lowest July output since FY19.
On a 12-month moving average, generation is stuck at 10.2 billion units, the same level seen more than four years ago. National consumption has not declined—it has simply shifted away from the grid. Mind you, this is happening at a time when captive industrial consumers are fast transitioning to the grid.
The solar rush explains much of this gap. Rooftop solar imports worth billions of dollars have flowed through official channels in recent years, yet policymakers never adjusted their planning to account for the breakneck pace of adoption.
The result: while households and businesses keep generating more of their own electricity behind the meter, the centralized grid is left carrying the burden of ever-rising fixed costs. Capacity payments that worked out to Rs7 per unit in FY20 now translate to over Rs17 per unit in FY25 for nearly the same level of generation.
Industrial demand offers a rare bright spot. NEPRA data shows that the transition of industrial captive users back to the grid accelerated in 4QFY25, translating into a nearly 50 percent year-on-year jump in industrial sales during the quarter. But the overall sales picture is far less rosy: total sales for 4QFY25 grew by just 6 percent year-on-year.
Given industry’s 20 percent share typically during fourth quarters, this implies that domestic and commercial sales plunged by an estimated 13 percent. The kicker? Effective domestic tariffs were lower than last year, yet households who have shifted to rooftop solar or net metering show no signs of returning to the grid.
The July 2025 numbers reinforce this trend. The transition of captive industrial users is only expected to have gained momentum, as higher gas and LNG prices make captive power increasingly unviable.
Industrial sales will likely form an even greater chunk of total sales going forward. But the broader truth remains unchanged: domestic and commercial users are steadily migrating off-grid, underpinned by a lucrative net metering regime. The sight of industrial consumption overtaking domestic in the national grid is not farfetched anymore.
Without a serious course correction—reviving demand through affordable tariffs and reforming net metering to balance fairness with sustainability—the grid risks becoming a massive drag on the sector. Consumption is rising, but the centralized system is being left behind.