Solarization, industrial slowdown slash Pakistan’s power demand by a tenth

ISLAMABAD: Electricity demand across Pakistan plunged by over a tenth during the first quarter (July-Sept) of the current fiscal year, as industries and agricultural users increasingly switched to solar power.

Data presented during a National Electric Power Regulatory Authority (Nepra) hearing on Wednesday revealed that electricity purchases by the country’s power distribution companies (Discos) dropped by 10.85 percent, from the reference demand of 41,762 gigawatt-hours (GWh) to 37,232 GWh now.

This decline, which varied from 4.02 per cent to 18.99 per cent across the ten state-run Discos, has exacerbated costs for on-grid consumers. Nepra officials attributed the trend to the rapid adoption of solar technology by major industries and agricultural tubewell operators, alongside a slowdown in industrial activity.

The Nepra hearing, held on Monday, addressed a request by Discos to recover Rs6.48 billion from consumers under the July-September quarterly adjustment mechanism. During the session, Member Maqsood Anwar Khan explained that the drop in electricity consumption deprived consumers of potential cost savings amounting to Rs50-60 billion. “Discos are resorting to load-shedding to minimize losses, which is reducing electricity usage,” he noted.

After hearing arguments, Nepra reserved its decision on the adjustment request which, if approved, will impose additional charges on most electricity users, excluding lifeline customers.

The decline in power purchases was most pronounced in Quetta Electric Supply Company (QESCO) and Multan Electric Power Company (MEPCO), which reported reductions of 19 per cent and 15.76 per cent, respectively. Other major distributors also saw significant drops, with Faisalabad Electric Supply Company (FESCO) and Peshawar Electric Supply Company (PESCO) reporting decreases of 14.48 per cent each, while Lahore Electric Supply Company (LESCO) and Islamabad Electric Supply Company (IESCO) recorded smaller declines of 8.4 per cent and 4.02 per cent, respectively.

During the public hearing when the Fesco official was asked about the reasons, he linked the decline to a 50 per cent reduction in agricultural tubewell demand and a sharp downturn in industrial consumption. Categories B3 and B4, which include large-scale industrial users, saw demand drop by 28 per cent and 58 per cent, respectively, amid textile unit closures in its jurisdiction. Similarly, MEPCO reported a 45 per cent reduction in tubewell usage and a 17 per cent decline in industrial consumption, as solar adoption and economic challenges led many businesses to cut back or shut down entirely.

The decline in demand presents significant financial challenges for Discos, which rely on steady consumption to maintain fiscal stability. Experts warn that unless costs are reduced and service reliability improves, the transition to solar power could accelerate further.

Consumers are already grappling with rising costs, including an additional Rs1.74 per unit charge under a previous quarterly adjustment that ends this month. NEPRA is now considering further adjustments ranging from Rs0.09 to Rs0.36 per unit for the next quarter.

Adding to the financial burden is the continued shutdown of the Neelum-Jhelum power project, which has strained resources and led to increased costs for consumers, the authority noted. He emphasized the importance of strategic planning to address these issues, suggesting that advancements in solar and battery technologies could reshape the energy sector in the coming years.

Nepra Chairman Waseem Mukhtar proposed commissioning a study, potentially through the Lahore University of Management Sciences (LUMS), to forecast the impact of declining solar prices on the industry. While Nepra Member Rafiq Sheikh stressed the need for governance reforms, including privatizing and restructuring Discos into smaller units, he cautioned that operational improvements are equally critical. “The current structure is unsustainable; these companies cannot operate under such conditions,” he said. Sheikh dismissed the idea that solar alone could substantially lower grid electricity demand, arguing instead for broader reforms to address systemic inefficiencies.

Nepra’s decision on the quarterly adjustment is expected to have far-reaching implications for both power consumers and the financial health of the country’s energy sector. The outcome will also reflect how well Pakistan’s energy regulators and distributors adapt to the shifting dynamics of solarization and industrial contraction.