How rising power costs, energy reforms, and rooftop solar are reshaping Pakistan’s electricity landscape



Pakistan’s electricity sector is undergoing a quiet but transformative shift. For the first time in decades, demand for grid-supplied electricity is declining, while rooftop solar adoption through net-metering has surged nearly fourfold. This trend marks a fundamental change in how households, businesses, and industries source their power, with far-reaching implications for the national grid, energy policy, and economic stability.

A Surprising Decline in Grid Electricity Demand

Historically, Pakistan’s electricity demand followed a steady upward trajectory, driven by population growth, urbanization, and industrial expansion. However, recent data and utility reports indicate a notable slowdown, and in some areas an outright decline, in grid electricity consumption.

Several factors are contributing to this shift. One of the most significant is the sharp rise in electricity tariffs over the past few years. As fuel costs increased and subsidies were reduced under energy sector reforms, consumers began facing monthly bills that many found unsustainable. For middle-class households and small businesses, electricity became one of the largest recurring expenses, prompting them to seek alternatives.

Additionally, energy conservation measures and reduced industrial activity during economic slowdowns have also played a role. Industries facing high power tariffs have either scaled back operations or invested in captive power solutions, reducing their reliance on the national grid.

Solar Net-Metering: A Fourfold Surge

While grid demand falls, solar net-metering has emerged as a powerful countertrend. Net-metering allows consumers with rooftop solar systems to generate their own electricity and sell excess power back to the grid. Over a relatively short period, the number of net-metered connections and installed capacity has increased nearly four times.

This growth reflects a dramatic shift in consumer behavior. Rooftop solar, once considered expensive and niche, has become financially attractive. The global decline in solar panel prices, combined with rising grid tariffs, has shortened payback periods for solar investments. In many cases, households can recover installation costs within three to five years, after which electricity becomes significantly cheaper.

Urban centers such as Lahore, Karachi, Islamabad, and Faisalabad are leading this transition, with residential homes, commercial plazas, and factories installing solar systems at record rates. Even rural and semi-urban areas are joining in, particularly where grid supply is unreliable or prone to load-shedding.

Why Consumers Are Choosing Solar

The appeal of solar energy in Pakistan goes beyond cost savings. Reliability is a major factor. Frequent power outages and voltage fluctuations have long frustrated consumers. Solar systems, especially when paired with inverters or batteries, offer greater control and stability.

Environmental awareness is also growing. As climate change impacts become more visible through heatwaves, floods, and water stress, many Pakistanis are increasingly conscious of clean energy solutions. Solar power offers a way to reduce carbon emissions while meeting everyday energy needs.

Moreover, net-metering policies have encouraged adoption by allowing consumers to offset their bills rather than waste excess generation. For many, watching their electricity meter run backward has become a powerful incentive.

Impact on the National Grid and Power Sector

The rapid rise of rooftop solar presents both opportunities and challenges for Pakistan’s power sector. On the positive side, distributed generation reduces pressure on the national grid during peak daylight hours. It can lower fuel imports, cut transmission losses, and reduce dependence on expensive thermal power plants.

However, declining grid demand also creates financial stress for power distribution companies. Fixed costs associated with power generation, transmission, and capacity payments remain largely unchanged, even as electricity sales fall. This imbalance can worsen the so-called “circular debt” problem, where unpaid bills and subsidies create a chain of financial shortfalls across the energy sector.

There are also technical challenges. Managing a grid with a high share of rooftop solar requires better forecasting, smarter meters, and upgraded infrastructure to handle bidirectional power flows. Without proper planning, voltage instability and system inefficiencies can arise.

Policy Questions and the Road Ahead

The surge in net-metering has sparked debate among policymakers. Some argue that generous net-metering rates shift costs onto non-solar consumers, many of whom cannot afford rooftop installations. Others counter that solar adoption should be encouraged as part of a long-term transition to sustainable energy.

Going forward, Pakistan faces critical choices. Policymakers must strike a balance between promoting renewable energy and ensuring the financial viability of the grid. This could involve revisiting net-metering tariffs, investing in grid modernization, and introducing time-of-use pricing to better reflect actual supply and demand.

At the same time, expanding access to affordable solar financing could help lower-income households participate in the energy transition, making it more equitable.

A Turning Point for Pakistan’s Energy Future

The decline in grid electricity demand alongside a fourfold increase in solar net-metering signals a turning point for Pakistan. Consumers are no longer passive recipients of electricity; they are becoming producers, investors, and decision-makers in the energy ecosystem.

If managed wisely, this shift could reduce energy costs, improve reliability, and move Pakistan closer to a cleaner, more resilient power system. If mishandled, it risks deepening financial strains and creating new inequalities. What is clear is that Pakistan’s energy landscape is changing rapidly, and solar power is at the heart of that transformation.