ISLAMABAD: Despite reaching a total installed power generation capacity of 46,605 megawatts in FY2024-25, Pakistan’s electricity consumers remain burdened by steep capacity payments passed on through higher tariffs.

These payments, ranging from Rs12 to Rs15 per unit, are made to power producers regardless of whether electricity is purchased from them, inflating electricity costs even when demand is low.

Experts remain hopeful the burden will ease over time, as the government has terminated multiple Power Purchase Agreements (PPAs) and halted approval of new generation projects.

Rising Capacity, Low Utilisation

The Economic Survey confirms that installed capacity has grown to 46,605MW, up 1.6% from last year.

This includes more than 2,800MW added via solar net metering, reflecting increased adoption of renewable energy by consumers.

The electricity mix now includes hydel (24.4%), thermal (55.7%), nuclear (7.8%), and renewables (12.5%).

However, total power generation during July–March FY25 was 90,145GWh, with consumption lower at 80,111GWh.

Households used nearly half of all electricity generated (49.6%), followed by industry (26.3%) and commercial use (8.6%).

Much of the unused generation stems from Independent Power Producers (IPPs), which still make up nearly half of the installed capacity.

Only about 10,000MW is generated from IPPs during summer, while in winter — when demand drops to around 12,000–13,000MW — excess capacity becomes financially burdensome.

Hydel generation also dips in winter due to reduced water flow, increasing reliance on costly thermal sources.

Solar Grows, But Challenges Remain

Solar generation, particularly through net metering, is expanding, but it doesn’t count as firm capacity since it cannot supply power during peak evening hours.

Dr. Fayyaz A. Chaudhry, Chairman of the National Grid Company of Pakistan, estimated the firm capacity of the grid at 40,000MW — meaning only this portion can reliably be dispatched at any time.

Older public-sector thermal plants, such as those at Guddu, are now operating at half their original capacity, further complicating efficient power planning.

The government is banking on reduced reliance on idle plants, lower imports of costly fuels, and more efficient generation to bring down tariffs in the long term.

But until structural reforms are completed, capacity payments for unused electricity will remain a major burden on end users.