Solar is our saviour, capacity charge our drain
Pakistan's power sector crisis, which the writer traces to the oil price spike of 2004 and the circular debt that followed, has been reshaped by an unexpected force: off-grid solar. A petroleum engineer and oil and gas management professional argues that solarisation has proven "the biggest saviour for our economy", both through savings on energy imports and through the economic activity it supports.
The writer estimates that hardly 13% of Pakistan's aggregate installed solar capacity is integrated with the grid. Applying a capacity utilisation factor of 18% to 22%, the piece puts the maximum net capacity of off-grid systems alone at above 10,000MW, which it says is already 42% of average grid power demand in summer. Industrial grid consumption, it notes, was 29,885 gigawatt hours in FY2020-21 and 29,114 GWh by 2024-25, despite a 7.5% rise in users in that category.
Against that, the article points to the growing burden of capacity charges. Citing Nepra's 2017 State of the Industry report, it says capacity payments were Rs280 billion in FY2015-16 and Rs350 billion in FY2016-17, and that the report warned power sold in FY2018-19 would need to be 57% higher than the previous year for the value to hold; actual growth was under 2%. The writer says around $40 billion has been paid in capacity charges since 2019, a cost he argues could largely have been avoided through stricter qualifiers in the "take or pay" clauses of power purchase agreements.
The piece is sceptical that recent net-billing changes will slow the shift off-grid, noting that solar battery purchases in FY2025-26 rose about 2.5 times from the previous year. It also cites the Energy Yearbook 2025 as showing a roughly 46% fall in documented industrial energy consumption between 2020 and 2025, with coal, wood and other fuels filling part of the gap, and a 58% decline by volume in coal use in brick kilns since 2021.
The writer's prescriptions are threefold: be cautious about intervening in solarisation, renegotiate what he calls evidently pro-seller power purchase agreements, and monitor changes in the country's energy mix against its greenhouse gas commitments to the United Nations. He also flags the effort, begun under IMF pressure, to eliminate captive power and move that load to the grid, which he says would spare around 280 million standard cubic feet per day of processed gas.
