Pakistan’s Demand for Grid Electricity is Falling, Solar Net-Metering Up 4x

Pakistan’s grid electricity demand remains depressed while solar net-metering adoption has surged nearly fourfold over the past two years, according to the State of Industry Report 2025 released by the power regulator.

During FY2024-25, total electricity consumption across all distribution companies (DISCOs), including K-Electric (KE), stood at 111,466.7 GWh, reflecting a marginal 1.7 percent increase over FY2023-24. However, consumption remained 11.8 percent lower than FY2021-22 and 1.3 percent below FY2022-23, underscoring a multi-year demand contraction rather than a cyclical slowdown.

While the residential sector’s share rose to 50.5 percent in FY2024-25 from 49.2 percent a year earlier, NEPRA notes that this increase does not indicate stronger household consumption. Instead, it largely reflects a sharp decline in agricultural demand, which fell by more than 31 percent year-on-year.

Industrial consumption showed a modest recovery, rising from 27,754 GWh to 29,114 GWh, supported partly by industrial migration from captive generation to the national grid and federal incentive packages.

Despite this recovery, the overall demand environment remains constrained by high tariffs, economic stagnation, and consumer conservation. Rising electricity prices have pushed households and businesses toward alternative energy solutions, most notably rooftop solar.

Against this backdrop, net metering has expanded at an unprecedented pace, emerging as one of the most significant demand-side transformations in Pakistan’s power sector.

NEPRA data shows that the number of net-metering consumers across all DISCOs increased nearly fourfold in two years, rising from 37,769 in FY2021-22 to 56,427 in FY2022-23, before jumping to 141,054 in FY2023-24.

Growth accelerated further in FY2024-25. As of June 30, 2025, DISCOs reported 350,207 net-metering consumers, while K-Electric accounted for an additional 28,132, taking the nationwide total to more than 378,000.

K-Electric alone recorded 15,318 net-metering consumers in FY2023-24, nearly doubling year-on-year.

The rapid expansion in connections has been matched by a surge in installed capacity. In FY2024-25, net-metering consumers across DISCOs exported more than 3.1 billion kWh to the grid while importing approximately 5.2 billion kWh, resulting in a net import of 1.76 billion kWh.

Within K-Electric’s service area, imports from the grid significantly exceeded exports, reflecting continued reliance on grid-supplied electricity despite increased rooftop generation.

Growth in net metering during FY2024-25 was driven primarily by large DISCO jurisdictions, with LESCO, FESCO, MEPCO, and IESCO accounting for a substantial share of both consumers and installed capacity. These service areas, characterised by dense urban centres, relatively higher-income households, and widespread rooftop availability, have consistently outpaced smaller DISCOs, reinforcing regional concentration in distributed solar adoption.

NEPRA notes that industrial net-metering consumers account for a disproportionate share of electricity imports, while domestic consumers dominate exports, altering traditional load profiles and revenue recovery patterns. Within K-Electric’s territory, net-metering adoption remains predominantly household-driven, despite Karachi being the country’s largest urban electricity market.

The trend aligns with NEPRA’s assessment that rooftop solar is increasingly being adopted by households in response to rising electricity tariffs and affordability pressures, rather than as a primary tool for industrial energy optimization.

The regulator warns that the rapid rise in distributed generation is occurring at a time when fixed capacity payments to power producers remain unchanged, increasing per-unit costs for remaining grid consumers. As higher tariffs drive further migration to solar, utilities face a shrinking revenue base, exacerbating circular debt pressures.

DISCOs argue that rising net-metering penetration undermines cost recovery, while consumers complain of delays in settlements and payable adjustments. In response, NEPRA has directed all DISCOs to conduct comprehensive technical, commercial, and financial impact studies to guide future policy and tariff decisions.

Beyond on-grid net metering, NEPRA also highlights a growing shift toward off-grid and hybrid solar-battery systems, particularly in remote and high-tariff areas, signalling a deeper transformation in how electricity demand is being met.