Pakistan’s Grid Electricity Demand Declines as Solar Net-Metering Surges Fourfold

Pakistan’s grid electricity demand continues to remain under pressure while rooftop solar adoption through net metering has surged almost fourfold over the past two years, according to the State of Industry Report 2025 released by the power regulator NEPRA.

During FY2024-25, total electricity consumption across all distribution companies, including K-Electric, reached 111,466.7 GWh, showing a marginal year-on-year increase of 1.7 percent. Despite this uptick, overall consumption was still 11.8 percent lower than FY2021-22 and 1.3 percent below FY2022-23 levels, indicating a sustained multi-year contraction rather than a short-term slowdown.

NEPRA noted that the residential sector’s share of total consumption increased to 50.5 percent from 49.2 percent a year earlier, but clarified that this did not reflect stronger household demand. Instead, the shift was largely due to a sharp decline in agricultural consumption, which dropped by more than 31 percent year-on-year.

Industrial electricity use showed limited recovery, rising from 27,754 GWh to 29,114 GWh, supported by some migration from captive power generation to the national grid and targeted federal incentives. However, high tariffs, weak economic activity, and consumer conservation continued to suppress overall demand, pushing households and businesses toward alternative energy sources.

Against this backdrop, net metering emerged as one of the most significant structural changes in Pakistan’s power sector. NEPRA data shows that net-metering consumers increased from 37,769 in FY2021-22 to 56,427 in FY2022-23, before jumping sharply to 141,054 in FY2023-24.

The growth accelerated further in FY2024-25. By June 30, 2025, distribution companies reported 350,207 net-metering consumers, while K-Electric added another 28,132, taking the national total to over 378,000 connections. K-Electric alone nearly doubled its net-metering consumers year-on-year during FY2023-24.

Installed capacity expanded alongside connections. During FY2024-25, net-metering consumers exported more than 3.1 billion kWh to the grid while importing around 5.2 billion kWh, resulting in a net import of 1.76 billion kWh. In K-Electric’s service area, grid imports continued to significantly exceed exports, highlighting ongoing dependence on grid-supplied power despite increased rooftop generation.

Large urban DISCOs, including LESCO, FESCO, MEPCO, and IESCO, drove most of the growth, reflecting higher-income populations, dense cities, and greater rooftop availability. NEPRA observed that industrial net-metering consumers account for a disproportionate share of electricity imports, while domestic users dominate exports, reshaping traditional load patterns and revenue dynamics.

The regulator warned that rapid growth in distributed solar generation is occurring while fixed capacity payments to power producers remain unchanged, increasing per-unit costs for remaining grid consumers. As tariffs rise further, additional migration to solar could erode utility revenues and worsen circular debt pressures.

NEPRA added that beyond net metering, adoption of off-grid and hybrid solar-battery systems is also rising, particularly in high-tariff and remote areas, signalling a deeper and more permanent shift in how electricity demand is being met across Pakistan.