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

Pakistan’s grid electricity demand has significantly decreased, while Pakistan solar net-metering adoption has surged by nearly fourfold over the last two years. This notable trend comes from the State of Industry Report, released by the power regulator. During FY2024-25, total electricity consumption across all distribution companies (DISCOs), including K-Electric (KE), reached 111,466.7 GWh. This reflects only a marginal 1.7 percent increase from the previous year. However, consumption remained 11.8 percent lower than FY2021-22 and 1.3 percent below FY2022-23, indicating a multi-year demand contraction, not just a cyclical slowdown.

Understanding the Shift in Electricity Consumption

The residential sector’s share surprisingly rose to 50.5 percent in FY2024-25, up from 49.2 percent a year prior. Nevertheless, NEPRA clarifies that this increase does not signal stronger household consumption. Instead, it mainly reflects a sharp decline in agricultural demand, which dropped by over 31 percent year-on-year. Furthermore, industrial consumption showed a modest recovery, climbing from 27,754 GWh to 29,114 GWh. This recovery was partly supported by industries migrating from captive generation to the national grid, alongside federal incentive packages.

Despite this minor industrial recovery, the overall demand environment remains strained. High tariffs, ongoing economic stagnation, and increased consumer conservation efforts all play a role. Consequently, rising electricity prices have prompted both households and businesses to explore alternative energy solutions, most notably rooftop solar installations.

The Unprecedented Growth of Pakistan Solar Net-Metering

Against this backdrop, net metering has expanded at an unprecedented rate. It has emerged as one of the most significant demand-side transformations within Pakistan’s power sector. NEPRA data clearly shows that the number of net-metering consumers across all DISCOs increased nearly fourfold in just two years. It rose from 37,769 in FY2021-22 to 56,427 in FY2022-23, before leaping to 141,54 in FY2023-24.

Accelerated Adoption and Capacity Surge

Growth accelerated even further in FY2024-25. As of June 30, 2025, DISCOs reported 350,207 net-metering consumers. K-Electric accounted for an additional 28,132, bringing the nationwide total to over 378,000. K-Electric alone recorded 15,318 net-metering consumers in FY2023-24, nearly doubling its figures year-on-year. This rapid expansion in connections has been mirrored by a significant surge in installed capacity.

In FY2024-25, Pakistan solar net-metering consumers across DISCOs collectively exported over 3.1 billion kWh to the grid. Simultaneously, they imported approximately 5.2 billion kWh, resulting in a net import of 1.76 billion kWh. Within K-Electric’s service area, however, imports from the grid significantly exceeded exports. This trend reflects a continued reliance on grid-supplied electricity, despite the increase in rooftop solar generation.

Regional Trends and Consumer Behavior

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

NEPRA also highlights key differences in consumer behavior. Industrial net-metering consumers account for a disproportionate share of electricity imports. In contrast, domestic consumers dominate exports, thereby 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. This trend aligns with NEPRA’s assessment: rooftop solar is increasingly chosen by households due to rising electricity tariffs and affordability pressures, rather than primarily for industrial energy optimization.

Challenges and the Future of Pakistan’s Energy

The regulator issues a warning: the rapid rise in distributed generation occurs while fixed capacity payments to power producers remain unchanged. This situation effectively increases per-unit costs for the remaining grid consumers. As higher tariffs further drive migration to solar, utilities face a shrinking revenue base, exacerbating circular debt pressures. Subsequently, DISCOs argue that increasing net-metering penetration undermines their cost recovery. Conversely, consumers often complain about delays in settlements and payable adjustments.

In response, NEPRA has directed all DISCOs to conduct comprehensive technical, commercial, and financial impact studies. These studies will guide future policy and tariff decisions. Beyond on-grid net metering, NEPRA also emphasizes a growing shift toward off-grid and hybrid solar-battery systems. This is particularly evident in remote and high-tariff areas. Therefore, this signals an even deeper transformation in how electricity demand is being met across Pakistan.