Pakistan's installed electricity generation capacity expanded significantly during the first nine months of fiscal year 2025-26, largely driven by rapid growth in net metering, while rising electricity tariffs altered consumption patterns by reducing the household share of power usage and boosting industrial demand.
According to the Pakistan Economic Survey 2025-26, the country's installed power generation capacity increased 8.5 percent to 49,651 megawatts (MW) during July-March FY2025-26, compared with 45,782MW in the corresponding period of the previous fiscal year. The increase was primarily attributed to the addition of 7,319MW through net metering installations, highlighting the growing role of distributed electricity generation in Pakistan's energy mix.
Electricity consumption also increased during the reporting period. Total power usage reached 83,143 gigawatt hours (GWh) during July-March FY2025-26, compared with 80,811 GWh in the corresponding period of FY2024-25, reflecting a 3.8 percent rise in overall consumption.
The survey pointed to a notable shift in demand across different consumer groups. Although households remained the largest consumers of electricity, their share declined to 47.5 percent, with consumption of 39,472 GWh, compared with 49.6 percent and 39,730 GWh during the same period of the previous fiscal year. According to the survey, the declining household share suggests a structural shift towards alternative energy sources as higher electricity tariffs reduced affordability and encouraged energy conservation.
Industrial electricity demand moved in the opposite direction. Consumption by the industrial sector increased to 26,205 GWh from 21,083 GWh, raising its share of total electricity usage from 26.3 percent to 31.5 percent.
Agriculture recorded the sharpest decline in electricity consumption. Usage fell 42.3 percent, dropping from 4,566 GWh to 2,636 GWh, reducing the sector's share from 5.7 percent to 3.2 percent. The survey attributed the decline to changing irrigation practices, rainfall patterns and a possible shift towards diesel-powered or solar alternatives in response to higher electricity costs.
Electricity consumption in the commercial sector increased modestly from 6,898 GWh to 7,044 GWh, indicating a slight improvement in business and retail activity, particularly in urban areas. The "others" category, which includes public lighting, bulk supply and government buildings, consumed 7,785 GWh, with its share easing from 9.8 percent to 9.4 percent.
The survey also highlighted changes in Pakistan's electricity generation infrastructure. Despite the expansion in installed capacity, 13 independent power producers (IPPs) with a combined capacity of 5,105MW were closed for various reasons. These included nine residual furnace oil-based IPPs with 2,877MW of capacity, three gas/RLNG-based plants totalling 601MW, and one multi-fuel IPP with 1,638MW of capacity.
Pakistan's installed generation mix remained diversified. Hydropower accounted for 23.4 percent of total installed capacity, thermal generation 49.2 percent, renewable energy 20.3 percent, and nuclear power 7.1 percent. Out of the country's total electricity generation of 92,835 GWh during the period, hydropower, nuclear and renewable sources collectively contributed 53.1 percent, indicating that more than half of Pakistan's electricity generation came from non-fossil fuel sources.
The findings of the Pakistan Economic Survey 2025-26 suggest that while the country's generation capacity continues to expand, changing tariff structures, increasing adoption of net metering and shifting consumption patterns are reshaping Pakistan's electricity sector alongside a gradual transition towards lower-carbon sources of power generation.