On-grid electricity demand weakens as solar uptake stalls FY25 power growth

• Average fuel cost of power generation falls by 2% over year.
• Industrial users increasingly shifting to self-generation: expert.
• Consumers continue to bear burden through capacity payments.

KARACHI: Power generation remained largely flat in the fiscal year 2024-25, as rising solar adoption and reduced industrial activity continued to suppress on-grid electricity demand, The News reported on Sunday.

Official data shows total power generation reached 127,160 GWh during FY25, almost unchanged from the 127,165 GWh recorded in the previous fiscal year.

In June, power generation increased by 2% compared to the same month last year and rose by 8% on a month-on-month basis.

The average fuel cost of power generation fell by 2% over the year. In June alone, it declined by 9% year-on-year (YoY) but was marginally higher — by 1% — compared to May.

"Solarisation has reduced the on-grid electricity demand in the country, as it has seen substantial growth," said Head of Research at Sherman Securities Farhan Mahmood. He added that industrial users had increasingly shifted to self-generation due to lower coal and oil prices, further reducing grid dependence.

He noted, however, that electricity consumers continued to bear the burden of low demand through capacity payments, which ranged between Rs12 and Rs15 per unit during FY25.

Hydropower generation remained steady during the fiscal year. Generation from regasified liquefied natural gas (RLNG) fell by 6.0%, while power from local coal increased by 2%.

Generation from imported coal rose sharply by 80%, but nuclear power declined by 3%. Both gas and wind-based generation dropped by 2% each, while solar power increased by 15%. Electricity generation from furnace oil plunged by 79%.

In terms of cost, nuclear power became 35% more expensive, while the cost of local coal-based generation rose by 10%. Generation from furnace oil became 12% cheaper, electricity from imported coal declined in cost by 5%, and RLNG power generation cost dropped by 1%.

Hydropower retained its position as the largest contributor to the national energy mix, accounting for 31.4% of total power generation. It was followed by nuclear at 17.7% and RLNG at 17.5%. Local coal contributed 12.2%, natural gas 8.8% and imported coal 7.1% over the course of the year.