Business Recorder
Pakistan’s national grid power generation in 9MFY26 remains below historical highs, even as recent months point to a gradual but visible recovery in demand. At close to 90 billion kilowatt hours, cumulative output is still around 8 percent lower than the peak recorded in the same period of FY22. Generation trails FY23, sits broadly in line with FY24 and FY21, and is only marginally higher than last year, underscoring that the system is recovering, but not yet back to peak intensity. At the margin, however, momentum has improved. March extended the recent pattern of actual generation exceeding reference levels, with output of 8.9 billion units against a reference of 8.4 billion units. This follows the break observed earlier in the year and suggests that underlying demand is firming up after a prolonged period of compression. This recovery is being driven in large part by the near-complete shift of industrial consumers back onto the grid. Having relied heavily on captive generation in recent years, industries are returning as grid tariffs turn competitive again. Industrial demand has already risen by an estimated 35 to 40 percent year on year. The shift is significant enough that some industrial players are now reconsidering further solar expansion, as grid electricity has, for many, begun to price out incremental solar capacity. A scenario that would have been difficult to imagine even a couple of years ago. The divergence from reference generation in March is best understood through the fuel mix. Hydel generation provided a critical cushion, with its share rising to 24 percent, well above the referenced 15.5 percent. This translated into roughly 800 million additional units, absorbing much of the pressure created by shortfalls elsewhere and preventing a sharper deviation in overall fuel costs. That pressure stemmed primarily from a decline in nuclear and RLNG-based generation. Nuclear output remained around 22 percent below reference levels, while RLNG availability was severely constrained. With supply disruptions limiting inflows, RLNG-based generation fell to just 500 million units, less than a third of the reference level. While the drop in RLNG helped contain fuel costs to some extent, it created a supply gap that had to be filled through other, more expensive sources. Imported coal once again acted as the system’s balancing fuel. Generation from imported coal rose to around 1.2 billion units, roughly three times the reference level, highlighting the extent to which the system leaned on it to maintain stability. As a result, the fuel cost adjustment remained positive for the fourth consecutive month. However, unlike the sharper increases seen earlier, the March adjustment was relatively contained, with lower RLNG usage offsetting some of the upward pressure. What is more critical than the aggregate numbers is the evolving demand profile. The hourly generation curve for March shows a pronounced midday dip, deeper than even two years ago, despite higher overall demand levels. This reflects the growing footprint of off-grid and behind-the-meter solar, which is suppressing daytime grid consumption while leaving evening demand largely intact. The result is a much steeper ramp requirement after sunset. As demand begins to approach 2022 highs, the system now has to manage larger and faster increases in load within a short window. In the absence of sufficient RLNG-based flexibility, this burden is shifting to other, less efficient sources. Hydel, despite its higher overall share, has not consistently provided support during peak ramp hours, further complicating system operations. These pressures are increasingly visible on the ground. Load management, particularly in high-demand regions such as Punjab, is re-emerging as a tool to manage peak stress. What is being framed as peak relief is, in effect, targeted load shedding. At the same time, longstanding transmission bottlenecks between the north and south continue to constrain optimal dispatch. Despite years of investment, evacuation capacity remains a limiting factor, and even modest spikes in evening demand are enough to destabilize the system. The broader context has offered some relief. Pakistan’s rapid expansion in off-grid solar has helped shield overall demand from external shocks, including recent geopolitical disruptions affecting energy markets. But this comes with its own trade-offs. The increasingly pronounced duck curve is making system balancing more complex, shifting the challenge from capacity adequacy to flexibility and timing. Looking ahead, constraints are unlikely to ease. RLNG availability is expected to remain limited, and domestic gas-based generation offers only a fraction of RLNG’s dependable capacity, roughly one-fourth by comparison. Even with full utilization of available gas plants, a shortfall during peak hours appears inevitable. The system is therefore entering a phase where trade-offs are unavoidable. Either higher-cost generation will need to be dispatched to meet evening peaks, or load shedding will continue as a balancing mechanism. In both scenarios, upward pressure on fuel cost adjustments and periodic tariffs is likely to persist, setting the tone for the months ahead.
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