Electrify or stagnate

 By: Ahmad Jameel

For the past few years, Pakistan’s official data have told a strange story: the economy is growing modestly, the population is expanding, cities are swelling—yet energy consumption appears flat. At first glance, this looks like a miracle of efficiency. In reality, it is a measurement problem with serious policy consequences.

A recent white paper, Electrons in, hydrocarbons out – Pakistan’s quest for economic and resource efficiency, makes a compelling case that Pakistan has not decoupled economic growth from energy use. Instead, we have failed to count a large and rapidly growing part of our energy system: distributed solar.

Between FY20 and FY24, official primary energy supply hovered around 81 million tonnes of oil equivalent (MTOE), despite real GDP growth averaging roughly 2.6% annually over the same period (see discussion on pages 6–7). Over the longer decade from 2014 to 2024, energy consumption grew only 13%, the weakest performance among comparable countries such as India, Bangladesh and Vietnam. Meanwhile, our population rose from around 188 million to 242 million, and urbanisation accelerated.

This combination—rising economic activity, rising population, but stagnant energy use—is unusual for a developing economy. As the report argues, there is little evidence of the kind of structural transformation or dramatic efficiency gains that would explain such a divergence. The more plausible explanation is that a growing share of energy use is simply missing from official statistics.

That missing piece is solar.

By June 2025, Pakistan had imported roughly 48 gigawatts (GW) of solar PV capacity, spending around USD 7.4 billion on panels alone (page 10). Official data, however, capture only about 6.1 GW of net-metered capacity and 780 megawatts of utility-scale projects. The gap is vast.

Using trade data and conservative utilisation assumptions, the authors estimate that distributed solar capacity had reached 14.5 GW by the end of FY24, generating roughly 19 terawatt-hours (TWh) of electricity in that year alone (page 10). That is close to one-fifth of grid-supplied electricity. In energy terms, distributed solar contributed about 1.6 MTOE of final energy and displaced roughly 5 MTOE of primary fossil fuel input.

In other words, energy demand did not weaken. It migrated—from centrally recorded fossil fuels to citizen-led solar systems installed on rooftops, farms and factory floors.

This shift is not just statistical. It has profound macroeconomic implications.

In FY24, fossil fuel imports cost Pakistan PKR 4.4 trillion—about 10.6% of GDP and roughly one-third of the annual import bill (page 11). During the 2022–23 energy crisis, energy imports averaged around USD 20 billion, accounting for over half the trade deficit. As the rupee depreciated from 158 per dollar in 2020 to 248 in 2023, the rupee-denominated cost of imported energy surged by more than 200% (page 12).

This is not merely an energy issue. It is a balance-of-payments issue, a currency stability issue, and ultimately a development issue.

The physical inefficiency of fossil fuels compounds the economic cost. The report’s energy accounting framework shows that from 56.5 MTOE of primary fossil fuel supply, Pakistan derives only about 21.4 MTOE of useful energy (pages 14 and Annex 2). Roughly 59% of the energy value is lost in conversion, transport and end use. Oil, particularly in transport, is especially inefficient, with overall efficiency near 32%.

Solar PV, by contrast, converts sunlight directly into electricity without combustion losses. When paired with electrified end uses—such as electric motors, which convert 80–90% of delivered electricity into useful work—the efficiency gains are dramatic. Replacing internal combustion engines with electric vehicles could reduce primary energy requirements for mobility by nearly two-thirds (page 15).

The financial arithmetic is equally striking. Fully operational, the imported 48 GW of solar capacity could generate about 1,650 TWh over its lifetime (page 15). Producing that much electricity using coal and gas would require an estimated 330–400 MTOE of primary fossil fuel input, equivalent to USD 100–120 billion in fuel imports at FY24 prices. Solar, once installed, avoids these recurring outflows.

Unlike oil and LNG, which must be bought and burned year after year, solar panels are capital goods. They transform foreign exchange into long-lived generation assets.

This is why the report introduces the idea of Pakistan as a potential “electrostate” (page 16)—an economy where electricity becomes the dominant energy carrier and electrification is driven by efficiency and cost, not ideology. China may be the most advanced example, but Pakistan’s experience shows that even a lower-middle-income country can begin moving in that direction through consumer-led adoption.

Yet here lies the governance challenge.

Households and firms are electrifying informally and without coordination. Utilities, designed for centralised fossil-based generation and one-way power flows, face shrinking sales and financial stress. Energy accounting frameworks still reflect a fossil-centric worldview. Policy remains anchored in legacy models, even as citizens quietly build a parallel system.

The choice before policymakers is not whether electrification will happen. It is whether the state will align planning, regulation and industrial strategy with what is already underway.

If we update our data, reform utility models, invest in grid flexibility and channel finance into clean technologies, electrification can reduce macroeconomic risk and strengthen long-term competitiveness. If we ignore the shift, the transition will proceed in a fragmented manner, with higher fiscal and social costs.

Pakistan’s energy story is not one of declining demand. It is one of incomplete measurement and delayed institutional adaptation. The electrons are already flowing. The question is whether policy will catch up.