Pakistan’s power demand is back. The problem is that the cost of serving it has changed dramatically.
National grid generation reached 14.5 billion units in July, up 6 percent year on year. On a rolling 12-month basis, however, growth remains modest at 2.8 percent. The stronger monthly number therefore reflects a meaningful pickup in demand rather than a broad-based acceleration in electricity consumption.
The shift is most visible in the hourly demand profile. July’s grid demand is now materially above both 2025 and 2024 through much of the day. More importantly, the evening peak has moved sharply higher. The demand curve from two years ago now looks almost like a different system.
The return of industrial consumers from captive generation is a major part of this story. With captive power increasingly priced out of the equation, industrial demand has returned to the grid. At the same time, solar has continued to eat into daytime grid demand. This has created a more pronounced duck curve. Grid demand falls sharply during sunny hours, then rises rapidly once the sun goes down.
That evening ramp is now becoming the real test for the power system.
July generation was broadly in line with reference levels, a welcome improvement from the shortfalls seen during the worst of the RLNG disruption. But the fuel mix shows how much the system had to stretch to meet the changing demand profile.
Hydel was the clear star. Generation reached nearly 6 billion units, accounting for around 40 percent of total generation. This was the highest monthly hydel generation on record by a considerable margin. Output was also around 8 percent above reference, providing the system with a large block of low-cost electricity at the start of the peak demand season.
RLNG also continued its recovery. Its share stood at around 11 percent, with actual generation about 12 percent below reference. That gap has narrowed considerably from the early months of the conflict, as Pakistan managed to secure LNG cargoes despite the disruption in global gas markets. Yet July still marked the fifth consecutive month in which RLNG generation remained below reference.
The missing RLNG was not the only issue. Imported coal became the bigger story.
Imported coal generation was a staggering 144 percent above reference, with its share reaching around 11 percent. The system generated more than 1.2 billion additional units from imported coal than envisaged. July also recorded the highest monthly imported coal-based generation on record.
This is not simply a story about insufficient generation. It is a story about timing.
The system has plenty of electricity during the middle of the day. Solar has changed that equation permanently. But once the sun sets, the system needs large volumes of conventional generation to come online quickly. With RLNG still below reference and the evening ramp getting steeper, the burden has increasingly fallen on thermal units, including imported coal.
And that comes at a price.
The marginal cost of generation during peak demand reached as high as Rs46 per unit in July. That is dramatically higher than the corresponding levels seen in the previous two years. RLNG was particularly expensive, with generation cost averaging around Rs47 per unit, an all-time high. The use of spot LNG cargoes at elevated import prices is now feeding directly into the cost of meeting peak demand.
This is the uncomfortable side of the demand recovery. Higher electricity consumption is good for the grid. It improves utilization, brings industrial consumers back and spreads fixed costs over a larger number of units. But if the incremental units are being supplied through expensive thermal generation during the evening peak, the recovery also comes with a sizeable fuel cost.
The July fuel cost adjustment is therefore expected to be north of Rs2 per unit. That would add another layer of pressure for consumers, particularly after several months of moderate adjustments.
The problem may not ease immediately. August and September typically bring the year’s highest electricity demand.
At the same time, there is no clear end to the geopolitical disruption affecting LNG supplies and prices. If RLNG remains constrained or expensive, the system will continue to rely more heavily on alternative thermal sources during the evening ramp.
Meanwhile, the solar story has not stopped. More rooftop and behind-the-meter solar continues to suppress daytime grid demand, while batteries are beginning to add another dimension to the equation. Storage can potentially smooth some of the evening ramp, but it also means the traditional demand profile is becoming harder to predict.
Pakistan’s power sector is therefore entering a rather unusual phase. Demand is recovering, but the shape of that demand is changing faster than the generation system.
Hydel can provide cheap energy when available. Solar can take the load off the grid during the day. But after sunset, the system still needs flexible thermal generation, and that flexibility is increasingly expensive.
The issue is no longer whether Pakistan has enough electricity. It is how much it costs to produce it at the hour when the country needs it most.
