8 Critical Energy Trends That Defined 2025 in Pakistan, and What Happened to Each by 2026
Rooftop solar, falling grid demand, a mountain of unpaid bills, too much imported gas and then, suddenly, too little. This plain-English guide takes the eight trends that shaped Pakistan's energy in 2025 and follows each one into 2026.
About this article: It was prepared with the help of AI tools from public sources and is being reviewed by our editors. If you spot an error, please let us know so that we can correct it.
⚡ The short answer
In 2025 Pakistan’s energy story was a paradox: the country had too much of almost everything it had spent a decade building. Too many power plants for the electricity the grid could sell. Too many gas cargoes for the gas anyone would buy. The cause was the cheapest thing of all, solar panels, which households and factories installed at a pace seen almost nowhere else. In 2026 a war in the Gulf turned the gas surplus into a shortage overnight and proved the point that had driven the solar rush: power you make yourself cannot be cut off.
- ✅ Rooftop solar on the grid: from under 200 megawatts to nearly 7,000 in six years
- ⚠️ Net metering replaced by net billing for new users in February 2026
- ⚠️ Unpaid bills in power and gas together: over 5 trillion rupees
- ⚠️ 2026: war in the Gulf disrupts oil and gas supplies
The big picture
For twenty years Pakistan’s energy problem was shortage. Factories closed for want of gas. Cities went dark for twelve hours a day. Governments fell over load-shedding.
So the country built. Between 2015 and 2022 it added power plants, many of them financed by China, and signed long contracts for imported gas. By 2023 the shortage was over.
And then people stopped buying. Electricity had become so expensive that anyone who could afford to make their own did. That is the thread that runs through all eight trends.
Pakistan spent a decade building a power system for customers who, by the time it was finished, had bought solar panels and left.
The eight trends at a glance
| No. | Trend | In one line |
|---|---|---|
| 1 | The solar rush | The fastest take-up of solar panels almost anywhere |
| 2 | The end of net metering | New users are paid far less for power they export |
| 3 | A shrinking grid | Fewer units sold; the same fixed costs |
| 4 | Circular debt | Trillions in unpaid bills, refinanced but still growing |
| 5 | Contracts reopened | Old deals with power producers renegotiated |
| 6 | The gas glut, then the gas shock | Surplus cargoes in 2025; war in 2026 |
| 7 | Pushing factories back to the grid | A levy on making your own power from gas |
| 8 | Privatisation, batteries and electric vehicles | The system’s next shape |
1. The solar rush
What happened. Chinese solar panels became extraordinarily cheap after 2022. Pakistani electricity became extraordinarily dear. The result was predictable. Pakistan became one of the largest importers of solar panels in the world, bringing in more in a single year than the entire capacity of its hydroelectric dams.
Much of this is invisible to official statistics, because it sits on rooftops and in fields with no connection to the grid. The part that is connected, under the scheme called net metering, grew from about 190 megawatts in 2019-20 to nearly 7,000 in 2025-26.
Who did it. First wealthy households and large factories. Then, as prices fell, shopkeepers, schools, mosques and farmers, who use solar pumps in place of diesel.
In 2026. The rush continued, and the Gulf war gave it a new argument: security.
2. The end of net metering
What it was. Under net metering, a household with panels sold its spare daytime power to the grid and bought power back at night, at the same price. A unit exported cancelled a unit imported. For those who could afford a system, bills fell to almost nothing.
Why it became a problem. The grid was paying the full retail price for solar power it could have bought far more cheaply elsewhere, and solar owners were contributing little to the fixed costs of the system. Officials estimated the cost to other consumers at about 100 billion rupees in a single year. Those other consumers were, on average, poorer.
What changed. After a year of proposals and retreats, new rules took effect on 8 February 2026.
| Old system (net metering) | New system (net billing) | |
|---|---|---|
| Power you export | Credited at the retail price | Paid at a much lower reference price |
| Power you import | Billed at the retail price | Billed at the retail price |
| Length of agreement | Seven years | Five years |
| Who is covered | Everyone who signed before the change | New applicants |
Existing users keep their old terms until their agreements expire.
What it means. The sums now favour using your own solar power yourself, in the daytime, and adding a battery, over exporting it.
💡 Tip: net metering and net billing in one example
Suppose your panels send 100 units to the grid during the day and you draw 100 units back at night. Under net metering the two cancel and you pay nothing for energy. Under net billing you are paid a low price for the 100 you sent and charged the full price for the 100 you took, so you owe the difference. The lesson is simple: under the new rules a unit you use yourself is worth several times a unit you export.
3. A shrinking grid
What happened. Electricity sold through the national grid has been flat or falling, even as the population and the number of air conditioners have grown. Solar took the daytime demand of the best-paying customers.
Why it matters. Most of the cost of a power system is fixed. The plants, the loans and the wires must be paid for whether or not electricity flows. Pakistan’s contracts promise producers capacity payments, a rent for being available, running to some two trillion rupees a year.
Spread that over fewer units and the price of each unit rises. A higher price pushes more customers to solar. Engineers call this a death spiral.
In 2025 and 2026. The government managed to cut the base tariff slightly, to about 34 rupees a unit, by refinancing debt and renegotiating contracts, and it offered cheap rates for extra winter and industrial use to lure demand back. The underlying problem remains.
4. Circular debt
What it is. A chain of unpaid bills. Distribution companies do not collect enough to pay the power producers. The producers cannot pay their fuel suppliers. The suppliers cannot pay for imports. In the end the government borrows to plug the gap, and the cost returns to consumers as a surcharge.
The 2025 deal. In September 2025 the government and eighteen banks signed the largest financing deal in the country’s history, worth 1.225 trillion rupees, to pay off overdue bills. It is being repaid over several years from a surcharge already on every electricity bill.
In 2026. The stock of power-sector debt was about 1.7 trillion rupees at the end of June 2026, slightly higher than a year earlier. Adding the gas sector, the total passed 5 trillion. The deal bought time. It did not stop the leak.
| Where the leak comes from | Why |
|---|---|
| Losses and theft | A fifth or so of power in some companies is never billed |
| Unpaid bills | Government departments and some regions pay late or not at all |
| Subsidies paid late | The treasury owes the companies for cheap rates it ordered |
| One large private utility | Disputes over what it owes and is owed |
5. Contracts reopened
What happened. In late 2024 and 2025 the government pressed the owners of older private power plants to accept new terms. Several contracts were ended early. Others were changed so that owners are paid only for power actually taken. Sugar-mill plants and some state-owned plants followed.
Why it was controversial. The government said the savings ran to hundreds of billions of rupees over the life of the contracts and that the old terms had been too generous. Investors said that contracts signed with a sovereign state were being rewritten under pressure, and asked who would lend to the next project.
What was not touched. The largest and most recent contracts, those with Chinese-financed plants, proved the hardest. Talks on stretching out their loans have run for years.
6. The gas glut, then the gas shock
2025: too much. Pakistan had signed long contracts to import liquefied natural gas, mainly from Qatar. But with less electricity being generated and factories switching fuels, there was nowhere to put it. Cargoes were deferred. For 2026 the government negotiated the diversion of 35 cargoes to other buyers and still expected a surplus. Meanwhile gas from the country’s own fields had to be shut in to make room.
2026: too little. On 28 February 2026 war broke out in the Gulf. The Strait of Hormuz, through which Qatar’s gas and much of the world’s oil must pass, was blocked for much of the spring and has been dangerous since. Deliveries to Pakistan were cut sharply. Oil prices jumped. Fuel prices at Pakistani pumps followed, and by the summer inflation was back in double digits.
The lesson drawn. A country that imports most of its oil and a large part of its gas through one narrow strait is exposed. Analysts who had warned in 2025 that Pakistan’s gas contracts were too rigid warned in 2026 that the surplus could return as soon as the fighting stopped.
⚠️ Two opposite risks in the same year
Pakistan’s energy planners now face both of the mistakes a buyer can make. Contract for too much and you pay for fuel you cannot use, as in 2025. Contract for too little, or from too few places, and a war can leave you short, as in 2026. Neither risk has gone away. Anyone who tells you the answer is obvious is ignoring one of them.
7. Pushing factories back to the grid
The background. For decades large factories ran their own gas-fired generators, known as captive power plants, because the grid was unreliable. They received scarce gas at a favourable price.
What changed. Under the IMF programme the government decided that these factories should buy from the national grid, which badly needs customers. In 2025 it imposed a levy on gas used for captive generation and raised it in steps.
| Date | Levy |
|---|---|
| Early 2025 | 5 per cent |
| July 2025 | 10 per cent |
| February 2026 | 15 per cent |
| August 2026 (scheduled) | 20 per cent |
The result. Gas use by captive plants fell by about two-thirds. But not every factory moved to the grid. Many moved to solar, to furnace oil or to coal. Exporters said the change raised their costs against competitors in Bangladesh and Vietnam.
8. What comes next: privatisation, batteries and electric vehicles
Selling the distribution companies. The state-owned companies that deliver electricity are where most of the losses arise. The government plans to sell the better-run ones first. The sale of the national airline in 2025 and 2026 showed that such deals can at last be completed.
A market for electricity. Rules now allow a large customer to buy directly from a generator and pay the grid only for carrying the power. Its first transactions are awaited.
Batteries. The fall in battery prices is following the fall in panel prices. With net billing in force, batteries are the logical next purchase for solar households. If they spread, evening demand on the grid will fall too.
Electric vehicles. A policy adopted in 2025 aims for electric models to make up nearly a third of new vehicle sales by 2030, starting with motorbikes and rickshaws. Charged from solar panels, they would cut the oil import bill. Charged from the grid at night, they would give it badly needed sales.
Big projects. Coal from the Thar desert, large dams on the Indus and a new Chinese-built nuclear reactor are all under way. Each adds capacity to a system that already has more than it can sell, which is why each is argued over.
A word on the climate
Pakistan produces well under one per cent of the world’s greenhouse gases, and its solar rush was driven by price, not by concern for the planet. The effect is the same. Every unit made on a rooftop is a unit not made by burning imported gas, oil or coal.
There is a catch. The country is still tied by contract to coal and gas plants built in the last decade, and must pay for them whether they run or not. So the fuel saved by solar does not always show up as money saved. And the dirtiest plants are not necessarily the first to be switched off; the cheapest to run are kept on.
The cleanest outcome, cheap solar by day and hydropower or batteries by night, is within reach. Getting there means retiring plants that still have years of payments owed on them, which is a question of money and politics, not of engineering.
What it means for you
| If you are… | The trend that matters most | What to consider |
|---|---|---|
| A household without solar | Tariffs and surcharges | Bills will stay high while the grid’s fixed costs are spread over fewer units |
| A household thinking of solar | Net billing | Size the system for what you use in daytime; get several quotes; check the current rules with your distribution company |
| A household with solar already | Your existing agreement | Your old terms continue until it expires; note the date |
| A small business | Daytime use | Solar pays best when you consume the power yourself |
| A factory | The captive levy; the new market rules | Compare the grid’s industrial rates with your own generation |
| A motorist | Fuel prices | These now move with events in the Gulf |
✅ Key point
The eight trends are one story. Pakistan built an expensive, centralised energy system just as the cheapest energy in history became something a family could bolt to its roof. The country’s task now is not to stop that, which it cannot, but to redesign the grid, its prices and its contracts for a world in which millions of customers are also producers.
Words used in this article
| Term | Plain meaning |
|---|---|
| Megawatt | A unit of power; one megawatt can supply several hundred homes |
| Unit | One kilowatt-hour of electricity, the measure on your bill |
| Net metering | Exported and imported units cancel at the same price |
| Net billing | Exported units are paid at a lower price than imported ones |
| Prosumer | A customer who both consumes and produces electricity |
| Capacity payment | A fixed payment to a power plant for being available |
| Circular debt | The chain of unpaid bills in the energy sector |
| Captive power | Electricity a factory generates for itself |
| LNG | Liquefied natural gas, shipped in tankers |
| Distribution company | The company that delivers electricity to your meter |
Timeline
| Date | Event |
|---|---|
| 2015 to 2022 | A wave of new power plants ends load-shedding |
| 2022 and 2023 | Tariffs rise steeply; solar imports soar |
| Late 2024 | Older power contracts are reopened; gas cargoes are deferred |
| 2025 | Levy on captive gas; record solar additions |
| September 2025 | The 1.225 trillion rupee bank deal |
| 8 February 2026 | Net billing replaces net metering for new users |
| 28 February 2026 | War in the Gulf begins; oil and gas supplies are disrupted |
| April 2026 | Existing solar agreements confirmed until expiry |
| Mid-2026 | Fuel prices and inflation rise |
For how such policies are made, read our explainer on the National Assembly, which passes the budget, and our guide to Pakistan’s politics.
Understand the decisions behind your bills
PoliticsPK explains who is who, how the system works and what changes, without the noise.
More in Pakistan & Economy Politics Explained Latest from PoliticsPK
Frequently asked questions
❓ Has net metering ended in Pakistan?
For new applicants, yes. Rules in force since 8 February 2026 replaced it with net billing. Existing users keep their terms until their agreements expire.
❓ What is net billing?
A system in which the electricity you export to the grid is paid for at a lower price than the electricity you import. Under net metering the two prices were the same.
❓ Is solar still worth installing in Pakistan?
That depends on your own use and is not something this article can advise on. In general, the new rules reward using your solar power yourself during the day more than exporting it.
❓ How much rooftop solar does Pakistan have?
Nearly 7,000 megawatts was connected to the grid under net metering by 2025-26, up from about 190 megawatts in 2019-20. A large further amount is not connected to the grid and is not counted.
❓ What is circular debt?
The chain of unpaid bills between distribution companies, power producers and fuel suppliers. In the power sector it stood at about 1.7 trillion rupees in June 2026.
❓ Why is electricity so expensive in Pakistan?
Mainly because of fixed payments to power plants under long contracts, losses and theft in distribution, and taxes and surcharges added to bills. As more customers leave for solar, those fixed costs fall on fewer units.
❓ What is the captive power levy?
A charge on gas used by factories to generate their own electricity, introduced in 2025 and raised in steps, to push them to buy from the national grid.
❓ How did the 2026 Gulf war affect Pakistan’s energy?
It disrupted oil and gas shipments through the Strait of Hormuz, cut gas deliveries, raised fuel prices and helped push inflation back above 10 per cent.
❓ Who regulates electricity in Pakistan?
The National Electric Power Regulatory Authority, known as NEPRA.
Sources
- ProPakistani, “Pakistan’s solar boom reaches 7,000 MW as govt moves to replace net metering” — 17 July 2026.
- PV Know-How, “Pakistan rooftop solar users protected under old net metering rules” — 27 August 2026; a trade site.
- Profit, “The truth behind Pakistan’s 1.225 trillion rupees deal” — 7 October 2025.
- The News, “Power circular debt flow hits Rs1.86tr” — 2026.
- Institute for Energy Economics and Financial Analysis, “Pakistan’s LNG surplus crisis” — a research group’s analysis.
- Geo News, “Pakistan asks Qatar to divert 2026 LNG shipments amid oversupply concerns” — 2025.
- PkRevenue, “Captive power plant levy to rise to 20% from August 2026” — 2026; a tax news site.
- Wikipedia, “2026 Iran war” — read in part; last edited 8 October 2026.
- National Electric Power Regulatory Authority — for the regulations and tariff decisions themselves.
