As per the Economic Survey, the total installed power generation capacity in Pakistan is projected to reach 46,605 megawatts by the end of the fiscal year 2024-25. Despite this increase, significant capacity payments to inactive power plants continue to burden electricity users across the country.

Energy experts from both the public and private sectors are hopeful that the burden of capacity payments, estimated at Rs12 to Rs15 per unit and passed on to consumers, will gradually decrease. This optimism stems from the government's decision to cease new power projects and terminate power purchase agreements (PPAs) with various independent power producers (IPPs).

During a recent interview with Dawn, a senior official at the Ministry of Energy highlighted that the issue of capacity payments is more pronounced in winter when the total electricity demand drops to 12,000-13,000 MW, compared to the summer months.

The Economic Survey reveals that the energy mix in Pakistan consists of hydel (24.4%), thermal (55.7%), nuclear (7.8%), and renewables (12.5%). From July to March of FY25, the total electricity generation was 90,145GWh, with hydel contributing 30.4%, thermal 46.3%, nuclear 19.1%, and renewables 4.2%.

Households accounted for 49.6% of electricity consumption during the same period, followed by industrial users (26.3%), agriculture (5.7%), and commercial consumers (8.6%). The survey also indicates that six nuclear power plants with a combined capacity of 3,530MW supplied 17,174 million units of electricity during this timeframe.

The total installed power generation capacity of 46,605MW includes an additional 2,800MW through solar net metering, marking a 1.6% increase from the previous fiscal year. While thermal power remains the primary source of electricity at 55.7%, there has been a gradual shift towards more sustainable sources such as hydel, nuclear, and renewables, which now collectively contribute 53.7% to the total generation.

It is noted that almost 50% of the installed capacity comes from IPPs, with around 16,000-17,000MW excluding RLNG plants. The reduction in capacity from old government-owned plants and the maintenance of certain IPPs contribute to the overall capacity charges paid by consumers. Dr. Fayyaz A. Chaudhry, Chairman of the Board of Directors of National Grid Company of Pakistan, emphasized that the system's firm capacity stands at around 40,000MW.

While solar power generation plays a significant role, it is not considered firm capacity due to its limitations during evening hours. By terminating PPAs with inactive IPPs and halting new projects, there is potential to reduce overall tariffs and alleviate the burden on electricity consumers.