Citizens transport 50 GW of solar power as costly fossil fuel demand shrinks

After decades of dependence on imported and local fossil fuels, Pakistan is turning to cheaper and cleaner options. In FY24, shrinking energy supply and declining consumption defined Pakistan’s energy story. Weak demand and rising fuel costs are leading to a gradual shift away from dependence on fossil fuels.

Economic pressures are reshaping energy use

The Pakistan Energy Market Review (PEMR) 2025 by Renewables First reveals that Pakistan’s primary energy supplies fell for the second consecutive year in 24 years, while final energy consumption fell sharply due to affordability constraints and weaker industrial and agricultural demand.

Crude oil production has fallen by 25% over the past decade, and domestic natural gas production continues to decline, increasing reliance on expensive imported liquefied natural gas (LNG). Coal consumption is also falling, with most of the remaining demand now being met through local coal instead of imports.

Despite this shift, pressures remain. LNG imports are putting pressure on foreign exchange reserves as industries move away from them due to high costs. These imports are now being redirected to households, adding to already heavy electricity bills. Long-term LNG contracts have also created a surplus at a time when industrial and captive consumption is declining. Along with the rupee’s volatility against the dollar, these factors are adding stress to the energy system.

“LNG has served as our backup fuel, but it is only a temporary bridge,” said Huma Naveed, data analyst at Renewables First. “This mismatch between supply and demand requires planners to integrate the country’s growing use of renewable energy into future energy strategies.”

The gas sector’s revolving debt stood at Rs 3.2 trillion by March 2025, highlighting the urgent need for reforms across the gas supply chain.

Solar offset of fossil fuel use

Pakistan’s energy market is undergoing a consumer-led transformation as the country moves beyond short-term fixes towards a permanent shift from fossil fuels to renewables. Non-mineral energy stocks, including hydel, nuclear and solar, have risen nearly 50% since 21st year, while mineral-based supplies have continued to shrink. Coal’s share of the energy mix is ​​declining mainly due to market dynamics, as rising costs make it less competitive.

The report highlights that the transition spans all sectors. The industrial sector saw the largest decline in fossil fuel use, with industrial energy consumption down 21% year-on-year in FY24. Incentives for electric vehicles are pushing transport towards electrification, while farmers are turning to solar-powered tube wells to reduce reliance on diesel and the grid.

Rabia Babar, head of energy and climate data at Renewables First, commented on the wider shift: “We are seeing a structural reset as energy, agriculture, transport and industry turn to solar solutions instead of more expensive fuels. The question now is not whether fossil fuels will decline, but how quickly clean technologies can replace them.”

Together, these changes reveal an energy system in motion — one where solar power becomes the foundation for future growth. Since 2017, Pakistan has installed over 50 GW of solar PV capacity, enabling households, farms and industries to reduce costs and improve reliability.

While this transformation brings much-needed relief, the report stresses that it also requires decisive action. Reforms in the gas and electricity sectors, including rationalizing tariffs, improving distribution efficiency and open market access, are crucial to curbing cyclical debt. Policies must ensure that solar adoption remains accessible and fair for all consumers.

With solar adoption accelerating, Pakistan’s energy landscape is entering a new phase — citizen-led and defined by resilience and reform.