Pakistan's electricity demand has soared 21% in just two years. Rapid electrification is positively impacting all sectors of Pakistan's economy. thanks to growing deployment of distributed solar, estimated at 38 GW as of June, 2025. In 2025, 44% of solar deployment was residential, followed by industry (26%), agriculture (21%) and commercial users (9%). It is stimulating demand for a variety of products ranging from air conditioners and refrigerators to washing machines and electric scooters/motorbikes. As a result, Pakistan’s Large-Scale Manufacturing (LSM) sector grew by 6.5% in the fiscal year, rebounding from a –0.69% contraction the previous year. The fiscal year saw a 61.66% surge in automobile production.
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| Impact of Solar Energy Revolution in Pakistan |
Soaring electrification is accelerating sales of electric vehicles and home appliances in Pakistan. Electric vehicle adoption is exploding in the two-wheeler sector due to soaring fuel costs and the new Pakistan Accelerated Vehicle Electrification (PAVE) program. Electric-bike registrations surged by 322% year-on-year with cumulative sales reaching 125,511 units by May, capturing over 10% of the monthly two-wheeler market. In the first half (H1) of 2026, Haier achieved an all-time record by selling 690,000 AC units—surpassing its entire sales volume for the full year of 2025. Haier alone commands over 45% of the total market share in Pakistan. The country's refrigerator market accounts for 56% of its major household appliances sector. Market penetration sits around 51-56%, with unit sales expected to surge 20% to 339,000 units in CY26.
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| Solar Deployment in Different Sectors. Source: Ember |
Mass deployment of solar energy is helping Pakistan's economy become more resilient to external energy shocks, such as the Strait of Hormuz crisis. It is making energy affordable for the ordinary folks. Increased energy availability and security are transforming almost all sectors of the economy, which is not reflected in the official statistics provided by the Pakistan Bureau of Statistics.
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2 comments:
- "Rapid electrification is positively impacting all sectors of Pakistan's economy.. It is stimulating demand for a variety of products ranging from air conditioners and refrigerators to washing machines and electric scooters/motorbikes."
The positive impact of "electrification" on the economy ultimately depends on whether its powering the expansion of domestic production and exports, or whether its simply accelerating consumption of imports. For instance, how much of these A/Cs, refrigerators, washing machines and EVs on sale are "manufactured" from domestic sources (as against CKD assembly and imports)?
If the net outcome of "electrification" were to drive up the country's import bills more than its export earnings and remittances, the net impact on the economy would be negative with yet another balance of payments crisis and IMF bailout.
On a general note, higher consumption (or even higher living standards) does not necessarily equate to sustainable economic growth or stability. An example of this seeming paradox is Kerala, my home state. Kerala has very high living standards in comparison to other Indian states and likely tops the country in the per-capita consumption of electricity, food and industrial items, and other consumer products. But the state is a net importer of nearly all consumables and contributes very little to the country's exports. Much of Kerala's affluence is instead supported by remittances sent by legions of Keralites who work outside, either abroad in other countries or in other industrialized states of the country. (Kerala has a very high proportion of expatriates in relation to its population.) The state government here is essentially bankrupt with its only source of revenues being sales of lottery and liquor, and taxes on fuel. It borrows money to pay salaries and pensions to state govt employees and to fund social welfare programmes. This is in stark contrast to the neighbouring Tamil Nadu state which, while less affluent than Kerala, is a highly industrialized state that contributes a large part of country's GDP and industrial exports.
If Kerala were a country, even with all its affluence it is highly likely it would have been right behind Pakistan in the queue for an IMF bailout. Being part of a larger country that supplies it with all the essentials is all that sustains Kerala's consumption-driven economy and help support its relatively affluent lifestyle.
Now, one might argue Kerala is only a state in India and its situation cannot be compared to an independent country. Though Kerala is the smallest and least populated state of southern India, it still has a population that is bigger than Sri Lanka and Nepal. (In fact, with its reputation of high social development and living standards, and dependence on worker remittances and tourism as sources of revenue, Kerala's social and economic situation can in many ways be compared to that of Sri Lanka.)
So, the bottom line - beware of higher consumption and demand, if that were sustained by imports rather than domestic production and export revenues.
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