Capacity Payments Burden on Electricity Consumers to Gradually Decline

Strategic Insights -

Pakistan's total installed power generation capacity is set to rise to 46,605 megawatts in FY25, but substantial capacity payments to idle power plants continue to burden electricity consumers nationwide. Energy experts are optimistic that this issue will gradually decline as the government has halted new power projects and terminated power purchase agreements with several independent power producers. According to the Economic Survey, the country's energy mix comprises hydel (24.4%), thermal (55.7%), nuclear (7.8%), and renewables (12.5%). As the winter season approaches, the capacity payment burden becomes more significant, with the country's total electricity demand dropping to 12,000-13,000 MW.

Key Takeaways:

  • The issue of capacity payments is more significant in winter when total electricity demand drops to 12,000-13,000 MW.
  • The country's energy mix comprises hydel (24.4%), thermal (55.7%), nuclear (7.8%), and renewables (12.5%).
  • Total electricity generation stood at 90,145 GWh during July-March FY25, with hydel (30.4%), thermal (46.3%), nuclear (19.1%), and renewables (4.2%) contributing to the mix.
  • Six nuclear power plants with a total capacity of 3,530 MW supplied 17,174 million units of electricity during July-March FY25.
  • The installed capacity includes an addition of over 2,800 MW through solar net metering, reflecting a 1.6% increase compared to FY24.
  • Thermal power still makes up the largest portion of the electricity supply at 55.7%, but its share has declined in recent years, indicating a shift towards more indigenous and sustainable sources.
  • Hydel, nuclear, and renewable sources now collectively account for 53.7% of total electricity generation.
  • The government has halted new power projects and terminated power purchase agreements with several independent power producers to reduce the capacity payment burden.

Statistics:

  • Pakistan's total installed power generation capacity: 46,605 MW (Economic Survey)
  • Hydel: 24.4% of total energy mix (Economic Survey)
  • Thermal: 55.7% of total energy mix (Economic Survey)
  • Nuclear: 7.8% of total energy mix (Economic Survey)
  • Renewables: 12.5% of total energy mix (Economic Survey)
  • Total electricity generation (July-March FY25): 90,145 GWh (Economic Survey)
  • Electricity demand (December 2022): 12,000-13,000 MW (Source: Ministry of Energy official)

Sources:

  • Economic Survey
  • Ministry of Energy official (interviewed by Dawn)
  • Dawn article (entitled "Capacity payments burden on electricity consumers to gradually decline")