Solar boom hits DISCOs revenues

Facing relentless electricity price hikes and heavy bills, Pakistani consumers have increasingly turned to solar power, leading to a 17% drop in grid power demand and sparking a revenue shortfall for distribution companies (DISCOs).

And in an effort to stimulate consumers to use more electricity, the government on Friday announced the Bijli Sahulat Package, for residential, commercial and industrial consumers on incremental usage over three winter months (Dec to Feb).

Under the package, the power consumers will receive an 18-50 per cent discount on additional usage over previous years' levels, with rates varying based on category and consumption slabs.

Electricity tariffs in the country have increased by more than 50 percent over the past two years on average while industrial output has declined due to escalating energy costs and challenging economic conditions at home and abroad.

Many consumers have switched to cheaper alternatives like solar power, while others have struggled to cope, leaving policymakers in a difficult position amid tough IMF conditions, rising circular debt and unaffordable electricity costs.

The resulting drop in electricity demand has led to a sharp decline in consumption, making demand forecasts unpredictable. Power generation in September was reported to be 9.9 percent below projections, with demand 6.4 percent lower year-on-year and 5.2 percent lower than in August. Overall, electricity generation for the first quarter (July-September) of this fiscal year was 8 percent below the same period last year.

Within the Lahore Electric Supply Company (LESCO) alone, 60,666 consumers now generate 836MWs of electricity through solar means, collectively saving billions in energy costs.

The shift comes after years of skyrocketing electricity prices and ongoing load-shedding, pushing not only residential but also commercial and industrial users to seek solar power as a cost-effective alternative to grid electricity.

Although solar systems were initially out of reach for some, recent reductions in solar panel and inverter prices have made the transition more accessible.

According to official data, more than 8,000MW of solar panels have been sold nationwide. Of this, roughly 3,000MW has been linked to the national grid through on-grid systems, allowing consumers to not only offset their own power bills but also contribute surplus electricity to the grid.

The widespread adoption has led to an 18% drop in electricity demand compared to last year, largely attributed to solarisation efforts and reduced industrial activity.

Where peak demand in previous years has reached 20,000MW, it now stands at around 16,000MW during the same period, indicating a substantial national reduction.

Documents show that LESCO's 60,666 net-metering users collectively generate 836 MW of electricity, impacting their utility bills but also reducing DISCOs' electricity sales.