Pakistan’s Next Energy Revolution Is a Smarter Grid

Pakistan has spent decades expanding power generation. The next challenge is to build an electricity network that can see, predict and adapt.

By Dr Habib Ur Rahman Habib, SMIEEE, MIET

For generations, the story of electricity has been largely about construction: bigger turbines, longer transmission lines, more dams and more power plants. Pakistan has followed that path intensely, from Tarbela and Mangla to newer thermal, wind and solar projects.

Yet despite substantial additions to generation capacity, households and businesses continue to face expensive, unreliable and, at times, poor-quality electricity. This apparent contradiction points to an important reality: an electricity system can have sufficient power plants and still perform poorly when its transmission, distribution, planning and commercial systems remain weak.

The defining energy question for Pakistan in the coming decade, therefore, should not be limited to how much more electricity the country can generate. The more important question is how efficiently, reliably and affordably Pakistan can use every available unit of electricity.

The next energy revolution will not be won simply by adding megawatts. It will increasingly depend on teaching the grid how to think.

That does not mean handing the national power system over to an opaque computer. It means combining artificial intelligence, digital sensors, secure communications, automated control, modern power electronics, energy storage and skilled human judgement.

A smarter grid should be able to see changing conditions, forecast what may happen next, recommend appropriate responses and, within clearly defined engineering and regulatory limits, act quickly.

The cost of an inefficient system

Pakistan is an especially important case for this transformation. Available generation can remain underused while consumers continue to face supply constraints, while fixed contractual payments remain payable even when power plants are not operating at full capacity.

NEPRA’s tariff analysis for FY2024–25 placed capacity charges at Rs18.39 per unit, compared with an energy-charge component of Rs10.94 per unit. This highlights the financial pressure created when the power system is unable to make efficient use of available generation.

Simply building more plants without improving dispatch, demand management and network efficiency risks increasing costs without adequately addressing the problems faced by consumers.

The distribution system is where these national challenges become painfully local. Voltage problems, overloaded transformers, electricity theft, inaccurate billing, equipment failures and poor recovery all converge at the distribution level.

NEPRA reported aggregate transmission and distribution losses of 18.31 per cent for distribution companies in FY2023–24, compared with an allowed average of 11.77 per cent. Losses above the permitted level contributed about Rs276 billion to circular debt during the year.

This is not simply a shortage of electricity. It is also a shortage of visibility, coordination, accountability and operational intelligence.

Making the grid visible

A smarter electricity system begins with better information.

Smart meters, feeder sensors, automated substations and modern supervisory-control systems can replace delayed estimates with a near-real-time picture of what is happening across the network.

Artificial intelligence can analyse large volumes of data to identify abnormal consumption, locate avoidable losses, detect overloaded equipment and help distinguish technical faults from potential meter irregularities or theft patterns.

This would allow field teams to respond more precisely, while infrastructure investment could be guided by evidence rather than assumptions.

Predictive maintenance offers another immediate opportunity.

Instead of waiting for a transformer to fail or a feeder to trip repeatedly, utilities can analyse temperature, loading, voltage-quality and maintenance data to identify equipment that may be at risk.

Planned maintenance is generally less disruptive and potentially less costly than emergency replacement, prolonged outages and the resulting loss of public confidence.

The success of digitalisation should therefore not be measured by the number of dashboards created. It should be measured by fewer and shorter outages, better voltage quality, lower losses and faster restoration of service.

Forecasting a changing energy system

Forecasting will become equally important.

Electricity demand changes with temperature, industrial activity, agricultural pumping, holidays and consumer behaviour. At the same time, solar and wind generation fluctuate according to weather conditions.

AI-based forecasting can estimate both electricity demand and renewable generation over periods ranging from the next few minutes to the following day.

Better forecasting can help system operators schedule lower-cost resources more effectively, reduce unnecessary reserves and fuel consumption, and make better use of renewable electricity that might otherwise be curtailed.

This is particularly important as Pakistan’s energy mix becomes more decentralised.

From consumers to “prosumers”

The structure of Pakistan’s electricity system is already changing.

Homes, businesses and factories are installing rooftop solar systems. Batteries are likely to become increasingly common, while electric vehicles could eventually add another significant source of flexible electricity demand.

Consumers are gradually becoming “prosumers”—people and businesses that can consume electricity, generate it and, in some cases, store it.

A network designed primarily for one-way electricity flows from large power stations to passive consumers will face increasing challenges as two-way flows become more common.

The answer should not be to treat distributed solar simply as a threat to the traditional power system. Instead, Pakistan should focus on integrating distributed energy resources intelligently.

Utilities need accurate information about where these systems are connected, how much electricity they can export and when local feeders are approaching technical limits.

Smart inverters can help support voltage and frequency, while time-of-use tariffs can encourage flexible activities such as water pumping, cooling and electric-vehicle charging during periods when electricity is more readily available.

Household and commercial batteries could also be aggregated to absorb surplus electricity and release it during evening peaks, allowing thousands of small energy assets to operate collectively in much the same way as a virtual power plant.

Storage should solve a defined problem

Energy storage can provide an important bridge between variable renewable generation and dependable electricity supply.

But storage should not be reduced to a single technology or treated simply as a procurement target.

Batteries can respond rapidly to changes in the grid, supporting frequency control and critical loads. Pumped hydropower and other long-duration technologies can shift larger quantities of electricity over many hours or days. Thermal storage can also provide useful flexibility for buildings and industrial facilities.

Pakistan should therefore procure storage against clearly defined system requirements—whether frequency response, peak reduction, renewable integration, backup power or network support.

The country should first identify the problem and then determine which storage technology can solve it most effectively.

Power electronics and the future grid

Modern power electronics will also play an increasingly important role.

As solar, wind, battery storage and high-voltage direct-current systems expand, a greater share of electricity will pass through electronic converters rather than conventional rotating machines.

Advanced grid-forming converters can help establish voltage and frequency and strengthen networks with low inertia or weak-grid characteristics.

Such technologies could be particularly relevant to renewable-rich regions, remote communities, industrial microgrids and controlled electricity restoration following major disturbances.

But a more digital electricity system also creates new risks.

Cybersecurity must be built in

A digital grid must be secure by design.

Pakistan needs clear and enforceable rules covering data ownership, consumer privacy, interoperability and cybersecurity. Critical recommendations generated by AI systems should be explainable and auditable.

Artificial intelligence should assist operators by forecasting conditions, prioritising alarms and optimising routine operations. However, trained engineers should retain authority over safety-critical decisions.

Reliable communications, offline fallback systems and regular cybersecurity exercises should be regarded as essential components of grid reliability rather than optional additions.

Start with targeted projects

Pakistan does not need to treat grid digitalisation as an expensive national “moonshot”.

A more practical approach would be phased and targeted.

The country could begin with high-loss feeders, overloaded urban networks, industrial zones, areas facing renewable-energy constraints, hospitals and university campuses.

Each selected area should have a complete monitoring and smart-metering chain linked directly to operational decision-making.

Performance should then be measured through clear indicators, including reductions in losses, fewer outages, faster recovery, greater renewable-energy absorption, lower maintenance costs and quicker resolution of consumer complaints.

Projects that demonstrate measurable results can subsequently be scaled using common data and equipment standards.

Five steps towards national reform

Five actions could help turn isolated smart-grid pilots into broader national reform.

First, prioritise grid visibility. Utilities cannot effectively manage what they cannot measure.

Second, reward distribution companies for outcomes. Incentives should focus on reliability, loss reduction, service quality and successful integration of distributed energy resources rather than simply on capital expenditure.

Third, establish regulated sandboxes. Utilities, universities and Pakistani technology companies should have controlled environments in which they can test forecasting, storage, microgrids and demand-response solutions.

Fourth, strengthen system operations. Operators need modern forecasting and decision-support tools so that renewable electricity can be scheduled and integrated rather than merely accommodated.

Fifth, invest in people. Power engineers need stronger data and cybersecurity skills, while software specialists need a deeper understanding of protection systems, grid stability and the physical limitations of electricity networks.

Pakistan can build its own expertise

Pakistan is not starting from zero.

The country has a young software and data-science workforce, experienced power engineers, a growing solar supply chain and universities capable of becoming living laboratories for energy innovation.

University campuses could combine solar generation, battery storage, controllable loads, electric-vehicle charging and real-time simulation in controlled environments. Such facilities could train students, test locally developed technologies and help utilities evaluate solutions before committing to large-scale procurement.

The long-term ambition should be greater than simply importing smart-grid equipment.

Pakistan has the potential to develop and export algorithms, controllers, sensors and engineering services to other emerging economies facing similar electricity challenges.

Consumers must remain at the centre

Ultimately, consumers must remain at the centre of the transition.

A grid is not intelligent simply because it generates more data for institutions. It is intelligent when that data translates into tangible improvements for citizens and businesses: fewer outages, faster restoration, accurate billing, fairer tariffs and meaningful choices.

Digitalisation must also avoid deepening inequality.

Low-income households should not be excluded simply because they cannot afford solar panels, batteries or smart appliances. Community energy initiatives, targeted financing and carefully designed lifeline protections can help ensure that technological progress benefits a broader section of society.

Beyond the old generation debate

Pakistan’s power debate is too often trapped between two unsatisfactory choices: build more generation or manage more load-shedding.

There is a third path.

The country can make every existing megawatt work harder through better forecasting, flexible demand, energy storage, automated control, lower distribution losses and more accountable operations.

A new generation should certainly be added where transparent and integrated system planning demonstrates that it is genuinely required.

But adding capacity alone cannot solve structural weaknesses in the electricity system.

The technologies needed for a smarter grid are increasingly available. The harder task is aligning institutions, incentives, engineering standards, cybersecurity safeguards and public trust.

If Pakistan can achieve that alignment, its electricity network can become more than a pipeline carrying power from generators to consumers.

It can become a responsive national platform for industry, innovation and social development.

Pakistan has spent decades chasing megawatts. The next decade should be about teaching the grid how to think.