ISLAMABAD: NEPRA has approved a $47 billion Integrated System Plan through 2035, projecting higher power demand and major generation additions while raising serious concerns over surplus capacity, costly investments and the exclusion of cheaper renewable power.
The National Electric Power Regulatory Authority (NEPRA) approved the Integrated System Plan (ISP) 2025-35 submitted by the Independent System and Market Operator (ISMO), setting out the country’s projected electricity generation and transmission requirements through 2035.
Under the approved plan, peak electricity demand is projected to rise from 26,950 megawatts in 2025 to 35,521 MW by 2035. To meet the projected demand, the plan envisages 26,045 MW of additional generation capacity, comprising 17,485 MW of committed projects and 8,560 MW of optimised capacity.
At the same time, around 2,577 MW of existing generation capacity is projected to retire during the planning period.
The generation expansion under the original plan carried an estimated cost of $47.13 billion, while a further $10.65 billion would be required for transmission system upgrades.
However, NEPRA’s approval came with several important exclusions, reservations and directions for ISMO to improve its planning methodology and address weaknesses in data, modelling and tariff projections.
The regulator rejected the proposed $900 million investment in Battery Energy Storage Systems (BESS), observing that the cost of the proposed system had not been properly incorporated into ISMO’s optimisation model for a meaningful assessment.
NEPRA directed that a comprehensive technical study of the battery storage project be conducted before the proposal is considered again.
The regulator also did not endorse ISMO’s proposal to complete the NGC-K-Electric Interconnection transmission line by 2028, observing that the proposed timeline was not realistic as construction of such a transmission line would require around five years.
The ISP essentially covers two major components of the power sector: expansion of generation capacity through new power projects and development of transmission infrastructure required to evacuate and deliver electricity.
NEPRA also directed ISMO to address shortcomings before preparing future plans, including providing clearer data, resolving discrepancies in electricity tariff projections and improving the overall planning and optimisation process.
A significant feature of the determination was that NEPRA’s members did not reach complete unanimity on the plan, with individual members recording separate notes of concern.
NEPRA Member Maqsood Anwar Khan raised objections over the exclusion of several hydropower projects, including Gabral Kalam, Madyan, Kalam Asrit and Asrit Kedam.
He observed that these projects had previously been approved and safeguarded, and argued that their exclusion without a clear or legal justification could discourage investors who had made investments on the basis of earlier assurances.
The plan has also drawn concerns from various stakeholders, including planners, business organisations and provincial governments, who have questioned the need for further large-scale capacity additions when Pakistan already has an estimated 15,000 to 20,000 MW of surplus generation capacity.
Stakeholders pointed out that existing power plants are operating at only around 45 percent of their capacity, warning that further investment could increase circular debt and capacity payments, ultimately adding to the burden on electricity consumers.
One of the strongest objections within NEPRA came from Member Amina Ahmed, who highlighted the exclusion of cheaper renewable energy from national planning.
In her dissenting note, she pointed out that K-Electric had secured tariffs as low as 3.09 US cents per kilowatt-hour during its renewable energy auction in late 2024, describing these as the lowest renewable energy tariffs achieved in Pakistan so far.
According to her, ISMO had failed to incorporate projects totalling around 640 MW into its planning for more than a year despite repeated questions raised by NEPRA, including a request made in March 2026.
Amina Ahmed further observed that ISMO had used incorrect figures in its model. After the data was corrected in July 2026, the modelling showed that inclusion of the cheaper renewable power would reduce rather than increase the overall system cost.
She said the episode had significantly affected NEPRA’s confidence in ISMO’s optimisation process.
NEPRA Chairman Waseem Mukhtar supported the final determination but highlighted the broader problem of Pakistan paying for excessive generation capacity.
He observed that consumers were already facing higher electricity bills because the country was paying for generation capacity that was not being fully utilised.
According to the chairman, electricity demand from the national grid during daytime hours has already declined to around 12,000 MW as consumers increasingly turn to solar panels and other alternative sources instead of relying solely on grid electricity.
The demand trend has raised questions over whether future generation and transmission investments are being planned against realistic consumption patterns, particularly as rooftop solar, distributed generation, captive power and consumer-level energy storage continue to affect grid demand.
NEPRA’s concerns therefore extend beyond the size of the proposed investment. The regulator has stressed that demand forecasts must accurately reflect changing consumption patterns because they determine the scale and timing of generation and transmission investments and, ultimately, the costs borne by electricity consumers.
The determination also underscores the challenge facing Pakistan’s power sector: balancing the need for reliable future electricity supply with existing surplus capacity, declining grid demand and the rapid expansion of cheaper distributed renewable energy.