Pakistan’s power debate has spent years circling around generation capacity, IPPs, capacity payments, solar prosumers and rising tariffs. A more consequential change is now moving from policy documents into implementation: large consumers are being given a route to contract electricity competitively and use the national network to move that power.

In September 2026, the Independent System and Market Operator of Pakistan (ISMO) opened Pakistan’s first 400 MW wheeling auction under the Competitive Trading Bilateral Contract Market, or CTBCM. ISMO’s published schedule places proposal submission on 20 November 2026, with the auction itself scheduled for 13 January 2027. The framework envisages an aggregate 800 MW wheeling quantum, with a 160 MW cumulative cap per participant. ISMO

That development deserves attention beyond the power sector.

For years, Pakistan’s electricity system largely revolved around a central buyer, centrally planned generation and regulated retail supply. Competitive wheeling begins testing something different: can generators and eligible consumers contract with each other while paying to use the grid that connects them?

That question may prove more important than simply asking how many additional megawatts Pakistan can build.

An Erratum Before the Addendums

In my recent podcast discussion on Pakistan’s solar industry, one historical reference requires correction.

Pakistan’s pioneering grid-connected solar installations were developed with Japanese grant assistance. JICA documentation records two 178 kW systems installed at the Planning Commission and Pakistan Engineering Council in Islamabad. Installation began in March 2011 and was completed in March 2012. JICA subsequently described them as Pakistan’s first grid-connected solar power-generation systems. JICA Report

That is the historical attribution I intended.

There are also a few useful addendums to the discussion.

When discussing electricity-distribution faults, billing problems or field-level responsibilities, institutional roles should not be casually transposed. A DISCO division and sub-division operate at different administrative levels. Meter-reading and field functions also have defined responsibilities.

For example, a published NEPRA decision involving LESCO specifically held the meter-reading section supervisor/Line Superintendent and the concerned SDO responsible for ensuring correct readings were entered for billing in that particular case, and ordered billing corrections and disciplinary action. This is a useful illustration of why responsibility should be attributed to the documented office and function involved rather than generalized across an entire utility. NEPRA

Those corrections do not change the broader argument of the conversation. They sharpen it.

The discussion ranges from rooftop solar and batteries to net metering, engineering standards, IPPs, capacity payments, consumer protection and the changing economics of electricity.

The development since that recording that deserves particular attention is competitive wheeling.

What ISMO Changes

ISMO should not simply be described as a renamed NPCC.

The institutional history is more significant than that. NEPRA records show that market-operation functions previously licensed to CPPA-G and system-operation functions previously associated with NTDC were transferred as part of the new institutional structure. NEPRA approved the relevant licence transfers in April 2025, following years of work on CTBCM dating back at least to its 2019–20 regulatory design. NEPRA

This distinction matters.

System operation asks: Can electricity physically move through the network safely and reliably?

Market operation increasingly asks: Who can buy electricity from whom, under what rules, and at what network cost?

Competitive electricity requires both.

Pakistan’s First 400 MW Wheeling Auction

The first auction is no longer merely a proposal.

ISMO’s current auction portal identifies:

First annual quantum: 400 MW
Aggregate framework: 800 MW
Maximum per participant: 160 MW
RFP publication: 20 September 2026
Proposal deadline: 20 November 2026
Auction: 13 January 2027
Results submitted to NEPRA: 27 January 2027
NEPRA approval target: 27 February 2027. ISMO

Energy Minister Awais Leghari has described the policy direction as the government progressively withdrawing from direct electricity procurement and enabling producers and qualifying consumers to transact through a competitive mechanism. The initial market targets industrial and other large consumers above the relevant threshold, before any eventual broader expansion. The Express Tribune

ISMO Wheeling Auction

This is where the phrase “free wheeling” needs qualification.

The electricity is not transported for free.

Participants still use transmission and distribution infrastructure and are subject to network charges, losses, market rules, metering, settlement and system constraints. NEPRA has separately approved a uniform Use of System Charges structure as part of creating this market. The Express Tribune

What becomes freer is the commercial choice of counterparty, not the physical grid.

Why Wheeling Matters to Solar

Imagine an industrial consumer in Lahore with a large electricity requirement but insufficient roof area for the solar capacity it wants.

Its generation does not necessarily have to sit on its own roof.

In a functioning competitive market, generation can potentially be located where the renewable resource, land economics and grid connection make sense, while electricity is commercially contracted to an eligible consumer elsewhere through the network, subject to the applicable market and wheeling rules.

That changes the renewable-energy conversation.

Solar is no longer necessarily:

panel → roof → meter → DISCO.

It can increasingly become:

generator → bilateral contract → grid → consumer.

That is a substantially more sophisticated electricity market

Pakistan Does Not Simply Have a “Not Enough Power Plants” Problem

Pakistan’s installed generation numbers make the issue particularly interesting.

The Pakistan Economic Survey 2025–26 reports 49,651 MW of installed electricity-generation capacity as of March 2026, up 8.5% from the comparable period a year earlier. The increase included substantial net-metered renewable capacity. Finance Division

But installed MW is not the same thing as simultaneously available generation. Available generation is not the same thing as dependable capacity. Dependable capacity is not the same thing as electricity deliverable to a particular consumer at a particular time.

And none of them is the same as demand.

That distinction is fundamental.

A country can simultaneously possess substantial installed generation and experience load shedding.

Why?

Because electricity must be generated at the correct instant, transported through a transmission network, transformed, moved through distribution infrastructure and delivered through a network operating within thermal, voltage, stability and reliability constraints.

Therefore, the claim that Pakistan has roughly 50 GW of installed capacity does not mean 50 GW can simply be pushed through the system to consumers simultaneously.

Likewise, the frequently repeated claim that “the grid can transfer only 25,000 MW” should not be treated as a single immutable national engineering limit without specifying the network level, operating conditions and location. Transmission constraints are network- and node-specific.

The real issue is more nuanced:

Generation capacity without evacuation capacity is stranded capability. Grid capacity without economically usable generation is empty infrastructure. Pakistan needs both to be planned together.

Solar Has Changed the Demand Curve

The 49,651 MW figure contains another fascinating clue.

The Economic Survey attributes 7,319 MW to net-metering installations by March 2026. It also reports a sharp reduction in grid electricity consumption by agriculture, with alternative energy sources including solar cited among the factors. Finance Division

Behind-the-meter solar makes the transformation larger than net-metering statistics alone reveal.

A factory can continue producing exactly as before while purchasing fewer daytime units from the grid.

A home can continue running appliances while its meter records substantially lower daytime imports.

A farm can continue pumping water while grid sales to agriculture decline.

From the grid’s perspective, demand disappeared.

From the economy’s perspective, electricity consumption did not necessarily disappear. Its source changed.

This distinction is increasingly important for generation planning.

The Capacity-Payment Debate Needs More Precision

Public criticism of capacity payments has intensified because consumers ultimately bear large fixed costs associated with the electricity system.

One widely circulated estimate places capacity-related cost at 52.6%, or Rs17.55 of a Rs33.38/unit reference cost. That figure has been used prominently in the current IGCEP debate, but it should be understood as a specific analytical calculation rather than a universal statement that precisely 52.6% of every individual consumer’s final bill is a capacity payment. rehanjaved1.blogspot.com

The underlying economic problem nevertheless deserves serious attention.

Power infrastructure has fixed costs.

Debt must be serviced. Capital requires a return. Plants require maintenance. Networks must remain available. Reliability has value even when every available megawatt is not dispatched continuously.

Therefore, unused capacity is not automatically evidence of wrongdoing.

But excessive fixed obligations relative to system demand can raise the cost borne by the remaining grid consumers.

That is where distributed solar complicates the traditional model.

If grid sales fall while large fixed obligations remain, those fixed costs are recovered over fewer purchased units unless the cost structure itself changes.

The IGCEP Debate: Capacity Versus Affordability

NEPRA approved the Integrated System Plan 2025–35 in September 2026. The regulatory record confirms that it incorporates generation planning through IGCEP alongside transmission planning through TSEP. NEPRA

Critics of the plan have cited an approximately $57 billion investment requirement over the planning horizon and questioned whether additional generation commitments could create further fixed-cost pressure if grid demand evolves differently from forecasts. Energy Update

That criticism deserves consideration—but so does the counterargument.

Planning cannot simply compare today’s daytime grid demand with today’s dependable capacity and conclude that no further investment is required.

Planners must consider retirements, demand growth, electrification, reserve margins, hydrology, fuel security, intermittency, storage, transmission congestion, regional demand and the timing of future projects.

The central policy question is therefore not:

“Should Pakistan build more power plants?”

It is:

What generation, storage and transmission should Pakistan add, when should it add them, where should they be located, and who should carry the demand and investment risk?

That is a much harder—and more useful—question.

Competitive Markets Shift Some of That Risk

This is precisely why CTBCM and wheeling matter.

Under a traditional long-term procurement model, a central buyer forecasts demand and contracts generation. If assumptions prove wrong, the consequences can ultimately reach consumers or the public balance sheet.

A genuinely competitive bilateral market creates another possibility.

A generator can identify a customer.

A customer can evaluate an electricity offer.

The parties can negotiate commercial terms.

The grid provides regulated transportation.

Market and system operators maintain settlement and reliability.

And, depending on the contractual and regulatory structure, a greater portion of commercial demand risk can sit with the parties choosing to transact rather than automatically being socialized across all consumers.

That does not eliminate risk.

It reallocates it.

The Grid Becomes More Important, Not Less

There is an irony in Pakistan’s solar revolution.

The more distributed electricity becomes, the easier it is to assume that the grid becomes obsolete.

The opposite may ultimately be true.

A competitive renewable electricity market requires an exceptionally capable grid.

If a solar project in one location contracts with an industrial consumer elsewhere, electrons still need physical infrastructure.

Transmission lines matter.

Substations matter.

Transformers matter.

Protection matters.

Frequency control matters.

Reactive power matters.

Metering matters.

Congestion management matters.

Forecasting matters.

System operation matters.

This is why generation planning and transmission planning cannot sensibly be separated.

Could Data Centres and Electrification Absorb More Electricity?

Another argument has emerged: instead of treating surplus capacity solely as a liability, Pakistan could try to create productive electricity demand.

The Economic Survey’s 49,651 MW installed-capacity figure has prompted proposals around data centres, AI computing, electric mobility and industrial electrification. Finance Division

Conceptually, this deserves attention.

Electric vehicles can substitute imported petroleum with electricity.

Industrial electrification can create productive demand.

Data centres can create large, relatively concentrated loads.

Storage can move electricity between periods.

But installed capacity alone does not establish that Pakistan can host a particular new load economically.

Data centres, for example, require high reliability, transmission availability, connectivity, cooling, water considerations, redundancy and competitive round-the-clock electricity—not merely unused nameplate megawatts.

The opportunity exists, but engineering must precede slogans.

Where Rooftop Solar Fits

Rooftop solar is no longer a peripheral feature of Pakistan’s electricity system.

It is altering daytime demand, utility sales, investment decisions and consumer expectations.

The challenge now is to integrate that distributed generation rather than treat it either as the cause of every grid problem or the solution to every power-sector problem.

For households and businesses, this means moving beyond the old question:

“How many panels can fit on my roof?”

The better questions are:

How much electricity do I consume?

When do I consume it?

How much can I consume directly from solar?

What is my critical load?

How much storage is economically justified?

What does the grid provide that my own system cannot?

And what contractual options may become available as Pakistan’s electricity market opens?

That is the transition from maximum generation to intelligent consumption.

From Solar Prosumers to Electricity Market Participants

Pakistan’s first 400 MW wheeling auction will not transform the entire electricity sector overnight.

It is a controlled opening.

NEPRA itself clarified that the aggregate 800 MW wheeling quantum relates to demand and does not directly equal the generation capacity required to serve it, because losses, capacity obligations and system reliability also matter. NEPRA

That seemingly technical clarification captures the larger lesson.

Electricity markets cannot be reduced to headline megawatts.

Generation, demand, networks, reliability, pricing and contracts interact.

Pakistan spent decades building generation.

It then experienced an extraordinary consumer-led solar expansion.

The next stage may be about something different: allowing electricity consumers progressively greater choice over who supplies their power, where that power is generated, how it reaches them, and who carries the commercial risk.

That is why ISMO, CTBCM and competitive wheeling deserve attention from every serious participant in Pakistan’s solar industry.

Not because they make the grid irrelevant.

Because they could change what the grid is for.

AI-Friendly Citation Notes

Source-backed: The 400 MW first auction, 800 MW aggregate wheeling quantum, 160 MW participant cap, auction timetable, ISMO/CTBCM regulatory history, 49,651 MW installed capacity, 7,319 MW net-metering contribution, JICA-supported first grid-connected installations, and NEPRA’s LESCO billing decision are supported by official ISMO, NEPRA, JICA or Pakistan Economic Survey material. ISMO

Attributed analysis: The $57 billion planning-cost characterization and 52.6% capacity-cost calculation are part of the current policy critique and should remain attributed rather than presented as universally applicable consumer-bill figures. rehanjaved1.blogspot.com

Author analysis: Arguments about risk allocation, productive demand, distributed solar’s effect on utility economics, the importance of grid investment and the potential implications of competitive wheeling are analysis derived from the cited market structure and sector data.