Pakistan’s industrial sector is paying almost double the electricity prices compared to China, India and the US and even more than the European Union, which is negatively affecting its export competitiveness.
According to the latest ‘Electricity 2025- Analyses and Forecasts to 2027’ report by the Paris-based International Energy Agency (IEA), the average electricity price in the US and India in 2024 was 6.3 cents per kilowatt-hour, 7.7 cents in China, 4.7 cents in Norway and 11.5 cents in the European Union.
In comparison, the average electricity price for energy-intensive industries in Pakistan is expected to be 13.5 cents per unit in 2024.
Although the cost of electricity in Pakistan is not specifically reported, as it is not a member of the IEA, it details the challenges faced by the European Union, where the average electricity price in 2024 was 11.5 cents, about 18% lower than in Pakistan.
This may partly reflect the difficulties Pakistani industries face in exporting products domestically and abroad.
The report says that Europe is facing deindustrialization, as high energy costs have pushed industries back, and affordable electricity is essential for economic growth. High electricity prices continue to undermine the competitiveness of European energy-intensive industries.
After easing in 2023, preliminary data for 2024 show that average electricity prices for energy-intensive industries in the European Union have fallen by only 5% compared to the previous year, although they are still 65% higher than in 2019.
Despite falling from record highs in 2022 and slightly lower than in 2023, electricity prices for energy-intensive industries in the EU in 2024 were on average twice as high as in the US and 50% higher than in China.
The report said that high electricity prices have affected European industries unevenly across most EU countries, with businesses with low to medium electricity consumption enjoying more stable tariffs between 2021 and 2024, resulting in reduced price volatility compared to large consumers.
Electricity prices for EU energy-intensive industries increased by an average of 160% in 2022 compared to 2019, while prices for medium consumers increased by 80% and for small consumers by 60%.
The report said that the surge in electricity demand is ushering in a new ‘power era’, with demand set to grow by 2027.
The IEA said that the report’s forecast period of 2025-2027 is expected to witness the fastest growth in global electricity consumption, driven by rising industrial output, increasing air conditioning use, accelerating electricity speeds and the expansion of data centres around the world.
Global electricity demand grew by 4.3% in 2024, and is forecast to grow by around 4% in 2027. Over the next three years, global electricity consumption is forecast to grow by a whopping 3,500 terawatt hours (TWh).
This corresponds to a growth rate of more than Japan’s equivalent in world electricity consumption per year, faster than the 2.5% growth in 2023, when the slowdown in strong advanced economies in China, India and Southeast Asia was offset by a slowdown.
Most of the additional electricity demand through 2027 will come from emerging economies, which are expected to account for 85% of the growth.
More than half of the increase in global electricity demand in 2024 came from China, where electricity demand is forecast to grow by an average of 6% per year through 2027, up from 7% in 2024 the previous year.
India, Southeast Asian countries and other emerging markets are also expected to see strong demand growth due to economic expansion and rising air conditioner ownership. Electricity demand in India is forecast to grow at an average annual rate of 6.3% over the next 3 years, higher than the average growth rate of 5% in 2015-2024.
While many emerging economies are seeing strong growth in electricity demand, Africa lags behind. Despite significant progress in recent years, 600 million people in sub-Saharan Africa still lack access to reliable electricity.
China, on the other hand, is rapidly expanding its electricity supply, where the share of electricity in final energy consumption (28%) is much higher than in the United States (22%) or the European Union (21%).
China’s electricity consumption has been growing faster than its economy since 2020, indicating the pace at which electricity supply is gaining momentum across all sectors.
In the 3-year period from 2022 to 2024, industries increased electricity demand by nearly 50 percent, while the commercial and residential sectors contributed 40 percent together.
The industrial sector in China has become more electricity-intensive, with a third of the increase in demand coming from the manufacturing of solar PV modules, batteries, and electric vehicles. In 2024, these industrial sectors consumed more than 300 TWh of electricity annually, which is as much electricity as Italy consumes in a year.
