ISLAMABAD: Pakistan’s industrial sector is paying almost double the electricity prices compared to China, India and the United States, and even higher than the European Union, adversely impacting its export competitiveness.
According to the latest ‘Electricity 2025 — Analysis & Forecast to 2027’ report by the Paris-based International Energy Agency (IEA), the average 2024 electricity rates in the United States and India amounted to 6.3 cents each per kilowatt-hour (kWh), 7.7 cents in China, 4.7 cents in Norway and 11.5 cents in the European Union.
In comparison, average electricity prices for energy-intensive industries in Pakistan hovered around 13.5 cents per unit in 2024.
Although the report did not specifically report about Pakistan, as it was not a member of the IEA, it explained in detail the challenges faced by the European Union, where average electricity rates in 2024 at 11.5 cents were almost 18 per cent lower than in Pakistan. That could partly indicate difficulties faced by the Pakistani industries at home and in exporting products abroad.
IEA analysis says expensive electricity hurting export competitiveness
It said that Europe was facing de-industrialisation as high energy costs pushed industries elsewhere. Affordable power is vital for economic growth. “High electricity prices continue to undermine the competitiveness of European energy-intensive industries,” the report said.
After easing in 2023, preliminary data for 2024 shows that average electricity prices for energy-intensive industries in the EU decreased only by 5pc compared to the previous year and are still 65pc higher than in 2019. Despite declining from record highs in 2022 and slightly lower compared to 2023, electricity prices for energy-intensive industries in the European Union in 2024 were, on average, still double those in the United States and 50pc higher than in China.
The report said higher electricity prices hit European industries unevenly across consumption levels. In most EU countries, businesses with low to medium electricity consumption enjoyed more stable tariffs between 2021 and 2024, resulting in reduced price volatility compared to larger consumers.
On average, EU electricity prices for energy-intensive industries were 160pc higher in 2022 than in 2019, while medium consumers experienced an 80pc increase and prices for businesses with low consumption rose by 60pc.
It said the strong growth in electricity demand was heralding a new ‘Age of Electricity’, with demand set to soar through 2027. The IEA said global electricity consumption was expected to increase at the fastest pace in years over the 2025-2027 forecast period of this report, fuelled by growing industrial production, rising use of air conditioning, accelerating electrification, and the expansion of data centres worldwide.
Global electricity demand rose by 4.3pc in 2024 and is forecast to continue to grow at close to 4pc out to 2027. Over the next three years, global electricity consumption is forecast to rise by an unprecedented 3,500 terawatt-hours (TWh).
This corresponds to adding more than the equivalent of Japan to the world’s electricity consumption each year. This was also a sharp acceleration over the 2.5pc increase in 2023 when strong gains in China, India and Southeast Asia were tempered by declines in advanced economies.
Most of the additional demand for electricity through 2027 will come from emerging economies, which are expected to make up 85pc of the growth. More than half of global electricity demand growth in 2024 came from China, where it grew by 7pc in 2024, similar to the previous year. Electricity demand in China is forecast to increase on average by 6pc annually out to 2027.
India, Southeast Asian countries and other emerging markets are also expected to record strong demand growth, supported by economic expansion and rising air conditioner ownership. India’s electricity demand is forecast to grow at an average of 6.3pc annually over the next three years, stronger than the 2015-2024 average growth rate of 5pc.
While many emerging economies are seeing robust electricity demand growth, Africa is lagging. Although significant progress has been made in recent years, 600 million people in sub-Saharan Africa still do not have access to reliable electricity.
On the other hand, electrification is progressing rapidly in China, where the share of electricity in final energy consumption (28pc) is much higher than in the United States (22pc) or the European Union (21pc).
China’s electricity consumption has been growing faster than its economy since 2020, underscoring the speed at which electrification across all sectors is taking hold.
In the three-year period 2022-2024, industry accounted for almost 50pc of electricity demand growth, with the commercial and residential sectors combined making up another 40pc.
The industrial sector in China has become more electricity-intensive, with one-third of the growth 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 — as much as Italy uses in a year.
Published in Dawn, March 6th, 2025
