Pakistan's energy sector is at a crossroads, and fresh analysis suggests that piecemeal policy moves will not suffice. Two new research papers from the Policy Research Institute for Equitable Development (PRIED) argue that sustainable progress demands simultaneous action across electricity, gas, industrial, and financial fronts. The reports zero in on the Captive Power Gas Levy and utility-scale solar development, framing them as interconnected pieces of a larger puzzle. Main Developments The first study examines the Captive Power Gas Levy, introduced in January 2025 under Pakistan's reform commitments with the International Monetary Fund. This levy incrementally raises gas costs for captive power plants, nudging industries that generate their own electricity to return to the national grid. The report assesses how the policy could boost electricity sales, improve utilisation of existing generation capacity, and strengthen the power sector's finances by reconnecting industrial consumers. Read also: Pakistan trims petrol and diesel prices for three-day window Concerns raised during stakeholder consultations also feature prominently. Industrial competitiveness, operational reliability, and production costs are flagged as potential drawbacks. The paper further warns of knock-on effects on Pakistan's gas sector, where declining industrial demand could pile on additional financial strain. The second monitor turns to utility-scale solar, which currently contributes less than 2% of grid-connected electricity despite the country's strong solar resources. Regulatory uncertainty, financing constraints, transmission bottlenecks, and institutional barriers are identified as key impediments. The study argues that expanding large-scale solar could reduce dependence on imported fuels and cushion the economy against international price swings and exchange-rate pressures. Recommendations include institutionalising competitive reverse auctions, strengthening transmission infrastructure, improving payment security, and expanding blended finance that mixes concessional and commercial capital. Both reports were launched at a policy dialogue attended by policymakers, regulators, development partners, industry representatives, financial institutions, academics, and energy experts. Background Pakistan has dramatically expanded electricity generation capacity over the past decade, yet demand has lagged far behind installed capacity. This leaves a large share of generation assets underutilised while fixed costs continue to push electricity tariffs upward. The Captive Power Gas Levy is part of broader reform commitments tied to the IMF programme, aimed at addressing circular debt and bringing industrial users back onto the national grid. The solar study notes that despite some of the region's strongest solar irradiance, utility-scale projects have failed to take off. International experience shows that competitive procurement and tailored financing mechanisms have successfully supported large-scale renewable investment elsewhere. PRIED researchers stress that policy objectives need to shift from merely replacing fossil fuels to actively scaling renewables, with battery storage playing a pivotal role in transforming intermittent solar into reliable industrial power. Why It Matters The stakes are high for Pakistan's economy and energy security. If the captive gas levy is implemented in isolation, it risks simply shifting financial burdens from the power sector to the gas sector, inflating production costs and undermining industrial competitiveness. As noted by PRIED researcher Muqaddas Ashiq, developing the levy in silos is a zero-sum game that bleeds one sector to benefit another. On the solar front, accelerating utility-scale deployment offers long-term benefits: lower generation costs, reduced import bills, and greater resilience against global fuel price volatility. However, without coordinated reforms in transmission, financing, and regulation, the country risks missing out on its solar potential. The reports collectively argue that energy challenges cannot be resolved through isolated interventions—grid reliability, affordability, and renewable expansion must move in tandem. Policymakers are urged to anticipate the next phase of the energy transition. As battery costs fall and net metering spreads, more businesses will likely generate their own power, creating new implications for excess generation capacity. Economist Dr Khaqan Hassan Najeeb frames the real transition as moving from inefficient to competitive markets, requiring an efficient integrated energy ministry, a strong unified regulator, and sound policy commitment. What's Next The reports set the stage for ongoing policy dialogue, but concrete next steps remain undefined. PRIED's findings will likely feed into discussions with the IMF and national energy planning. Key questions include how the government will balance industrial competitiveness with fiscal reforms, and whe