From gas to power: modernising Pakistan’s homes and industries through electrification

Pakistan’s evolving energy landscape – marked by rapid solar expansion, declining domestic gas supply and underutilised power generation capacity – offers an opportunity to gradually shift energy demand towards electricity.   

Two new Agora analyses outline a comprehensive roadmap for the country to reduce its growing dependence on fossil gas by electrifying energy use across industry and households. The findings detail a pathway to strengthen energy security, reduce fiscal pressures and cut emissions while making better use of existing power infrastructure.  

In Agora Energiewende’s residential electrification sector study conducted in collaboration with LUMS Energy Institute (LEI), modelling shows that fully transitioning household gas appliances to electric alternatives by 2050 against a business-as-usual pathway could generate USD 23.8 billion in cumulative fuel import savings, while reducing nearly 108 million tonnes of carbon emissions across the same period.  

Findings from the industrial electrification study, conducted by Agora Energiewende and Agora Industry with Policy Research Institute for Equitable Development (PRIED), show that electrifying process heat could reduce Pakistan’s industrial emissions by up to 50 percent by mid-century while delivering energy savings of more than 36 percent compared to current trajectories. 

Addressing Pakistan’s structural gas challenge 

Pakistan’s gas sector faces mounting pressure as domestic production declines while demand continues to grow. This has led to increased reliance on imported liquefied natural gas (LNG), which now accounts for roughly a quarter of total gas supply and costs the country around USD 4 billion per year. At the same time, under-pricing of gas and persistent subsidies are undermining the financial sustainability of large-scale LNG procurement and contributing to rising circular debt in the sector. This dependence has also aggravated supply insecurity and affordability challenges for both residential and industrial consumers.  

Despite this, households and industry remain heavily reliant on gas for essential energy services, from cooking and heating to industrial process heat. As supply constraints intensify, shortages also increasingly cause disruptions. The publication authors demonstrate that electrification offers a practical and scalable pathway to gradually reduce this dependence while improving overall energy system efficiency. Particularly in the residential sector, electrification would also address Pakistan’s growing seasonal imbalance in the power and gas sectors, where winter household gas demand spikes due to space and water heating, while electricity demand declines – leaving significant generation capacity underutilised.  

Strong potential for electrification across sectors 

Technologies needed for electrification are already commercially available in many applications. These include cooking, water heating and space heating in homes, as well as in low- to medium-temperature industrial processes used in food processing, textiles, paper and pulp production and fertiliser manufacturing; the latter industries account for around 50% of Pakistan’s industrial GDP and thus play a major role in the country’s energy use.  

Robust policy support is required to facilitate widespread adoption of these technologies. For example, while heat pumps offer the highest efficiency and strongest long-term cost performance, both for residential heating and for industrial low-temperature heat, their higher upfront investment costs remain a key barrier under current electricity pricing structures. Addressing these constraints through electricity tariff reform and targeted financing will be essential to unlock this potential. The new research also shows that industrial application paired with on-site solar photovoltaics, investment in electrification can achieve payback periods of less than five years (food, paper and pulp) or six years (textiles), indicating strong operating economics while enhancing supply reliability for consumers. 

Phased transition key to success 

The studies emphasise that electrification needs to be sequenced according to technoeconomic maturity to align with grid readiness, tariff reforms and institutional capacities. A phased approach would prioritise electrification of residential heating and low- to medium-temperature industrial processes over the coming decade. Pakistan’s power sector has adequate capacity to absorb a gradual increase in electricity demand in the near to medium term, particularly during winter months. Close coordination between regulators, planners and financial institutions will be key. 

Subsequent phases would gradually extend electrification to high-temperature industrial sectors by 2050 – strengthening industrial competitiveness and safeguarding export access in increasingly carbon-regulated markets. 

Policy and investment can enable major climate and economic gains 

Realising these outcomes will require supportive electricity tariffs, financing incentives for appliances, modernisation of grid infrastructure and stable policy signals to encourage investment. Integrated rooftop solar solutions, already cost-competitive in many cases, can further accelerate adoption if supported through appropriate regulatory and financing frameworks that enable sustainable off-meter deployment while maintaining overall system efficiency. 

At the same time, Pakistan’s power system is facing the challenge of integrating high volumes of rooftop solar power. Electrified demand in households and industry can help absorb surplus electricity generation, further improving utilisation of existing infrastructure. Energy storage systems – including industrial heat storage paired with electric boilers – can further enhance this effect by shifting demand to periods of high renewable generation.  

The research concludes that electrification offers Pakistan a strategic opportunity to simultaneously strengthen energy security, improve fiscal stability, enhance industrial competitiveness and meet its climate commitments, which include reducing economy-wide emissions by 50 percent by 2050 compared to a business-as-usual pathway. By coordinating industrial and energy planning, Pakistan can transform current supply constraints into a long-term transition pathway that strengthens resilience and supports sustainable economic growth. 

The two slide deck publications, A roadmap for industrial electrification in Pakistan (in collaboration with PRIED) and Reconfiguring traditional gas appliances in Pakistan’s residential sector (in collaboration with LEI), were launched at a hybrid policy dialogue on 26 February, convening government stakeholders, industry representatives, development partners and researchers. The publications are available for free download and are linked down below.