Availability of surplus power in the country, often a source of fiscal constraints, can become the cornerstone of a new industrial policy aimed at attracting energy-intensive manufacturing to the country, integrating value chains, and increasing exports. A surge in consumption of electricity through solar and an increasing prevalence of battery storage at a household level will continue to erode demand from the grid at an accelerated level, which can potentially threaten grid stability.

However, integrating the same into the planning process and allocating surplus power to energy-intensive manufacturing can provide the necessary demand, as well as a stimulus to economic growth and jobs.

Such reallocation of surplus power would require a transition away from an archaic and often pedantic ivory-tower-driven view of cost-plus pricing, which is grossly inefficient in terms of allocating resources. There is a dire need to move towards a marginal cost regime, wherein surplus power can be auctioned or made available to industries or sectors that generate incremental economic value, whether that is through exports, job generation, or simply higher industrial growth.

There needs to be a rethink of what kind of industrial growth we want, and that should drive decisions regarding power pricing while also ensuring no cross-subsidies or direct subsidies are at play.

At this point, Pakistan has an opportunity to develop an energy-intensive industry stack that may include steel, copper smelting, aluminium, and other........

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