Can CTBCM and Virtual Grids Transform Pakistan’s Energy Future?

Pakistan’s electricity problem has often been described as a shortage problem, but the reality is far more complicated. The country today has considerably more generation capacity than it did a decade ago, yet consumers continue to face rising electricity bills, unreliable service and a system in which they have almost no control over their energy choices. The real challenge is no longer simply producing more electricity; it is fixing a power market that has struggled to deliver affordable and dependable energy to the people who need it most.

The government’s latest push towards the Competitive Trading Bilateral Contract Market (CTBCM) and virtual-grid systems represents an attempt to address this deeper structural problem. By introducing competition, encouraging direct electricity purchasing and creating new ways to manage renewable energy, these reforms could mark an important turning point for Pakistan’s power sector. But the central question remains whether this transformation will improve the lives of ordinary consumers or mainly create opportunities for those who already have the resources to participate.

For decades, Pakistan’s electricity system has operated under a highly centralised model. Consumers have largely been passive participants, purchasing electricity through distribution companies without the ability to choose suppliers, negotiate contracts or benefit from market competition. This structure may have been suitable when the sector was smaller and less complex, but it has struggled to respond to the demands of a growing economy and changing energy landscape.

The consequences are visible across the country. Businesses frequently cite energy costs as a major obstacle to competitiveness, while households continue to adjust their budgets around increasingly expensive electricity bills. At the same time, the power sector remains burdened by financial challenges, inefficiencies in distribution and a lack of flexibility in responding to new technologies.

It is in this context that CTBCM represents a significant shift. Under this model, eligible consumers will have the ability to purchase electricity directly from suppliers while using the national grid to transport that power. Instead of relying entirely on a single purchasing structure, the market would allow multiple buyers and sellers to interact through regulated arrangements.

The potential benefits are considerable. Greater competition could encourage suppliers to offer better prices, improve service quality and develop more innovative solutions. For industries that consume large amounts of electricity, direct purchasing arrangements could provide greater control over energy costs and improve their ability to compete internationally.

The government’s decision to invite proposals for the first 400 MW electricity wheeling auction under CTBCM on Sept 20, 2026, is therefore an important development. It indicates that Pakistan is moving from discussing electricity market reform towards testing how such a system could operate in practice.

However, electricity markets cannot be transformed through contracts alone. Unlike many other goods, electricity depends on a physical network that requires constant investment and careful management. A factory may sign an agreement with a new supplier, but the electricity will still travel through transmission lines and distribution networks managed within the existing system.

This means the success of CTBCM will depend on much more than market design. Pakistan will need a grid that provides fair access, regulators who can enforce transparent rules and institutions capable of ensuring that competition does not become limited to a few powerful participants.

This is where the public interest question becomes important. If electricity market reforms initially benefit large industrial consumers, when and how will ordinary households benefit?

There is a strong argument that helping industries reduce energy costs can eventually support economic growth, exports and employment. However, these benefits are indirect and may take time to reach households. A factory receiving a better electricity contract does not automatically mean a family will see a lower monthly bill.

The affordability question becomes even more important when looking at the complete cost of electricity. Competition may reduce the price at which electricity is purchased, but consumers ultimately pay for the entire system, including generation, transmission, distribution and other charges.

NEPRA’s notified grid-use charges in October ranged from Rs6.23 to Rs19.62 per unit for eligible auction participants, in addition to the electricity supply price. These charges are necessary because maintaining the national grid requires significant investment, but they also highlight an important issue: will the final cost of electricity actually become cheaper once all charges are included?

This is the test that will determine whether CTBCM becomes a meaningful reform or simply a change in the way electricity transactions are organised.

The government and regulators must therefore focus on transparency. Businesses and consumers should be able to understand how prices are calculated, what savings are expected and who benefits from the new system. A reform that is understood only by industry experts and policymakers will struggle to gain public confidence.

The second major development, virtual grids, could potentially reshape Pakistan’s energy future even further. The traditional electricity system was built around large power plants producing electricity and consumers receiving it through a central network. But the global energy sector is moving towards a more flexible model, where solar power, battery storage and digital technologies allow consumers to become active participants.

Pakistan has already begun experiencing this shift. High electricity costs and concerns about reliability have encouraged thousands of households and businesses to install solar systems. However, these individual systems often operate separately from the wider electricity network.

Virtual grids could provide a way to connect these scattered energy resources. By combining solar generation, battery storage and smart management systems, electricity production and consumption could be coordinated more efficiently. During periods of high demand, stored energy could support the system, reducing pressure on the grid.

The idea is promising, but policymakers must also consider who will benefit from it.

Renewable energy technologies require investment. Large companies and wealthier households may have the ability to install solar panels and battery systems, while many lower-income consumers do not. If the future energy transition depends only on individual purchasing power, it risks creating a system where the benefits of reform are concentrated among those who are already better positioned.

For this reason, virtual-grid policies must include wider participation. Smaller businesses, communities and ordinary households should not be left outside the new energy system. Affordable financing options, community-based energy projects and clear consumer protections will be essential if these reforms are to become genuinely inclusive.

Pakistan’s history of power-sector reform also suggests that implementation will matter more than announcements. The country has introduced several policies over the years, but weak execution, inconsistent regulation and institutional limitations have often prevented them from achieving their intended results.

CTBCM and virtual grids will face the same challenge. Regulators will need to ensure fair competition, distribution companies will need to improve service quality and the government will need to continue investing in grid modernisation. Without these foundations, even the most ambitious reforms may fail to deliver meaningful change.

The government should also define clear measures of success. The public should know whether electricity prices are falling, whether supply is becoming more reliable and whether the benefits of market reform are reaching beyond large industrial consumers.

A successful electricity reform should not be measured by the number of auctions conducted or regulations introduced. It should be judged by whether consumers experience a better system.

Pakistan cannot continue with an electricity structure that has produced high costs and limited choices for decades. A transition towards competition, renewable integration and smarter energy management is necessary. But reform must remain focused on the people who ultimately pay for and depend on the system.

The journey from monopoly to market could transform Pakistan’s energy future, but only if it delivers results beyond the boardrooms of companies and the offices of regulators. The real achievement will come when ordinary households see lower costs, better reliability and a greater sense of control over the electricity they consume.

Until then, the most important question remains unanswered: if CTBCM and virtual grids initially benefit large industrial consumers, when and how will ordinary Pakistani households benefit?