THE modern world is advancing at an unprecedented pace, powered by energy.
Energy lies at the heart of every human activity. In physics, it is defined as the ability to perform work; in economics, it energizes households, industry, and services. An economy, meanwhile, is the system through which a society produces, distributes and consumes goods and services. The relationship between energy and the economy is inseparable. Economic survival and smooth functioning depend fundamentally on energy.
At its core, energy represents the ability to do work—whether turning a turbine, running a processor or heating a home. Modern hospitals, businesses and schools rely entirely on electricity. Expanding access to affordable energy raises living standards and creates employment opportunities. Without affordable energy, economic activity slows and eventually stops. When energy is reliable and reasonably priced, businesses grow, people feel secure and technological innovation accelerates. The connection between energy consumption and economic growth is well established. Research on Pakistan shows that a 1% increase in natural gas consumption raises economic growth by around 1.5%, while a 1% increase in petroleum consumption adds about 0.2% to growth. Although electricity consumption has a smaller coefficient compared to petroleum or natural gas, it still contributes positively to growth. At the global level, the World Bank describes energy as the lifeline of a modern economy.
The world is also experiencing an energy-intensive digital transformation. Artificial-intelligence-driven data centres consume enormous quantities of electricity. According to the International Energy Agency, a typical AI hyperscale data centre uses as much electricity as 100,000 households and facilities under construction may consume many times more. In 2023, data centres accounted for nearly 26% of Virginia’s electricity use and substantial shares in other U.S. states. Around 60% of their electricity is used by servers and advanced chips that consume far more energy than conventional systems, placing pressure on power grids and raising costs. Modern economies are increasingly shaped by artificial intelligence. Data centres support cloud computing, streaming services, and e-commerce platforms. The rapid growth of the Internet of Things, big data analytics, and AI has significantly increased demand for uninterrupted energy. Online transactions, digital media, and cloud-based logistics depend on servers that operate continuously. Without reliable power, websites fail, transactions stop, and productivity declines. Affordable energy, therefore, sustains the digital economy and reinforces its role as the backbone of modern growth.
Energy transitions are not only about quantity but also about long-term sustainability. Renewable energy creates employment and reduces costs. In 2023, renewable-energy jobs worldwide rose to 16.2 million, up from 13.7 million the previous year. Building new solar or wind installations is now cheaper than operating existing coal plants, and renewables accounted for 90% of new generation capacity added in early 2024. Governments pursuing clean-energy targets expect to save billions; Germany, for instance, aims to generate 80% of its electricity from renewables by 2030.
Investments in renewables also lower household electricity bills. Net-metering schemes allow consumers to sell surplus solar power back to the grid, reducing monthly expenses. These developments show that green energy is no longer a luxury but an economic necessity. Agriculture, too, is an energy-conversion process. Modern farming depends on energy at every stage, from irrigation and mechanization to storage and transport. The Food and Agriculture Organization reports that agri-food systems consume around 30% of global energy. Where electricity is unreliable, farmers struggle to irrigate fields or process harvests, leading to lower incomes and food insecurity. Reliable energy enables countries to meet domestic food needs and expand agricultural exports. Beyond agriculture, countries with abundant and affordable energy attract foreign investment. Singapore’s 2019 moratorium on new data centres—introduced because they consumed 7% of national electricity—pushed investors toward neighbouring Malaysia, where energy and land are more readily available. Energy availability thus directly shapes investment decisions. Reliable electricity also affects public safety. A study of planned outages in Cape Town found that an additional ten hours of outages per month increased crime by 2.6%. Power cuts weaken surveillance systems, street lighting, and security infrastructure, creating opportunities for crime. Conversely, affordable electricity transforms lives. Bangladesh’s solar home systems now power over four million homes, enabling people to work, study, and conduct business after sunset while improving agricultural productivity.
The same principle applies to industry. Exporters in Pakistan, consistently emphasize that affordable energy is critical for competitiveness and job creation. Cheap and reliable power stabilizes societies and unlocks economic potential. Energy shapes every aspect of the modern economy by supporting production, innovation, and social well-being. Regions with sufficient and affordable energy attract investment and employment, while shortages undermine growth and security. Ultimately, energy policy is economic policy. Nations that fail to secure affordable, reliable, and sustainable energy condemn their economies to stagnation, social unrest, and declining competitiveness. For Pakistan, recurring energy shortages, high tariffs, and policy inconsistency have repeatedly constrained growth and widened inequality.
The way forward demands long-term planning, institutional reform, and decisive investment in indigenous and renewable resources. Energy must be treated not as a political tool but as a strategic national asset. By prioritizing efficiency, diversification, and affordability, Pakistan can turn its energy sector from a chronic bottleneck into a catalyst for productivity, resilience, and inclusive economic transformation. Pakistan’s experience highlights both the dangers of energy neglect and the opportunities created by strategic planning. Making stable, sustainable, and affordable energy a national priority is essential for long-term economic growth and prosperity.
—The writer is Commoner from 44th Common Educationist — Founder of WHI Institute.based in Sargodha.
