Sustainable economy of a country is owed to the sustainable energy conditions of that country. Pakistan’s economic conditions fluctuate as the energy sector swings in an energy deficit and circular debts. This paper gives an overview of the power sector since 1947, energy policies settled since 1994 and the steps to implement these policies to smooth the rise and fall in the power sector. Renewable Energy Policy (REP) and projects initiated are also discussed that advanced the renewable energy resources in the power sector of Pakistan. The study revealed that the energy mix in power sector transferred from hydro domination to thermal under energy policy 1994 and anticipated that transition will be renewed from thermal to renewable domination in view of deep-seated actions taken place under the REP 2006. Currently, grid-connected 100 MW solar, six wind power plants of cumulative capacity 308.2 MW, four bagasse based power plants of summative capacity 145 MW and 98 MW micro hydropower plants are operational while various are at different project development phases. SWOT analysis envisaged a sustainable power sector on the bases of strengths and opportunities that are successfully being availed and the vigilant control over weaknesses and threats will approach sustainability earlier. Some universally recognized and practiced suggestions are made at the end that would create a win-win situation for the private investors and the consumers in generating and consuming electricity from renewable green sources at economical rates.