ISLAMABAD – The Pakistani government’s recent move to slash solar net metering buyback rates caused widespread concern, but a reconsideration is now underway.
Following strong criticism, the federal cabinet, led by Prime Minister Shehbaz Sharif, has opted to review the proposed policy changes before finalizing them. Concerns raised by several cabinet members prompted the Power Division to reassess the revisions.
The controversial proposal, which sought to lower the buyback rate from Rs. 27 to Rs. 10 per unit, faced backlash due to fears of increased financial strain on grid consumers. While the Economic Coordination Committee (ECC) had already approved changes to net metering regulations, the cabinet has now decided to refine the policy further before implementation.
One of the key reasons behind the rate reduction is the growing financial burden on grid consumers, estimated at Rs. 159 billion, caused by the increasing number of solar net-metering users. However, existing agreements remain unaffected until they expire. The revised billing structure will see exported electricity purchased at Rs. 10 per unit, while imported electricity will be billed according to peak and off-peak rates.
Concerns from the Renewable Energy Sector
The Renewable Energy Association of Pakistan (REAP) has raised alarms over the changes, warning that they could drive consumers towards off-grid solutions, negatively impacting solar businesses and employment. The amendments, which introduce gross metering and reduce purchase prices for solar energy, may result in financial losses for solar investors who have already invested in expensive inverters.
REAP outlined three primary concerns:
- Potential job losses in the solar sector
- A shift to off-grid systems that could reduce government revenue
- The risk of imported inverters becoming obsolete
The government, however, maintains that rationalizing net metering is necessary to ease the financial burden on consumers. It has invited REAP to present its concerns. While some experts criticize power distribution companies (Discos) for failing to anticipate solar energy’s impact, others, like Rehan Jawed, support the policy shift, arguing it will benefit industries in the long run.
New Net Metering Rules & Future Plans
The government has also shortened net metering contracts to five years and adjusted buyback rates based on the National Average Power Purchase Price. Stricter regulations have been introduced, requiring specific inverters and capacity limits for net metering users.
Additionally, the government is working to reduce overall electricity costs by decommissioning inefficient power plants, renegotiating contracts with Independent Power Producers (IPPs), and addressing concerns from the International Monetary Fund (IMF) regarding off-grid solar users.
Despite mixed opinions on the policy changes, the Power Minister claims that the revised regulations have made solar panels more affordable. With 4,000 MW of solar energy already connected to the national grid, projections indicate that solar capacity could exceed 12,000 MW within the next eight years.
