PSA Claims Net Metering Regulation Changes Detrimental to DISCOs’ Future; Decries Lack of Consultation with Stakeholders

Karachi : Talking about the recent direction by Ministry of Energy (Power Division) to change Net Metering Regulations, Mr. Waqas Moosa, Chairman of the Pakistan Solar Association, mentioned that “These new regulations will change the dynamics of the solar industry, especially residential and SME segments, in Pakistan. The split of hybrid, battery-based installations will increase vs on-grid installations going forward.” The proposed changes to Net Metering Regulations are designed with an objective of bringing payback of On-grid systems to around 3 years vs. around 1.5 years with current regulations. Hybrid (Solar+Battery) systems with the latest Lithium-ion batteries currently have an under 3-year payback, with continuous improvements in battery technology and expected shortening payback periods. So, we anticipate many more customers opting for Solar+Battery solutions in the coming months.
Overall, it is a poor decision for the country’s Power Sector in the long run. It will encourage customers to install batteries due to the huge differential created between the export rate of Rs 10 and saving of Rs 50-60 by storing the extra solar units in batteries for self-consumption. As customers start seeing the benefit of self-storage,
more and more customers will opt to go ‘off-grid’ for longer periods of the day, resulting in further decreased demand for the DISCOs. This will result in an increase in electricity price for remaining customers as lower demand means fixed costs are split over a decreasing number of units consumed from the Grid. This will worsen the plight of ‘less well-off’ customers, who the proposed changes claim to support.
In addition, taking this decision unilaterally without consulting stakeholders, especially industry, means that it will create havoc in the market as the supply of equipment in the market cannot be changed overnight. This will result in losses for traders carrying On- grid equipment and profiteering on Hybrid equipment and battery stocks as the demand shifts suddenly. Such volatility is never good for any industry and eventually the end consumer ends up bearing the cost of the artificially created inefficiency in the market.
Similar decisions in other countries around the world are made with at least a 6-month advance notice, if not more. The same should be followed in Pakistan to allow sufficient time for the market to be adjusted in line with any new policy announced.
Finally, the heavy marketing campaign by the ministry, depicting net metering customers in a distasteful manner and blaming them for the woes of the power sector is misleading at best and a mala fide misdirection away from the actual flaws in the power sector. It ignores the massive benefits created by net metering customers in terms of the hidden savings achieved by DISCOs as documented in different studies around the world.
There is no mention of the positive impact on the environment, forex savings through reduced consumption of fossil fuels, and the increased competitiveness of businesses with a lower cost of energy input resulting in lower prices in the market or increased exports. And it also conveniently fails to mention that all investment in rooftop solar by Net Metering customers is private investment without any assurances from the government, unlike the IPP plants with sovereign backed long-term returns that are a constant burden on our economy and eventually paid for by the masses.
The Pakistan Solar Association urges the Ministry of Energy (Power Division) to immediately take offline the distasteful ad campaign that inaccurately depicts Net Metering customers as the source of all Power Sector woes in Pakistan. In addition,
PSA strongly urges the Regulator (NEPRA) to take a balanced approach in determining the rate of Export units as part of the revised Net Metering regulations and to seek inputs of various stakeholders, including the industry and customers, prior to making any drastic changes to policies.
The Pakistan Solar Association (PSA) is a non-profit, non-governmental trade body, registered with the Directorate General Trade Organizations, Govt of Pakistan. With over 500 members from various segments of the solar industry including installers, EPC companies, importers, and traders, it is the largest representative body for the solar industry in Pakistan.