In a significant policy shift, the Pakistani government has introduced amendments to its net metering regulations, aiming to address financial imbalances in the power sector. These changes, approved by the Economic Coordination Committee (ECC) in March 2025, are set to impact both current and prospective solar energy users across the country.
Understanding Net Metering
Net metering allows consumers with solar panel installations to feed surplus electricity back into the national grid, receiving compensation that offsets their energy costs. This system has been instrumental in promoting renewable energy adoption, enabling users to reduce electricity expenses and contribute to a greener environment.
Key Changes in the Net Metering Policy
The recent amendments introduce several pivotal changes:
- Reduction in Buyback Rates: The government has reduced the rate at which it purchases surplus electricity from solar consumers from Rs. 27 per unit to Rs. 10 per unit. This 63% decrease aims to alleviate the financial burden on grid consumers.
- Shift to Gross Metering: A transition from the current net metering system to a gross metering framework is proposed. In gross metering, all electricity generated by solar panels is fed directly into the national grid, and consumers purchase their electricity needs from the grid at standard rates.
- Increased Evening Consumption Charges: Electricity consumed during peak evening hours, specifically between 6 PM and 10 PM, may be charged at higher rates, reflecting the increased demand during these periods.
Rationale Behind the Policy Shift
The government cites a substantial financial burden on grid consumers due to the existing net metering arrangements. By December 2024, net metering consumers had transferred a burden of Rs. 159 billion to grid users, a figure projected to rise significantly without timely amendments. Officials argue that net metering users, predominantly from affluent urban areas, have been avoiding fixed electricity charges, disproportionately increasing tariffs for conventional consumers.
Impact on Solar Energy Adoption
These policy changes are expected to have several implications:
- Extended Return on Investment: The reduction in buyback rates and the shift to gross metering are likely to extend the payback period for solar investments from the current 18-24 months to approximately 4-5 years, potentially discouraging new installations.
- Market Response: Following the announcement, solar panel prices in Pakistan have experienced a notable decline. The cost of installing solar systems has decreased by Rs. 35,000 to Rs. 175,000, depending on system size and market conditions, making renewable energy more accessible to consumers.
Government’s Position and Stakeholder Consultation
In response to public criticism and concerns from stakeholders, the government has decided to consult all relevant parties before finalizing the new net metering policy. The Prime Minister has emphasized that the promotion of renewable energy remains a priority, and any policy revisions will aim to balance financial sustainability with the growth of the solar energy sector.
Conclusion
The amendments to Pakistan’s net metering policy represent a significant shift in the country’s approach to renewable energy integration. While the government aims to address financial challenges within the power sector, it is crucial to ensure that these changes do not deter the adoption of solar energy. Balancing fiscal responsibility with environmental sustainability will be key to fostering a resilient and equitable energy future for Pakistan.