In a move to curb the growth of renewable energy amid soaring electricity costs, the government has reduced the buyback rate for solar net metering by one-third, setting it at Rs10 per unit. Additionally, net billing has been scrapped for new consumers.
The decision was made during a meeting of the Economic Coordination Committee (ECC) of the Cabinet, chaired by Finance Minister Muhammad Aurangzeb. Under the revised policy, power companies will purchase surplus solar electricity from consumers at Rs10 per unit during daylight hours, while selling grid electricity at Rs42 per unit (off-peak) and Rs48 per unit (peak) after sunset—excluding taxes and duties.
Key Policy Changes:
- Capacity Limitations: Consumers will no longer be allowed to install solar systems exceeding their sanctioned load, except for a 10% margin, a significant reduction from the previous 50% allowance.
- Gradual Implementation: Existing net-metering consumers will transition to the new framework upon the expiration of their seven-year contracts.
- Regulatory Justifications: The Power Division claims that current net-metering users contribute a nine-paisa per unit impact on average electricity costs, totaling Rs101 billion annually. This figure is projected to rise to Rs3.6 per unit (Rs545 billion) by 2034 without intervention.
Concerns and Criticism
Petroleum Minister Ali Pervez Malik opposed the decision, warning that it would discourage market confidence and consumer participation. Meanwhile, Power Minister Awais Leghari emphasized that imposing duties or taxes would negatively impact off-grid solar adoption and agricultural tubewells, making them difficult to regulate.
An official highlighted that urban, salaried consumers—already burdened with high taxes and expensive, unreliable grid electricity—would now be forced to sell their surplus power at Rs10 per unit while purchasing electricity at Rs65-70 per unit during peak hours. This could lead to a shift toward costly battery storage solutions and off-grid independence.
Lack of Stakeholder Consultation
The policy change was introduced without prior consultation with key regulatory bodies such as Nepra, the Federal Board of Revenue, and the Ministry of Finance. Although the Power Division claimed to have shared the proposal with Nepra, the Ministry of Industries, and the National Energy Efficiency and Conservation Authority (Neeca), their input was not secured due to the urgency of the matter.
Regulatory Adjustments and Implementation
The ECC has permitted the Power Division to issue policy guidelines directing Nepra to revise the buyback rate to Rs10 per unit, with future adjustments as deemed necessary.
- Billing Mechanism: Imported and exported units will now be billed separately. Exported units will be purchased at Rs10 per unit, while imported electricity will be charged at peak/off-peak rates. Any excess credits from exported units cannot be encashed but will be carried forward to the next billing cycle.
- Technical Regulations: Nepra will impose limits on the hosting capacity of distribution transformers and feeders. It will also establish standards for smart inverters with real-time grid interaction and communication capabilities via Wi-Fi and GSM.
Rising Solar Adoption and Financial Impact
The Power Division cited a sharp decline in solar panel prices as a major driver behind the surge in net-metering consumers. By December 2024, the number of solar consumers had risen to 283,000, up from 226,440 in October 2024. Officials warned that without policy intervention, solar users could shift a burden of Rs4.24 trillion to grid consumers by 2034.
Other ECC Decisions
The ECC also approved the following measures:
- Export of Potassium Sulphate Fertiliser: The Ministry of Maritime Affairs was granted permission to export up to 10,000 tonnes of potassium sulphate fertiliser annually from Gwadar Port until December 31, 2025. This move aims to support Gwadar Free Zone development while maintaining regulatory oversight.
- Supplementary Grants Worth Rs1.2 Billion:
- Rs250 million for the Ministry of Federal Education.
- Rs220 million for the Ministry of Industries to support small and medium enterprises (SMEs).
- Rs36.1 million for helicopter maintenance for Sindh Rangers.
- Rs15 million for helicopter maintenance for Frontier Corps Balochistan.
- Rs670 million for Sustainable Development Goals (SDG) projects in Islamabad.
The government’s decision to revise net metering policies signals a significant shift in Pakistan’s energy strategy, potentially impacting the adoption of solar energy across the country.
