In a recent development, the Power Division is advocating for a substantial adjustment in the buyback rates of net metered electricity, proposing a reduction from Rs 21 to Rs 11 per unit. This move reflects an effort to align excess power rates with the financial capabilities of the distribution companies, ensuring that solar systems are used primarily for personal consumption.

Rise in Net Metering Installations Spurs Government Action

According to BR, sources suggest that the increasing adoption of net metering systems, particularly among the affluent, has posed challenges for managing capacity charges. The government’s capacity to balance these charges has been strained by the rapid growth of net metering installations.

Reevaluation of Consumer Benefits and Rate Sustainability

The Power Division has noted that while the initial benefits of net metering for consumers were substantial, the sector is now encountering sustainability issues. With the current buyback rates ranging from Rs 12 to Rs 22 per unit, officials deem these figures unsustainable given the economic realities facing distribution companies.

Solar Panel Imports and Generation Insights As of the end of March 2024, Pakistan has seen imports of solar panels capable of producing a whopping 6000 MW, with half of that capacity currently operational through solar energy. This significant investment in solar technology underscores the country’s shift towards renewable energy sources.

Regulatory Changes and Public Response about Rate cut of Net Metering in Pakistan

In 2022, the National Electric Power Regulatory Authority (NEPRA) initiated a review of the 2015 Alternative & Renewable Energy Distributed Generation and Net Metering Regulations. This included a proposed shift from the ‘National Average Power Purchase Price (NAPPP)’ to the ‘National Average Energy Purchase Price (NAEPP)’, following a notable increase in NAPPP.

After a month-long period for public feedback and a hearing that took place on September 27, 2022, consumer opposition was evident. Participants highlighted the efficiency and low infrastructure demands of net metering. Despite this, and facing government pressures, NEPRA held off on amending the regulations, recognizing the economic advantages of net metering including cost and foreign exchange savings and minimal energy losses, despite it constituting a minor fraction of the total energy purchased by DISCOs.

Final thoughts

The proposed adjustment to net metering buyback rates, from Rs 21 to Rs 11 per unit, arrives at a challenging time for the general populace of Pakistan. Already burdened by high inflation and soaring utility costs, this policy shift could significantly impact households that have invested in solar systems expecting stable or improved returns. While the government aims to balance the interests of distribution companies with those of solar system owners, the drastic reduction in buy back rates could undermine the financial viability and incentives for adopting renewable energy.

This policy may deter future investments in solar energy, a critical component of Pakistan’s strategy to reduce reliance on non-renewable sources. The public’s frustration is understandable as this policy could add another layer to the economic pressures they are facing, calling for a more nuanced approach that considers the long-term benefits of sustainable energy solutions against immediate economic constraints.