Solar Net Metering Pakistan: Benefits Slashed by 63%
The reduction in benefits for new solar panel owners and the increase in electricity costs will likely deter new investments in the renewable energy sector, potentially hindering Pakistan's efforts to reduce its reliance on fossil fuels and mitigate climate change.
The government has made a drastic change to the net metering policy, reducing benefits for new solar panel owners by 63% and increasing electricity costs by 550%, in a move that critics argue will hurt the renewable energy sector and increase electricity prices for consumers.
The new policy requires rooftop solar panel owners to buy electricity from the national grid at Rs65 per unit, while selling their excess electricity at Rs10 per unit, resulting in a significant financial burden on solar consumers. This change will affect new solar panel owners, but existing users will be exempt until their current contracts expire. The government claims that 80% of solar net-metering consumers are concentrated in nine major cities, primarily in affluent areas, and that their growing numbers are straining the system.
The net metering regime was introduced in 2015 to promote renewable energy, but it has reportedly hurt the business interests of imported-fuel-based power plant owners. The ECC has also revised the capacity limit for distributed generation facilities, reducing the incentive to install solar panels. The decision has been criticized by Power Minister Awais Leghari, who says it will send a bad signal to the market and consumers.
The policy change is expected to lead to a reduction in rooftop solar installations, which have surged in recent years, growing from 5 MW in 2017 to 4,135 MW by December 2024. The government has reduced the buyback rate for surplus solar electricity from consumers by two-thirds to Rs10 per unit, under a revised policy for solar net-metering. The decision, taken at an Economic Coordination Committee (ECC) meeting, will affect new net-metering consumers and will be applicable to existing consumers as their seven-year contracts expire.
The move has sparked concerns about the impact on the renewable energy sector and the potential increase in electricity prices for consumers. As the government continues to grapple with the challenges of promoting renewable energy while managing the financial burden on grid consumers, the fate of solar net metering in Pakistan remains uncertain.
