Solar Net Metering Ends in Pakistan amid Political Concerns

In a pivotal move aimed at curbing escalating energy costs, Pakistan’s National Electric Power Regulatory Authority (Nepra) has drastically altered its net metering policy. The new regime will see Independent Power Producers (IPPs), long burdened with capacity payments to idle power plants, pass this financial burden onto solar net consumers in what is seen as a significant shift from the country’s renewable energy sector.

Currently, the buyback rate for solar-generated electricity stands at Rs25.9 per unit and is poised to be slashed to Rs11 per unit over the next five years. This move signals a fundamental change in how solar producers are compensated, ending the previous exchange-of-units model that provided incentives for consumers seeking to invest in renewable energy.

Under the new framework implemented by Nepra, distribution companies (Discos) will operate independently, setting their own electricity rates and purchasing daytime power from solar net consumers at Rs11 per unit. The burden of capacity payments previously borne by IPPs is being shifted onto solar customers, raising concerns among both policy makers and consumer advocates.

Critics argue that this shift places an unfair financial strain on solar net consumers while also exacerbating the issue of electricity shortages in Pakistan’s rural areas. With existing agreements up for renewal and new entrants facing a reformed framework, many are grappling with how they can navigate these changes effectively.

Nepra’s overhaul moves to establish a ‘net billing’ system under its Prosumer Regulations, 2026. This model requires utilities to purchase excess electricity from solar generators at the national average energy price and sell it back to consumers at their current tariffs. The goal is to end the one-to-one net metering arrangement that has served as a cornerstone of renewable energy policy in Pakistan.

The regulator’s decision to cap distributed generation facilities at one megawatt, coupled with stringent technical and administrative requirements, represents a substantial regulatory tightening aimed at preventing potential grid overloads while ensuring accountability among prosumers. Nepra’s new rules mandate formal concurrence from the agency for all interconnection applications within seven working days, along with specific timelines for completing technical reviews and installing interconnect facilities.

The implications of this shift are far-reaching, particularly for those consumers previously enjoying favorable rate structures under the old net metering system. Existing agreements remain in place until they expire; however, subsequent renewals will adhere to the new billing structure, marking a definitive change in how solar energy is compensated and managed in Pakistan’s electricity landscape.

The impact extends beyond just financial considerations, with industry officials highlighting that off-grid solar power—a predominant source of energy for agriculture—will be compelled to connect to the grid due to this policy overhaul. This move could lead to significant costs for consumers and further pressure on already strained electricity infrastructure.

As political backlash looms over any potential adverse effects, Nepra’s decision underscores the balance between regulatory oversight and consumer welfare in Pakistan’s nascent renewable energy ecosystem. The country is navigating a challenging transition as it seeks to harness cleaner sources of power while grappling with the complex interplay of financial incentives and technical implementation challenges within its sprawling electricity grid.

In essence, this change marks one of the most significant shifts in how renewable energy producers are compensated in Pakistan’s energy sector, signaling broader regulatory changes that could reshape the solar landscape for years to come.