In a significant policy shift, the Economic Coordination Committee (ECC) of Pakistan has approved amendments to the solar net metering framework, leading to increased costs for solar energy consumers. The buyback rate for surplus solar electricity has been reduced by one-third to Rs 10 per unit, and net billing has been discontinued
Key Changes
Reduced Buyback Rate: Power companies will now purchase excess solar electricity from consumers at Rs10 per unit during daylight hours. Previously, this rate was higher, providing more favorable returns for solar users.
Increased Purchase Rates: Conversely, consumers will continue to purchase grid electricity at Rs. 42 per unit during off-peak hours and Rs. 48 per unit during peak times, excluding taxes and duties.
Capacity Installation Limits: The new policy restricts consumers from installing solar capacity exceeding their sanctioned load by more than 10%, a decrease from the previous allowance of 50%.
These changes currently apply to new net-metering consumers, while existing users will transition to the new framework upon the expiration of their seven-year contracts.
Government’s Justification
The Power Division has cited financial concerns as the impetus for these revisions. They argue that the existing net-metering consumers were contributing to a nine-paisa per unit increase in average electricity costs, resulting in a total annual impact of Rs101 billion. Projections suggest that without intervention, this could escalate to Rs 545 billion by 2034, equating to an increase of Rs 3.6 per unit.
Criticism and Concerns
The policy shift has faced criticism from various quarters. Petroleum Minister Ali Pervez Malik expressed concerns that the move could send negative signals to the market and consumers, suggesting that the issue could have been addressed more effectively.
Additionally, many fear that the policy will adversely affect urban middle-class consumers who have invested in solar energy to reduce high grid electricity costs. These consumers may now be compelled to sell surplus solar power at Rs10 per unit while purchasing grid electricity at significantly higher rates, potentially leading them to invest in costly battery storage solutions or disconnect from the grid entirely.
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Lack of Stakeholder Consultation
The Power Division did not present any independent assessment of such speculations. The authorities did not consult the relevant stakeholders, including the power regulator Nepra, the Federal Board of Revenue, and the Ministry of Finance.
The division claimed it had circulated the summary to Nepra, the Ministry of Industries, and the National Energy Efficiency and Conservation Authority (Neeca). However, the authorities could not secure their views and comments due to the urgency of the matter. Power companies must purchase the exported units at the approved repurchase rate (Rs10) and issue the imported units at the applicable peak or off-peak rates.
Conclusion
The revised policy reflects the government’s attempt to balance the financial sustainability of the national grid with the promotion of renewable energy sources. However, the solar policy user costs, the abrupt nature of the changes and the absence of stakeholder consultation have sparked criticism. The long-term impact on solar energy adoption and the broader energy market in Pakistan remains uncertain.
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