Solar Net Metering in Pakistan | PM Shehbaz Orders Urgent Policy Review

The government of Pakistan is preparing for a major shift in the renewable energy landscape as Prime Minister Shehbaz Sharif has ordered an urgent review of the proposed reduction in solar net metering in Pakistan. This move has stirred discussions among homeowners, solar investors, and environmentalists about the country’s energy future and the potential impact on consumers who have adopted solar power to offset high electricity costs.

Understanding Solar Net Metering in Pakistan

Solar net metering allows households and businesses with solar panels to sell excess electricity back to the national grid. The government or distribution company compensates them at a specific buyback rate per unit. This system has encouraged thousands of Pakistanis to invest in rooftop solar systems, helping reduce dependency on the national grid and promoting clean energy use across the country. However, recent reports suggest that the buyback rate may be cut nearly in half, raising concerns for solar users.

Proposed Reduction in Solar Buyback Rate

The Power Division has suggested lowering the buyback rate from Rs. 22 per unit to around Rs. 11.30 per unit, citing an increasing financial burden on other electricity users. According to the proposal, the difference between production and consumption has started to strain the grid and increase the cost of electricity for non-solar consumers. This drastic reduction could discourage new installations and affect thousands who have already invested heavily in solar setups under existing contracts.

Government’s Review and NEPRA’s Role

Following the proposal, Prime Minister Shehbaz Sharif has instructed the National Electric Power Regulatory Authority (NEPRA) and the Power Division to conduct a detailed review. The review will examine whether the proposed reduction aligns with existing contracts and what legal or financial implications may arise from such changes. NEPRA’s report is expected to evaluate how solar generation affects the overall grid, the national power plan, and future investment in renewable energy in Pakistan.

Impact on Current Solar Consumers

For thousands of households currently benefiting from solar systems, this change could significantly alter their financial planning. Most users installed solar systems based on the assumption that they would receive a stable rate for excess electricity sold to the grid. A sudden drop to Rs. 11.30 per unit may double the return-on-investment period, making it less profitable. Many consumers have expressed disappointment, saying the government should focus on encouraging renewable energy instead of discouraging it.

Why the Government Wants to Revise the Rates

Officials argue that the rapid expansion of rooftop solar has reduced overall grid sales by 3.2 billion kWh in FY2024. This has reportedly added Rs. 101 billion in costs for non-solar consumers and increased average electricity tariffs by Rs. 0.9 per kWh. Projections suggest that by FY2034, the reduction in grid sales could reach 18.8 billion kWh, causing an additional Rs. 545 billion burden on the system. The government believes that unless net metering policies are updated, these costs will continue to rise, making electricity even more expensive for general consumers.

Shift Toward a Net Billing Framework

The government is now exploring a Net Billing model instead of traditional net metering. Under this framework, consumers will sell excess electricity at a lower, pre-defined wholesale rate instead of the standard retail rate. The Power Division says this would create a more balanced system that protects both solar investors and grid users. Additionally, new standard contracts are being drafted to align with the proposed Net Billing framework for all future solar customers.

Solar Industry’s Reaction

Solar energy companies and environmental groups have voiced strong opposition to the proposed rate cut. They argue that the government should be supporting the renewable energy sector to reduce dependency on imported fuels and cut carbon emissions. Many experts believe that lowering the rate could discourage investment in solar energy in Pakistan, slow down the adoption of clean technologies, and impact thousands of green jobs created in recent years.

Concerns from Environmental Experts

Environmental activists are urging the government to look at long-term benefits instead of short-term financial challenges. They emphasize that solar power is a sustainable solution to Pakistan’s energy crisis and plays a crucial role in fighting climate change. Reducing the incentive could push the country further away from its renewable energy targets under international agreements. Experts are calling for a transparent, data-driven approach before finalizing any reforms.

Operational Challenges Reported by Grid Operators

According to energy officials, increased daytime solar generation has caused operational stress on the national grid, forcing grid operators to balance fluctuating power loads. In some regions, high solar output during peak sunlight hours results in overgeneration, requiring utilities to restore high-loss feeders temporarily. While these issues are technical in nature, they have become part of the government’s argument for restructuring solar net metering in Pakistan.

The Economic Angle: Who Gains and Who Loses?

The main concern revolves around balancing costs between solar and non-solar consumers. While solar owners benefit from lower bills and income from excess generation, non-solar users bear the rising cost of maintaining the grid. The government claims the current setup creates inequality in cost-sharing. However, critics say that the real problem lies in the inefficiency of the power system, transmission losses, and expensive fuel imports—not solar users.

Public Response and Industry Feedback

The proposed cut has sparked widespread debate online. Many Pakistanis who recently installed solar systems fear that the government’s changing stance will reduce investor confidence in renewable energy projects. Business groups and home users alike are calling for policy stability. Several energy associations have also demanded that existing contracts remain untouched, with any new rates applying only to future connections.

Prime Minister’s Direction for Transparency

In response to the criticism, Prime Minister Shehbaz Sharif has ordered that all future consultations be transparent and include public input. He emphasized the need for a clear communication strategy to explain the reasons behind any policy changes. According to reports, the Prime Minister has not finalized the rate cut yet and has asked NEPRA to complete its analysis before any decision is implemented.

Long-Term Outlook for Solar Energy in Pakistan

Despite the ongoing policy uncertainty, solar remains one of the most promising sectors in Pakistan’s energy mix. With frequent load-shedding, rising fuel costs, and global pressure for clean energy, the government will likely continue to support renewable sources. However, the transition from net metering to net billing could redefine how consumers view solar investments. If implemented carefully, the new system could still promote clean energy while maintaining financial balance in the grid.

What Solar Consumers Should Expect Next

For now, the proposed rates are under review, and existing solar customers may not face immediate changes. Industry experts recommend that homeowners stay informed about upcoming NEPRA announcements and possible contract updates. Those planning new solar installations should review their expected payback periods carefully, considering potential rate adjustments. The solar market is expected to remain active, but investors are likely to be more cautious until the new framework is finalized.

Conclusion

The proposed changes in solar net metering in Pakistan have opened a crucial debate about the country’s renewable energy direction. While the government aims to balance costs and ensure grid stability, the solar community hopes that reforms will not discourage clean energy adoption. A fair and transparent policy, supported by strong communication and data analysis, will be essential to protect both consumers and the nation’s long-term sustainability goals.

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