ISLAMABAD:
Prime Minister Shehbaz Sharif’s government may face a political backlash as solar net metering is all but dead after the National Electric Power Regulatory Authority (Nepra) abolished electricity unit trading, dealing a blow to consumers hoping to switch to renewable energy.
Currently, the buyback rate of net solar generation stands at Rs 25.9 per unit, which can be reduced to Rs 11 per unit, while the contract period has been reduced from seven to five years.
The burden of capacity payments from Independent Power Producers (IPPs) is now shifting to solar consumers. Distribution companies (Discos) will charge their own electricity tariffs, which can reach Rs 50 per unit, while they will purchase daytime power from consumers at a possible price of Rs 11 per unit.
The new buyback rate is yet to be officially notified but was discussed at Rs 11 per unit during stakeholder consultations. Net solar consumers will have to pay the net difference to Discos once the unit exchange regime ends.
The policy will not apply to existing consumers, but once the contract expires, Discos have been authorized to terminate agreements or move users to the new policy framework.
The energy regulator has overhauled the country’s net metering regime, moving rooftop solar generators and other small generators to a new ‘net billing’ system under the NEPRA (Prosumer) Regulations 2026, fundamentally changing the way electricity producers are paid and repealing the decade-old framework.
Under the new rules, notified on Monday by Nepra, utilities will have to buy excess electricity from prosumers (households, businesses and industries generating up to one megawatt) at the national average power purchase price, while selling the electricity to them at the applicable consumer rate, effectively ending one-to-one net metering.
The regulations apply to solar, wind and biogas systems and come into effect immediately, replacing Nepra’s Alternative and Renewable Energy Net Metering and Distributed Generation Regulations 2015.
Existing prosumers will continue with their current agreements until they expire, but all future renewals will be governed by the new billing structure.
Nepra has limited the maximum size of a distributed generation facility to one megawatt and limited system capacity to the consumer’s authorized load, with a key technical restriction prohibiting new connections if generation at a transformer reaches 80% of its rated capacity.
Systems 250 kilowatts or larger must undergo a mandatory load flow study. Utilities must process requests within strict deadlines, acknowledge requests within five business days, complete technical reviews within 15 days, and install interconnection facilities within 15 days of payment.
Prosumers must also obtain formal approval from Nepra, which the regulator says will be issued within seven business days.
Financially, all interconnection costs, including meters and network upgrades, will be borne by the prosumer, while Nepra has introduced a non-refundable concurrency fee of Rs 1,000 per kW. The measurement must support bi-directional measurements, either through a single bi-directional meter or dual meters.
The standard term of the agreement has been set at five years, instead of seven, renewable by mutual agreement, while utilities retain the right to disconnect systems in cases of failure, non-compliance or maintenance, with or without notice. Prosumers are prohibited from selling energy to third parties using the utility’s network.
Nepra has also given itself broad powers to review purchasing rates during the term of the agreements, issue binding instructions, demand operational data, impose sanctions and relax or modify provisions where necessary.
The shift to net billing marks one of the most significant policy changes in Pakistan’s renewable energy sector, redefining the economics of rooftop solar and signaling tighter regulatory control as the number of distributed generators continues to rise.
The power divider had made two attempts to get the approval of the prime minister and the cabinet. However, he faced a political backlash, so the burden fell on Nepra to avoid public anger.
Currently, consumers have been paying more than Rs 2 trillion for capacity to idle power plants that have not been operational. Now, this burden had been shifted to solar energy consumers to continue paying considerable amounts for idle plants.
The country’s agricultural sector has mainly shifted towards off-grid solar energy and recent changes in the net metering regime will push more consumers to use off-grid energy. According to industry officials, the country will be forced to pay almost $1 billion each year for the import of solar net metering.
The world was promoting renewable energy, but the current government had forced solar energy consumers to switch to the grid system to foot the bill for power plants that were not operational but were receiving trillions of rupees every year.
