Govt considers cutting buyback rates from Rs 21 to Rs 11/unit for net metering

The government is considering reducing the buyback rates for net metered electricity from Rs 21 to Rs 11 per unit.

BR reported, quoting sources, that the surge in net metering installations has disrupted the government's ability to manage capacity charges, as wealthier segments adopt net metering systems.

The Power Division believes that the benefits of net metering to consumers have peaked, and the sector is now facing issues. While the government supports solar energy, the current buyback rate of Rs 12-22 per unit is deemed unsustainable.

Officials argue that solar systems should primarily serve personal consumption, and excess power rates should reflect the affordability of the distribution companies (Discos).

As of March 31, 2024, imports of solar panels capable of producing 6000 MW have been recorded, with 3000 MW currently generated through solar energy.

In 2022, the National Electric Power Regulatory Authority (NEPRA) began revising the Alternative & Renewable Energy Distributed Generation and Net Metering Regulations, 2015.

The proposed change involved replacing the term 'National Average Power Purchase Price (NAPPP)' with 'National Average Energy Purchase Price (NAEPP)', following an increase in NAPPP from Rs.12.95/kWh to Rs.19.32/kWh effective July 25, 2022.

This amendment was open for public feedback for 30 days, and a hearing was held on September 27, 2022, following stakeholder input and media coverage. Consumers at the hearing opposed the amendments, citing the efficiency and low infrastructure costs of net metering.

Despite government pressure, NEPRA delayed its decision for months, ultimately choosing not to amend the existing regulations, acknowledging the economic benefits of net metering, such as cost savings, foreign exchange savings, and minimal losses, despite it comprising less than 1% of the total energy purchased by DISCOs.