During recent discussions with the International Monetary Fund (IMF), Pakistani authorities revealed plans to phase out the net metering policy for rooftop solar panels.
This policy, which currently allows solar energy users to offset their grid electricity consumption with rooftop-generated power, will be replaced by a gross metering system that aims to encourage the use of grid electricity, which is more costly.
The shift is part of broader negotiations as Pakistan seeks further engagement with the IMF, including a proposed $15.4 billion energy debt restructuring with China. The Ministry of Energy has taken steps to ensure the IMF is fully aware of the upcoming changes in solar panel policies, which have traditionally helped consumers reduce dependence on expensive grid electricity.
Under the new gross metering policy, solar energy generated on rooftops will be fed directly into the national grid. Homeowners will then draw their electricity solely from the grid, potentially paying more as the financial benefits of generating their own power are diminished.
This system will require two separate meters at homes: one to measure electricity fed into the grid and another to measure consumption, replacing the current bidirectional meter system.
The government’s rationale for this policy shift is to bolster the revenues of power distribution companies, which have been hit by the increasing popularity of in-house solar power generation among Pakistan’s middle-to-upper class. This demographic has turned to solar power as grid electricity prices have soared due to inefficient power systems and unfavorable power purchase agreements.
The average base tariff in Pakistan is currently Rs29.79 per unit, but with additional charges, consumers can pay up to Rs62 per unit. The IMF has been informed that a major increase in electricity prices is expected in July, further compounding the financial burden on consumers.
Additionally, the rapid adoption of solar power has led to a decrease in demand for grid electricity, exacerbating the issue of idle capacity payments. These payments, which are made to power plant owners regardless of electricity production, have contributed significantly to the high cost of electricity.
The Ministry of Energy also highlighted concerns that the net metering policy is causing some solar panel users to fall into the ‘protected consumers’ category, enjoying lower electricity rates. With the introduction of gross metering, these benefits would be withdrawn, aligning more consumers with standard tariff rates.
In its ongoing financial strategy, Pakistan has also discussed renegotiating capacity payments with power producers under the China-Pakistan Economic Corridor (CPEC) and other agreements to alleviate financial pressures. However, negotiations have been challenging, particularly with CPEC-related projects, due to resistance from the Chinese side.
The proposed changes and ongoing financial negotiations underscore the complex challenges Pakistan faces in balancing energy costs, consumer interests, and the financial health of its power sector.
