When the net-metering regulations were changed with a decrease in the buyback rates, the Power Division launched a questionable video campaign. This informative digital and television advertisement by the federal government painted an evil picture of the solar net-metering consumer. It portrayed the circumspect users of self-installed solar electricity as opportunists, who are using refunds on their net metered units at the behest of the “common man”.
What the ad does is it incites a feeling of deprivation in the minds of the less fortunate. However the stance taken, is not entirely correct, to say the least.
Before dissecting what is wrong with the campaign, we need to get a few things clear.
What is net metering?
People who have installed solar panels on their properties, be it commercial or residential, have essentially established a mini power plant of their own. In this respect, these people use the units they produce and sell the excess units back to the grid, for which they get compensated.
Solar power generation was first decided upon in 2015, when Pakistan was looking to add renewable energy sources to its power mix. It was then that the government of Pakistan formally introduced net metering in 2015 through the National Electric Power Regulatory Authority (NEPRA) under the Net Metering Regulations, allowing consumers to sell excess electricity generated from solar and wind energy back to the grid.
Pakistan’s broader solar policy has evolved over time. The Alternative and Renewable Energy (ARE) Policy 2019, approved by the Council of Common Interests (CCI), aimed to increase renewable energy’s share in the national grid to 30% by 2030.
In fact, at the time, the government had also launched various initiatives to promote solar adoption, including incentives for households and businesses to install solar panels. So what is it that has led the same government, more importantly, the same political party’s government, to demonise solar electricity.
Why is it a problem?
On the face of it, this seems like a very good policy. It decreases the country’s reliance on imported fuel to produce electricity, adheres to the UN development goals of renewable energy and environment friendly energy while also producing additional power for the grid.
But that is the problem. The rise of net-metered solar consumers in Pakistan introduced a new challenge for the government. While rooftop solar installations did help individual consumers reduce electricity costs and reliance on the national grid, they also created financial and operational burdens on the government-owned power distribution companies (DISCOs).
Since net-metered solar users sell excess electricity back to the grid at retail rates while consuming less from DISCOs. Since all these users were often higher-paying domestic, industrial, and commercial consumers, their reduced reliance on the grid.
This meant a loss of revenue for DISCOs. And this in turn has severe implications for the power producers.
The government of Pakistan, by design, pays the independent power producers (IPPs) for the amount of electricity produced, not the electricity consumed. This is referred to as a capacity payment and has been covered by Profit in detail in past articles.
The circular debt crisis and high power generation costs mean that electricity tariffs are already inflated. Now, with more consumers switching to solar and reducing their grid consumption, DISCOs struggle to recover fixed costs, capacity payments to power plants, and line losses. Since the power companies still have to maintain their transmission and distribution infrastructure, leading to higher costs, which now, is spread across fewer paying customers.
To compensate for this shortfall, the government often raises electricity tariffs, disproportionately affecting those who remain dependent on the grid, including low-income households and small businesses.
Pakistan’s energy contracts with Independent Power Producers (IPPs) require capacity payments, meaning the government pays for electricity generation whether it is used or not. When net-metered consumers reduce grid reliance, the total units sold by DISCOs decline, but capacity payments remain unchanged. This results in a higher per-unit cost for grid users who must now absorb the financial burden.
Who’s fault is it?
To address this problem, the government has changed the buyback rate for net metering consumers to Rs 10. It has also revised its contracts on capacity payments with several IPPs however there is something wrong, in principle, with the stance taken by the government in its ad campaigns.
The latest advert tries to blame the consumer for this systemic inefficiency. A selective use of ostracising jargon and populist semantic instruments, makes an “us vs them” scenario in the ad. Wherein the “us” is the poor and destitute of the country, rightfully pointed out as the 4 crore registered consumers of DISCO’s electricity, and “them” being the 2.83 lac solar consumers, seemingly enjoying the undue perks. It uses phrases like “Chand lakh maaldaar afraad ka bojh aam awam kiun uthaye? (why should the burden of some rich people be borne by the public)”
It also fallaciously points out the cities of solar consumers associating a sense of prestige with the consumption of solar electricity. Another deliberate mistake that the video campaign makes is saying “Solar saarifeen na sirf muft bijli istemal kar rahay hain, balkay izafi paisay bhi haasil kar rahay hain” essentially alluding that the electricity used by these consumers is entirely free of cost.
Let us one by one look at the arguments presented. Firstly, the ad says that solar consumers use free electricity. It is important to note that, not only does it come at a significant cost, the maintenance itself is quite cumbersome. This is in fact what makes it a luxury rather than a common practice. In its essence it’s a one time payment to secure oneself from the government’s changing policies.
Secondly, the government itself provided the room for solar energy to take a strong root. The PML-N government of 2015 promoted it the most, presenting it as the ultimate saviour.
Interestingly PML-N still promotes the solar dream. In fact what makes the whole ordeal fallacious is Shehbaz Sharif’s repeated speeches in its favour, both in his interim setup and now. CM Punjab Maryam Nawaz’s “Free Solar Panel Scheme” which will distribute 100,000 free solar panels amongst the financially challenged, and the Sharif family’s huge vested interest in the solar panel import.
Another assumption that the advert makes is that solar energy is only being used for residential use. It is important to note that industries are not only a significant benefactor of the utility but also impact power costs, positively in other ways. Reducing subsidy utilisation offsetting the impact.
The campaign also says that 80% consumers live in 6-7 big cities. Congruently, this makes no sense, since the population and wealth in general is also distributed along the same bell curve.
The ad also calculates the increase in cost at 1.5 rupee per unit for the normal consumer. This figure, while difficult to isolate, is also expected to be different for each month, a variable. Here is, in fact, a list of all the other variables that are included in the per unit cost of electricity, and their value for each unit can also be isolated.
Fuel costs, Capacity charges, transmission and distribution losses, and most importantly, government subsidies or surcharges. The tariff is also primarily dependent on factors such as hydropower availability, exchange rate fluctuations, and circular debt levels. NEPRA reviews and adjusts tariffs periodically through mechanisms like Fuel Charges Adjustments (FCA) to reflect changes in the generation costs. An slight adjustment in any of the aforementioned can impact the power tariff and per unit cost in a massive way.
What is perhaps the most significant implication of the advert, is that it claims to have ended this additional cost so that the “common man” can benefit from the change. However, that is not true. The changes in the net-metering regulations, as conveyed to the media, have not been applied to people who have already installed. This means that all the 2,83,000 solar connections will continue to get the same buyback rates. And the cost, if correct in its calculation, will remain at least 1.5 rupees per unit from here forth.
The policy only targets new users, who will also be discouraged, not penalised for producing additional units. The amended copy of the net metering regulations, are yet to be made public.
While reducing the buyback rate may be a step in the right direction, public narrative is not something to be played with. Most policy makers knew of the capacity charge implication of solar adaptation when it was being put in place back in 2015, yet more IPP’s were simultaneously awarded licenses in the guise of ending Pakistan’s energy shortage.
A circumspect policy on solar adoption since the start had to be in place that could have avoided this ordeal. Solutions such as time-of-use pricing, storage incentives, and revised net metering tariffs could have helped balance benefits for all stakeholders at the very initiation. But it wasn’t done like that on purpose. So there remains only one target of critique in this whole ordeal and that cannot be the seemingly privileged solar consumers.
It is important to note that the said advertisement has since been replaced by a new, less offensive one, but the narrative remains the same. It goes to show that somewhere inside the ministry of energy it is the intention to hide incompetency with populist slogans and to get away with it.
There is no doubt that solar energy’s adoption is crucial for Pakistan’s energy independence. It is also agreed that an unchecked expansion of net metering without financial and technical adjustments creates cost burdens for everyone. However, steering the public narrative for political gains, falsifies performance metrics, making the public perception of each and every policy murky.
