The government has decided to limit the contract validity for net metering consumers to five years, along with periodic revisions to buyback rates, Business Recorder reported citing sources in the Power Division.
This decision comes after criticism from net metering consumers, particularly regarding the reduction of the buyback rate from Rs 27 to Rs 10 per unit. Following the decision, the Power Division sent policy guidelines to the power sector regulator, Nepra.
Sources said that Nepra has been tasked with updating the buyback rate, which will now be pegged to the National Average Power Purchase Price, adjusted periodically.
Prime Minister Shehbaz Sharif chaired a meeting on net metering on March 23, 2024, where he directed the Power Division to clarify public concerns.Â
Additionally, the settlement mechanism will differentiate between imported and exported units for billing purposes. Exported units will be bought at the approved buyback rate, while imported units will be billed at the applicable peak/off-peak rates. If the exported units exceed the imported units’ cost, the net amount will be credited to the consumer’s subsequent billing cycle.
However, the credit cannot be redeemed or cashed out by consumers. Nepra will also issue guidelines concerning the percentage or cap of hosting capacity on each distribution transformer and feeder, following a comprehensive study by the distribution companies within six months of the guidelines’ approval.
New net metering consumers must comply with updated inverter standards, including features like voltage and frequency regulation, anti-islanding protection, and remote monitoring. The capacity of the proposed Distributed Generation (DG) facility will not exceed the consumer’s sanctioned load. If the actual Maximum Demand Indicator (MDI) for export units exceeds more than 10% of the sanctioned load, no exported units will be credited in the bill for that month.
The validity of contracts under the new regulatory framework will be limited to five years. The shift in the net metering regime and the impact on fixed charges have been linked to higher electricity tariffs. The reduced sales due to net metering capacity are expected to contribute to an additional financial burden of Rs 101 billion on consumers in FY-2024. This burden could grow significantly by FY-2034, resulting in a projected increase of Rs. 3.6/kWh in consumer tariffs.
Additionally, the proposed IGCEP 2025 considers the forced addition of over 8,000 MW of net metering capacity, which is expected to negatively affect the least-cost expansion principle.
