Pakistan accelerates shift toward indigenous energy as solar capacity, net metering rules under review

Pakistan is restructuring its power sector to reduce reliance on imported fuels and expand indigenous energy generation, with officials projecting a long-term shift in the country’s energy mix alongside continued expansion of renewable capacity.

Power Minister Awais Ahmed Khan Leghari told parliament on Wednesday that locally sourced electricity currently accounts for 74 percent of national generation, while 26 percent is produced from imported coal and gas.

He said the share of indigenous energy is expected to rise to nearly 96 percent within the next four to five years as substitution measures and local fuel utilisation expand.

The minister was responding to a calling attention notice on changes to net-metering policy for solar prosumers and a proposed 18 percent tax on solar panels.

According to the ministry, installed solar capacity in the country stands at around 23,000 to 24,000 megawatts, including roughly 8,000 megawatts under net metering arrangements.

He said renewable energy currently makes up about 55 percent of the national grid mix, with a target of nearly 96 percent by 2032, though he stressed that solar and wind cannot fully replace base-load generation requirements.

Leghari said Pakistan would continue to rely on hydropower and fossil fuel-based plants to maintain grid stability, even as renewable penetration increases.

On policy changes, he said revised net-metering rules were developed after consultations spanning nearly a year, including approvals and deliberations at the Economic Coordination Committee, the federal cabinet, and directives from the prime minister.

He said existing net-metering consumers would remain protected under previously agreed contracts, while new users will shift to a net billing framework under revised regulations.

Under the new structure, electricity purchased from future prosumers will be acquired at the national grid’s average cost of about Rs9.80 per unit.

The minister said the reforms were intended to prevent additional cost pressure on non-solar consumers, estimating that without intervention the system could have added around Rs3 per unit and imposed an annual burden of roughly Rs35 billion.

He added that solar adoption remains financially attractive, citing an estimated payback period of about three years for a typical Rs100,000 household system.

Leghari said the government is also pursuing a plan to convert imported coal-based power plants to locally produced Thar coal, describing it as a cost-effective measure to reduce import dependence.

He said Pakistan operates around 14,000 electricity feeders, with about 11,500 currently free of load-shedding, while remaining feeders experience outages due to theft and transmission losses.

He added that load management will be shifted from feeder-level to transformer-level targeting within a year to improve efficiency and reduce unnecessary outages.

Leghari said renewable energy expansion will continue under current incentives and described the country’s solar uptake as a “green revolution” driven largely by domestic investment despite limited international climate financing.