Government to Reduce Solar Net Metering Rates Amid Growing Concern for National Grid

The government, which had initially promoted the expansion of solar energy by encouraging the public to adopt solar power through net metering, has now decided to reduce the solar net metering rates in the name of rationalizing the policy. This shift aims to ease the burden on the national grid, and the summary will soon be sent for approval to the Economic Coordination Committee (ECC).

According to Energy Minister Owais Leghari, the primary goal is to reduce the burden on existing consumers in the national grid. Under the new decision, the rate for electricity generated by solar users and sent to the national grid will be slashed from 27 rupees per unit to 9 rupees.

Previously, under the Green Energy Initiative by the PML-N government, net metering rates allowed consumers to recover their investment in solar energy systems within three years. However, with the new rates, it is expected to take consumers around five to six years to recoup their investments.

Former CEO of the Alternative Energy Board, Dr. Basharat, highlighted that many middle-class households have taken loans to install solar panels. He pointed out that the reduction in rates could make it difficult for these consumers to afford the system, as they would be selling their electricity at a significantly lower rate, causing a financial gap. Many might shift towards using batteries instead.

In the past year, the number of solar net metering consumers has increased by over 171,000. As of February 2024, there were 111,000 users, but this number has now risen to over 283,000. These consumers collectively generate about 3,500 megawatts of low-cost electricity, which is now seen as a challenge for the national grid.

Energy expert Abdul Sattar argued that to open the market for solar energy, the government must first adjust the “wheeling charges” (the cost of transmitting electricity) and explore newer ways of protecting the grid. He believes that the grid’s days are numbered, given advancements in technology.

Solar net metering consumers are now urging the government to reconsider its decision to change the rates, as it could lead to increased electricity costs for them. There are concerns that if net metering continues under the old rates, the additional burden on grid consumers could rise by 3 rupees per unit, leading to an annual cost of 300 billion rupees for regular consumers.

The ongoing debate highlights the tension between promoting renewable energy through solar power and maintaining the financial stability of the national grid.