The National Electric Power Regulatory Authority (NEPRA) is working on a major revision to the country’s solar net metering policy, with a proposal to significantly reduce the buyback rate for excess solar power. According to sources, the regulator plans to cut the rate from the current Rs. 23 per unit to a proposed Rs. 10 per unit.
This potential change follows concerns from the Power Division that the existing policy is increasing electricity costs for consumers who remain on the national grid. Officials cite a surge in rooftop solar installations as creating a substantial financial strain on the power sector.
Power Division sources provided data highlighting the economic impact. In the last fiscal year (FY2024), grid electricity sales fell by 3.2 billion units. This decline resulted in an estimated revenue loss of Rs. 101 billion for power distribution companies.
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To cover this shortfall, the government had to increase tariffs for traditional electricity users by nearly Rs. 1 per unit. Officials argue that the current net metering incentives are becoming unsustainable, with payments to consumers with solar systems reportedly reaching Rs. 125 billion.
The proposed reduction to Rs. 10 per unit may only be the first step. Sources indicate that a future phase could see the complete elimination of the buyback mechanism. Under such a scenario, consumers would not receive any payment for excess power they feed back into the grid and would be required to consume 100% of the electricity their solar systems generate.
The situation has drawn the attention of the Prime Minister, who, on October 22, directed the Power Division and NEPRA to conduct a comprehensive review of the buyback tariff and its broader consequences before finalising any policy reforms.
