Complying with International Monetary Fund (IMF) directives, the Pakistani government has outlined its plan to overhaul the existing net metering policy by transitioning to a gross metering system.
The new policy shift is expected to make electricity more costly for those currently benefiting from net metering, which allows consumers to sell surplus power generated from solar panels back to the national grid.
The proposed gross metering framework would involve installing two separate meters for solar panel users: one to track electricity fed into the grid and another to monitor electricity usage from the grid, which would apply the same electricity rates to solar panel users as those charged to regular consumers, effectively ending the financial incentives previously available under net metering.
The change comes as the government disclosed to the IMF its strategies for mitigating the electricity pricing crisis, which includes eliminating favourable net metering tariffs. Net metering facilitates consumers’ becoming a protected category, enjoying reduced electricity rates. However, under the new policy, solar panel users will be categorized as non-protected consumers, subject to standard rates that will diminish their cost savings.
This policy adjustment is part of broader reforms discussed with the IMF, including the restructuring of $15.4 billion in energy loans from China and the critical removal of capacity charges to lower electricity prices. The government has also noted that the increase in solar panel installations, 6,800 megawatts worth of imported in just the first ten months of this fiscal year, is impacting the demand for grid electricity and leading to higher costs related to unused capacity.
Additionally, the Ministry of Energy has highlighted the financial implications of the current net metering policy. It suggested that the minimal costs associated with net metering (1.90 rupees per unit) are negligible compared to the substantial capacity payment charges (17 rupees per unit), which significantly benefit power plant owners and foreign investors.
With rising electricity prices and a notable shift among the middle to upper classes towards home solar power generation, the average basic electricity tariff currently stands at 29.79 rupees per unit. When including additional charges like fuel price adjustments and taxes, the cost can soar to as much as 62 rupees per unit.
The gross metering policy is poised to reduce the advantages for household consumers who generate their electricity. It will require separate meters for production and consumption, likely leading to increased costs and reduced benefits for solar users. This new system aims to balance the financial dynamics of power generation and consumption but also raises concerns about the sustainability of consumer benefits in the face of growing solar adoption.
