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NEPRA and Power Division Directed to Revise Net Metering Rules for Solar Panels

ISLAMABAD: Prime Minister Shehbaz Sharif has instructed the National Electric Power Regulatory Authority (NEPRA) and the Power Division to revise net metering rules to rationalize buyback rates, amid concerns from solar panel installers across Pakistan.

During a meeting on the power sector, the premier highlighted the necessity of adjusting these rules to address the financial implications for electricity distribution companies (Discos), which have seen a revenue decline due to the growing popularity of net metering.

Net metering allows consumers to send excess energy generated by solar panels to the local grid in exchange for credits on their monthly electric bills. Given high electricity rates and the government’s preference for renewable energy, many households and businesses have transitioned to solar power.

The Power Division and Discos have raised concerns about the widespread adoption of solar energy, noting that it negatively impacts their revenues. This issue has been discussed with international financial institutions such as the World Bank, the Asian Development Bank (ADB), and the International Monetary Fund (IMF). The IMF has stressed the importance of consumers fully covering the cost of electricity.

In a recent aide-memoire, the ADB acknowledged the Power Division’s concerns about the rising number of net metering projects and their potential impact on Discos. The Division proposed reducing the buyback rates from the current Rs21-22 per unit to Rs11-12 per unit to mitigate these financial implications.

The meeting decided that the Power Division would submit a detailed summary after refining the rationalization plan. This plan includes converting the existing net metering system to gross billing with separate rates for importing and exporting units, creating a new tariff category, revising buyback rates, amending net metering regulations, and establishing a dynamic formula to determine a reasonable payback period. The final recommendations are expected by May 31, 2024.

In its presentation to the Prime Minister, the Power Division revealed that 6,000 MW of solar panels were imported during the first nine months of the current fiscal year, primarily due to the availability of low-priced Chinese photovoltaic panels.

Power Minister Awais Leghari clarified that there are no current plans to impose taxes on solar net metering and that existing regulations for already installed solar systems would remain unchanged. He acknowledged the fiscal challenges posed by capacity payments and emphasized the need for reforms in the transmission system over the next four years. Leghari also encouraged the public to adopt solar power to alleviate the load on the national power generation system.

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