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Government’s Solar Net Metering Policy Under Scrutiny

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In recent weeks, there has been significant confusion and concern surrounding the current solar net metering policy in Pakistan, which was established in 2015. The Minister for Power, Owais Leghari, released a statement on May 19 aimed at addressing these concerns and providing clarity on the government’s stance.

Minister Leghari reassured existing users of rooftop solar power-generated electricity that the government has no immediate plans to alter the solar net metering policy for them. Currently, these users receive Rs22 per kWh from power utilities to supply excess electricity generated from their solar panels to the power grid.

However, the minister also hinted at potential changes to net metering regulations for newly installed solar panels. He mentioned an ongoing review to assess the impact of solar net metering on grid electricity consumers. If adverse effects are identified, the government may consider revising the net metering policy for new installations.

This clarification came in response to media reports suggesting that Pakistani authorities had signalled to the IMF their intention to phase out the net metering policy entirely for rooftop solar panels, replacing it with a gross metering system. Under this proposed system, solar energy generated on rooftops would be directed to the national grid, and solar panel owners would solely rely on grid electricity, potentially resulting in higher costs compared to the net metering system.

The recent discussions around potential changes to the net metering rate or the adoption of a gross metering system have shed light on the resistance within the power bureaucracy to the widespread adoption of solar energy. This stance contrasts sharply with the global trend of transitioning to alternative energy sources. Concerns have been raised within the bureaucracy about the negative impact of solar net metering on low-income segments.

According to the Power Division, existing net metering license holders place an annual burden of Rs110 billion on grid electricity consumers, with the government subsidizing solar energy users by Rs1.90 per unit. While the concerns for low-income consumers are valid, questions have been raised about the priorities of focusing on the impact of Rs1.90 per unit from net metering, as opposed to the Rs17 per unit that the government pays as capacity payments to independent power producers, even when power plants are idle.

Experts have also highlighted the failure of the Power Division to renegotiate the favorable terms under which solar independent power producers operate in the country. These producers receive substantial tariff increases and financial reimbursements from the government, benefits not extended to rooftop solar energy generators.

It is evident that the current situation stems from flawed deals with independent power producers and the power bureaucracy’s historical inability to address system inefficiencies while also safeguarding itself from the impact of advancing technology.

Considering the economic burden on grid consumers, there may be a need to revise the net metering policy. One potential approach could involve maintaining the current net metering rate for solar generation units of up to 10kW, while reducing it for those generating power in excess of 10kW.

Additionally, the government should carefully assess the environmental implications of its decisions, particularly in a world grappling with the effects of climate change. Policies prioritizing consumer interests and simplifying processes for the power bureaucracy are crucial in the current landscape.

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