Arshad Mahmood Awan
The National Electric Power Regulatory Authority has made a decision that reveals more about Pakistan’s power sector dysfunction than it solves. Rushing through changes to net-metering contracts for both existing and future solar prosumers, Nepra has effectively penalized private citizens for trying to reduce their electricity costs while simultaneously exposing the fragility of a grid system built on inefficiency and excess capacity. This is not reform. This is panic masquerading as policy.
The transition from net metering to net billing fundamentally alters the economics of rooftop solar adoption. Under the previous framework, consumers who generated solar electricity and fed excess power into the grid received credit at rates that made the investment worthwhile. The new system changes this calculation dramatically. Even if a prosumer exports the same number of units to the grid that they later import, they will still face substantial bills. Why? Because the distribution companies will purchase their electricity at rock-bottom rates while selling grid power back to them at peak tariffs.
This arrangement is designed to discourage solar adoption by destroying its financial viability. The message to Pakistani households and businesses is clear: your attempt to generate clean, affordable electricity is unwelcome because it threatens the revenue streams of inefficient state utilities. Never mind that these utilities have accumulated circular debt exceeding trillions of rupees. Never mind that load shedding remains a fact of life across much of the country. Never mind that capacity payments to idle power plants drain billions from the national treasury each year. The problem, according to this logic, is not the broken system but the citizens trying to work around it.
Nepra conducted a public hearing before implementing these changes. Independent stakeholders raised serious concerns about the proposed shift. The regulator ignored them. This disregard for stakeholder input suggests that the decision was predetermined, driven by government anxiety over declining distribution company revenues rather than genuine concern for consumer welfare or energy sector sustainability.
The official narrative frames solar adoption as a threat to the national grid. It portrays solarized consumers as a privileged class that benefits from the system without paying their fair share, thereby shifting financial burdens onto grid-dependent consumers. This framing is both simplistic and fundamentally dishonest. It ignores several critical realities.
First, not every net-metered consumer belongs to the privileged class. Small businesses, middle-class households, and even some lower-income families have invested in solar panels as protection against rising electricity costs and unreliable supply. These are not wealthy elites gaming the system. These are ordinary people making rational economic decisions in response to a failing power sector.
Second, solar prosumers currently constitute only one percent of the entire national electricity system. One percent. The notion that this tiny fraction of consumers is responsible for the sector’s massive financial woes is absurd. The circular debt crisis, the capacity payment obligations, the transmission and distribution losses, the theft and non-payment: these problems existed long before rooftop solar became affordable and will persist regardless of how many prosumers are penalized.
The structural flaws in Pakistan’s power sector run deep. Excess generation capacity was built through poorly negotiated contracts that guarantee payments whether or not electricity is needed. Distribution companies suffer from technical losses, theft, and political interference that prevents rational tariff setting and bill collection. Governance failures, corruption, and lack of accountability have created a system where inefficiency is subsidized and innovation punished.
These systemic problems cannot be solved by attacking one small group of consumers. Yet that is precisely what these new regulations attempt. Rather than address the root causes of sector dysfunction, the government has chosen the path of least resistance: protect the status quo by limiting alternatives.
The shift to net billing will likely accelerate the very problem it claims to solve. Prosumers who find grid exports financially unattractive will invest in battery storage and behind-the-meter installations. They will pursue complete grid independence rather than the hybrid model that net metering encouraged. This phenomenon, known as grid defection, will further erode distribution company revenues and make fixed-cost recovery even more difficult.
The government has effectively created a self-fulfilling prophecy. By treating solar adoption as a threat, it pushes consumers toward complete disconnection from the grid. As more consumers defect, the remaining grid-dependent users face higher per-unit costs to cover fixed expenses across a shrinking customer base. This spiral of declining demand and rising costs will accelerate rather than resolve the sector’s financial crisis.
Prime Minister Shehbaz Sharif has reportedly taken notice of the Nepra decision following public outcry. This attention is welcome but insufficient. The problem is not merely this specific regulation but the broader attitude it represents. The new net billing framework must be understood alongside recent taxes imposed on solar panel sales. Together, these measures form a coordinated attempt to constrain solar growth and maintain centralized control over electricity generation and distribution.
This is neither the first nor the last step in this campaign. More restrictions are coming. The government views the solar tide as something to be stemmed rather than channeled. This defensive posture reflects a fundamental misunderstanding of where Pakistan’s energy future lies.
The country faces energy insecurity, environmental degradation from fossil fuel dependence, and a power sector drowning in debt. Solar energy offers a pathway toward addressing all three challenges. It provides decentralized generation that reduces transmission losses, clean power that cuts emissions, and consumer choice that introduces market discipline to a monopolistic sector.
Instead of embracing this opportunity, the government fights it. Instead of reforming the grid to accommodate distributed generation, authorities protect incumbent utilities from competition. Instead of recognizing that consumers are fleeing the grid because it fails them, not because they are privileged free riders, policymakers double down on a broken model.
Pakistan’s power sector needs fundamental reform: renegotiating exploitative capacity contracts, improving distribution efficiency, ending theft and non-payment, and building a grid capable of integrating renewable energy. Punishing solar prosumers accomplishes none of these goals. It merely delays the inevitable reckoning with a system built on unsustainable foundations.
