Editorial
There is growing speculation that the Pakistani government may revise the buyback rates for solar power from net-metered rooftop generation. Currently set at Rs21 per unit, reports suggest the government is contemplating reducing this to between Rs7.5 and Rs11 per unit. While the International Monetary Fund (IMF) is said to support this potential move, it has not specifically addressed solar pricing in its discussions with Pakistan. The Power Minister recently hinted at the possibility of adjusting rooftop net-metering regulations, signaling that changes may be imminent after months of deliberation.
Pakistan has seen a significant rise in solar panel imports, with figures for 2024 expected to exceed $2 billion, up from $1.37 billion in 2023. For fiscal year 2023, solar panel imports surpassed $2.1 billion, translating into approximately 15,000 MW of generation capacity. This surge is largely due to a combination of sky-high energy tariffs over the past two years and a sharp decline in solar panel prices. As of 2024, Pakistan’s solar panel imports have already accounted for 17 GW of solar PV capacity, with 2.9 GW of on-grid solar already deployed, which has contributed to a 5 percent reduction in grid demand during summer and winter months.
While the transition to distributed solar energy is unstoppable, the rapid induction of solar systems may disrupt demand patterns, particularly during the winter months. As more households transition to solar power, particularly high-paying consumers, the grid faces growing challenges. Data from the Power Information Technology Company reveals that in FY20, 10 percent of domestic consumers had average monthly demands of 400 units, but by FY24, this number had dropped to just 1 percent, with a surge in consumers using less than 200 units.
Although net metering has incentivized this transition, allowing for quick payback periods and significant savings, the potential reduction in buyback rates could slow down the solar adoption rate, giving the government time to address grid stability issues. With the rise of renewable energy, Pakistan must focus on improving grid resilience, investing in storage solutions, and implementing a Competitive Trading Bilateral Contract Market (CTBCM) to manage the increasing volume of distributed solar generation effectively.
