In a significant shift in Pakistan’s renewable energy strategy, the government has decided to implement stricter regulations on the solar net metering system, potentially transforming how rooftop solar users interact with the national grid and how they are compensated for surplus energy.This is the second attempt to alter net metering rules after an earlier effort was halted by Prime Minister Shehbaz Sharif due to public backlash. The latest proposal, however, outlines a range of sweeping reforms that could significantly impact existing and prospective solar users.Key Proposed ChangesBuyback Rate Slashed: One of the most controversial changes is the proposed reduction in the buyback rate from Rs27 per unit to just Rs10. This means distribution companies (DISCOs) will pay rooftop solar users significantly less for the electricity they supply back to the grid.From Net Metering to Net Billing: The government intends to replace the net metering model with a net billing system. Under this structure, rather than exchanging electricity units, DISCOs will simply pay a fixed amount (Rs10/unit) for excess electricity, abandoning the current credit billing system.Sanctioned Load Cap: The maximum sanctioned load for consumers will be reduced from 1.5 times their consumption to 1.0 times, which would effectively force many users to install hybrid systems supported by lithium batteries.Battery Demand and Import Concerns: Experts warn this policy shift could lead to an annual import bill of $1 billion for lithium batteries to support the new hybrid systems.Quarterly Billing Abolished: The current quarterly credit billing cycle will be replaced with a monthly cash settlement for excess power fed into the grid.License Contract Period Shortened: The licensing period for net metering will be cut down from seven years to five.Despite these restrictive changes, all categories of users — domestic, commercial, and others — will still be eligible under the revamped system.Government’s RationaleFederal Energy Minister Awais Ahmad Khan Leghari defended the proposed reforms, asserting that the government isn’t abolishing net metering but aiming to make the system more transparent, sustainable, and effective. Leghari, who originally helped introduce net metering in 2017-18, noted that while the initiative was initially small-scale, its current widespread adoption is now causing stress on the national grid.He emphasized that the reforms are intended not to punish solar users but to protect the national interest and maintain grid stability. The minister highlighted that a three-year payback period for solar investments is still viable and that the changes should be viewed as part of a broader effort to establish a balanced and financially sustainable energy ecosystem.Energy Sector Reforms in ParallelLeghari also unveiled broader energy reforms, including:Cancellation of 9,000MW worth of expensive and unnecessary projects, easing the financial burden on the grid.A levy on captive power users to bring them back into the national grid, boosting electricity demand.Cross-subsidies to the industrial sector, which have reached Rs174 billion, slashing industrial tariffs by 31% and increasing industrial power consumption.—Review SummaryThe proposed solar net metering overhaul marks a significant policy shift, aimed at addressing grid load concerns and fiscal sustainability. However, by drastically reducing incentives for solar users, especially through the slashed buyback rate and mandated battery use, the plan risks dampening the country’s solar momentum. While the government argues these reforms are essential for the system’s long-term health, critics warn they could undermine public trust and stall grassroots progress in renewable energy adoption. The coming weeks will likely see intense debate between energy authorities, environmental advocates, and concerned citizens as the policy edges closer to implementation.
