The Economic Coordination Committee (ECC) of the Cabinet, under the leadership of Finance Minister Senator Muhammad Aurangzeb, convened today to review and approve crucial amendments to the existing net-metering regulations. The changes aim to address the financial strain placed on grid consumers due to the increasing number of solar net-metering users.
With a surge in solar net-metering adoption, the government has recognized the need for regulatory adjustments to ensure a fair and balanced energy distribution system. The rapid expansion of net-metering has had significant financial implications, as grid consumers have been bearing additional costs. In response, the ECC has revised the buyback rate for excess electricity fed into the grid. Instead of being pegged to the National Average Power Purchase Price (NAPP), the buyback rate will now be fixed at Rs. 10 per unit. To maintain market flexibility, the National Electric Power Regulatory Authority (NEPRA) has been granted the authority to periodically revise this rate based on market conditions and evolving energy demands.
However, the committee emphasized that these amendments will not affect existing net-metering consumers who have valid licenses, agreements, or approvals under the NEPRA (Alternative & Renewable Energy) Distributed Generation and Net Metering Regulations, 2015. Any agreements already in place will remain legally binding until their expiration, ensuring that current net-metering users are not disadvantaged. This decision safeguards the rights and financial interests of those who adopted solar energy under the previous regulatory framework.
New Settlement Mechanism for Billing
In addition to revising the buyback rate, the ECC also approved an updated settlement mechanism to enhance billing transparency. Under the new system, electricity units imported from the grid and those exported to the grid will be treated separately. Exported units will be credited at the new buyback rate of Rs. 10 per unit, whereas imported units will be billed at standard peak and off-peak rates, inclusive of all applicable taxes and surcharges. This change aims to create a more structured and sustainable compensation model while addressing revenue losses incurred by power distribution companies.
To facilitate the smooth implementation of these regulatory amendments, the ECC authorized the Power Division to issue proposed guidelines. These guidelines will be subject to Cabinet approval and incorporated into NEPRA’s regulatory framework. This step ensures consistency, transparency, and legal clarity in the application of the revised net-metering rules.
Surge in Net-Metering Users Raises Concerns
During the meeting, the Power Division presented data highlighting the exponential growth of solar net-metering consumers, which has placed an increasing financial burden on grid users. As of December 2024, the number of net-metering consumers had reached 283,000, a sharp increase from 226,440 in October 2024. The total installed solar capacity surged from 321 MW in 2021 to 4,124 MW by the end of 2024. If left unchecked, the financial strain on the national power grid could become unsustainable. The Power Division projected that net-metering consumers had already shifted an economic burden of Rs. 159 billion onto grid consumers by the end of 2024, and this figure could skyrocket to Rs. 4,240 billion by 2034 if corrective measures were not taken.
The rising adoption of solar energy has led to challenges in managing electricity tariffs, as net-metering consumers do not contribute to the fixed charges associated with power generation and distribution. This includes capacity charges and operational expenses, which are then passed on to grid consumers, resulting in higher electricity bills for the general public. The committee acknowledged that this financial imbalance could undermine the stability of the power sector and hinder efforts to keep electricity tariffs affordable.
Geographic Disparities in Solar Net-Metering Adoption
Another key issue discussed was the uneven distribution of solar net-metering consumers across the country. The ECC was informed that approximately 80% of net-metering users are concentrated in nine major cities, with a significant proportion located in affluent neighborhoods. This geographic and economic disparity raises concerns about fairness in the energy sector, as wealthier consumers benefit from net-metering incentives while lower-income grid consumers shoulder additional costs. The government sees the need for regulatory interventions to ensure a more equitable distribution of benefits and burdens within the energy system.
A Step Toward a Balanced and Sustainable Energy Framework
The amendments approved by the ECC mark a critical step toward ensuring the long-term sustainability of the power sector. By revising the buyback rate, updating billing mechanisms, and granting NEPRA the authority to adjust rates periodically, the government aims to strike a balance between promoting renewable energy adoption and protecting the interests of grid consumers. These changes seek to create a more transparent, equitable, and financially sustainable framework for both solar energy users and those reliant on the national grid.
The government remains committed to fostering renewable energy growth while addressing economic disparities in electricity pricing. With these reforms, policymakers aim to maintain a stable power sector that benefits all consumers while preventing undue financial burdens on the majority who still rely on grid electricity.
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