Govt Reconsiders Solar Net Metering Reforms Amid Public Backlash

ISLAMABAD: Facing criticism for its decision to slash the solar energy buyback rate from Rs27 to Rs10 per unit, the government is now reevaluating its net metering policy, ensuring that all relevant stakeholders are consulted in the process.

During the weekly cabinet meeting led by Prime Minister Shehbaz Sharif on Wednesday, officials resolved to widen discussions regarding the recent solar net metering regulations ratified by the Economic Coordination Committee (ECC). The cabinet instructed that recommendations should be revisited and resubmitted following comprehensive input from stakeholders.

The revision follows an outcry from consumers and business owners who condemned the abrupt policy change, arguing that it undermined the growth of renewable energy. In response, the government reaffirmed its commitment to sustainable energy solutions, with the prime minister directing authorities to clarify any misconceptions regarding the net metering framework with concrete data.

Cabinet Calls for Revised Net Metering Policy Following Stakeholder Feedback

The prime minister emphasized that the administration remains dedicated to fostering solar energy and that no fundamental shift in policy priorities has occurred.

Under the initially proposed modifications, power companies would procure surplus electricity generated by solar consumers at Rs10 per unit during daylight hours, while charging Rs42 per unit (off-peak) and Rs48 per unit (peak) for grid electricity usage in the evening—excluding additional taxes and fees.

Moreover, a significant restriction was introduced, limiting consumers from installing solar panel capacity beyond their sanctioned electrical load, apart from a 10% allowance. This marked a drastic reduction from the 50% flexibility granted under previous regulations. Existing solar consumers would gradually transition into the new framework as their seven-year contracts reached expiration.

Electricity Relief Measures

The cabinet also moved to alleviate electricity costs for consumers, leveraging funds saved from renegotiating agreements with Independent Power Producers (IPPs), fluctuating global oil prices, and other financial adjustments.

On March 15, the Prime Minister’s Office announced that petroleum prices would remain unchanged, despite a calculated reduction of up to Rs13 per liter proposed by the oil regulator and petroleum division. Instead, the financial savings would be redirected to provide relief on electricity bills. The prime minister was initially set to announce the relief on March 23, but the delay in reaching an agreement with the International Monetary Fund (IMF) postponed the declaration.

Now that the IMF negotiations have concluded, the government is moving ahead with reducing power tariffs. While the exact scale of the reduction has not been disclosed, estimates indicate a considerable cut, with official announcements expected in the coming days.

During discussions with the IMF, a proposal was presented to lower electricity tariffs by approximately Rs2 per unit, based on savings achieved through revised agreements with the IPPs. Furthermore, authorities considered increasing the petroleum levy on petrol and diesel by Rs10 per liter, raising it to a maximum of Rs70 as permitted under the Finance Act 2025. This adjustment could further contribute to a tariff reduction of Rs2 to Rs2.50 per unit.

Additionally, the federal cabinet granted approval for the Central Power Purchasing Agency to negotiate fresh contracts with IPPs that operate using bagasse as a fuel source.

FAQs

1. What is net metering, and how does it benefit solar consumers? Net metering allows solar energy users to sell surplus electricity back to the grid, offsetting their electricity costs. It helps reduce dependency on conventional power sources while promoting renewable energy.
2. Why did the government initially propose reducing the buyback rate for solar power? The proposed reduction was aimed at restructuring the electricity pricing model. However, it received backlash from consumers and industry players who argued it would discourage solar energy adoption.
3. Will the government still reduce the solar buyback rate? The final decision is pending. The government has decided to re-evaluate the policy by consulting all stakeholders before making any definitive changes.
4. How will the new policy impact existing solar energy users? Current solar consumers will continue under their existing contracts, but once their seven-year agreements expire, they may be subject to the revised framework.
5. When can consumers expect a reduction in electricity tariffs? The government is finalizing the relief package, with an official announcement expected soon. Estimates suggest a potential Rs2 per unit reduction in electricity prices.