Government mulls reduction in solar net metering buy-in rate above Rs 10 per unit

• Rooftop solar reduces grid sales by 3.2 billion units, costing Rs 101 billion in revenue.
• The Power Division warns that losses could reach Rs 545 billion by FY2034.
• PM orders review of solar power purchase rate and tariff implications.
  

Islamabad: The government is considering reducing the buy-in rate for solar net metering from Rs 22 per unit to around Rs 11.30 per unit after estimates showed that the scheme has started imposing a heavy financial burden, up to Rs 2 per unit, on conventional grid consumers. The News reported on Friday.

According to official data, the rapid expansion of rooftop solar systems has led to a drop of 3.2 billion units in grid electricity sales in 2024, costing distribution companies nearly Rs 101 billion in lost revenue and causing an average tariff hike of Rs 0.9 per kWh for other users.

Power Department projections warn that by FY2034, this number could swell to 18.8 billion units, translating into an impact of Rs 545 billion and a potential tariff hike of Rs 5-6 per unit of grid electricity consumers. Officials say the matter has become serious enough to warrant the prime minister’s immediate intervention.

In a meeting on October 22, the chief minister directed the Power Division and Nepra to “review and verify” the feed-back tariff and its ripple effects before finalizing reforms in the net metering regime. “The system is effectively used as battery storage for solar consumers,” an energy official told this reporter.

“They sell the excess electricity at high market rates – around Rs 22 per unit – avoiding fixed charges, which leaves other consumers to bear the cost of the system.”

New solar plants are being contracted for less than Rs 10 per unit, highlighting what officials call a “big imbalance”.

The Department has proposed to reduce the buyback rate to Rs 11.30 per unit to reflect the current economic data and prevent further escalation of tariffs for grid-connected users.

The rapid growth of solar net metering—now estimated at 6,000 MW nationwide—also poses operational challenges. Winter demand typically drops to 8,000-9,000 MW, creating the risk of excess generation during the day.