The net metering share in the energy mix is ​​increasing

Net metering’s share in Pakistan’s total electricity generation increased by 57 basis points year-on-year in September 2025, reflecting the continued shift towards solar adoption and reduced reliance on the national grid, according to data compiled by Arif Habib Limited (AHL) based on the latest NEPRA data.

Total electricity production rose 0.8% year-on-year in September 2025, while net metering units rose 28.1% month-on-month, highlighting the growing contribution of distributed solar systems installed by households and industries. According to NEPRA estimates, electricity demand is projected to grow by 2.8% annually in year 25, driven mainly by seasonal industrial activity and urban expansion. However, high tariffs continue to weigh on consumer standards.

Energy analysts said the rise of net metering reflects both economic compulsion and environmental consciousness. Engineer Faiz Bhutta, Senior Solar and Battery Energy Storage Systems Consultant, told The Express Tribune that escalating electricity tariffs have necessitated alternative energy sources.

“Electricity has become so expensive that people are forced to think of alternatives,” he said. From an environmental point of view, this change is positive. However, from the point of view of the government grid, it is problematic. As production capacity increases and consumption weakens, underutilization of the system becomes a financial burden for the state.

Capacity payments to independent power producers have become a chronic budget issue. The government must pay for available capacity regardless of actual usage. When consumption falls because more users switch to solar, those capacity payments still have to be made, adding to the financial strain.

He pointed out that distribution companies have adopted disincentive policies to slow net metering approvals. Earlier, consumers could apply for systems up to 1.5 times their permitted load. Now some DISCOs limit them to equal load capacity. They also impose additional requirements, such as the installation of a separate transformer for systems above 10 kilowatts. These measures, along with higher fees and bureaucratic delays, are pushing people to explore out-of-network options. Battery systems that can power homes for up to five days are becoming popular.

According to Bhutta, some have gone completely off-grid, while others are reducing their reliance by installing hybrid systems.

The government is considering a shift from net metering to gross metering. Under this system, different tariffs will apply to imported and exported electricity, replacing the current one-to-one unit compensation system.

He highlighted the paradox of Pakistan’s excess energy capacity and low utilization. In winter, Pakistan’s installed generating capacity is about 37,000 megawatts. However, actual demand is only 8,000 megawatts. This underutilization turns into a financial burden due to fixed capacity payments.

Experts stress that instead of discouraging solar energy, the government should focus on reviving industrial development. Industries could then consume more energy, produce exportable goods and generate foreign exchange.

Buta suggested that tariff reforms could help encourage higher use of the network. “Instead of the current tariff of two zones – off-peak and peak – there should be four tariff zones. Reduced winter tariffs could provide an incentive for higher energy consumption,” he said.

Despite policy uncertainties, experts say growing solar adoption and net metering show that Pakistan’s consumers are driving the transition to cleaner energy faster than the system is adapting. With fuel imports costly and cyclical debt over Rs 1.2 trillion, analysts believe distributed solar generation could play a key role in stabilizing the sector. However, this requires the government to develop a balanced policy framework that aligns fiscal realities with public demand for energy independence.