The Muslim government’s recent news to the International Monetary Fund ( IMF) regarding the oncoming switch from net metering to net metering for rooftop solar panels has sparked a lot of problem.
This scheme change seeks to prevent the use of rooftop solar panels by altering how shoppers are paid for the energy they produce, a demand driven by the need to target economic issues in the energy market.
However, this decision’s possible effects could make electricity prices go up now and stifle Pakistan’s adoption of renewable energy. Consumers can now use rooftop solar panels to offset their electricity consumption under the shield metering system.
Consumers can reduce their reliance on expensive generator electricity by using a bilateral meter that measures both the generated and consumed electricity. This technique reduces the burden on the national grid and makes solar investments economically feasible.
In contrast, gross metering requires consumers to sell all of the electricity produced by solar panels to the grid at a fixed Feed-in-Target ( FITT ) and then pay back the electricity they use at retail rates.
This installation consists of two linear feet, one measuring the power that is exported to the network and the other measuring the power that is imported from the generator. Although this may make power distribution companies ‘ billing simpler, it considerably lessens the financial incentives for consumers to choose solar power.
The transition to net metering is likely to have a significant impact on both personal consumers and businesses. Consumers now generate and use their own solar power, which means lower energy bills.
However, under net metering, they did buy electricity to the grid at 11 rupees per product and buy it back at wholesale rates, which can go up to 62 rupees per unit after including several surcharges and adjustments. Due to this disparity, solar investments would become financially unviable, leading to a decline in solar adoption.
Industries that are increasingly reliant on solar energy to reduce high grid electricity costs would also suffer.
The proposed gross metering policy would force them to sell all of their generated power to the grid and repurchase it at higher rates, leading to higher operational costs and possibly lowering their standing in the global market. Moreover, this proposed policy change undermines Pakistan’s efforts to promote renewable energy and reduce carbon emissions.
A more sustainable and diversified energy mix has been made possible by the current net metering system, which has resulted in a rapid rise in rooftop solar installations.
The government risks stifling progress toward its renewable energy goals and increasing reliance on fossil fuels, which are in conflict with global trends and commitments, by discourage solar adoption. The policy change’s rationale is primarily to manage idle capacity payments and address financial losses suffered by power distribution companies.
However, this approach seems to prioritize energy security and long-term sustainability over short-term financial gains. To address these challenges constructively, several steps can be considered.
Instead of entirely shifting to gross metering, a balanced approach could be adopted. This would require implementing gross metering for larger commercial installations while maintaining net metering for smaller residential customers. Achieving this balance can help residential customers continue to receive financial benefit from solar investments while also addressing the financial concerns of power distribution companies.
In order to lessen the financial strain on the energy sector, the government should also renegotiate capacity payments with Independent Power Producers ( IPPs ).
While most contracts have been renegotiated, efforts should continue to include Chinese IPPs under the China- Pakistan Economic Corridor ( CPEC ) agreements. This renegotiation could result in significant savings for consumers and the economy as a whole in terms of overall electricity costs.
Additionally, gross metering’s reduced financial benefits can be offset by offering subsidies or tax incentives for solar panel installations. This approach could ease the transition to the new metering system while encouraging further investment in solar energy.
Financial incentives would help keep the adoption of solar power high, keeping Pakistan’s renewable energy goals on track.
Lowering overall electricity costs can be achieved by fixing problems in the power system, such as reducing theft and leakages. Improved grid management and modernizations can improve the distribution of electricity more reliably and effectively. By addressing these systemic issues, the government can establish a more affordable and sustainable energy sector.
Engaging with stakeholders, including consumers, industry representatives, and renewable energy advocates, is crucial. Their input can help refine policies to balance economic, environmental and social objectives. Open dialogue and collaboration can lead to more productive and fair solutions that benefit all parties involved.
The proposed switch from net metering to gross metering in Pakistan is a significant policy change with broad-ranging implications. While it is necessary to address financial issues in the energy sector, it is equally crucial to ensure that policies do not inhibit the development of renewable energy or place unnecessary strain on consumers and businesses.
The government can achieve its financial goals by pursuing a balanced and inclusive approach while supporting sustainable energy solutions and upholding the interests of all parties involved.
Sehr Rushmeen is an Islamabad–based freelance researcher. She earned her BSc in international relations from University of London ( UL) and her MPhil in strategic studies from National Defense University ( NDU).
She may be followed on X at @rushmeentweets and reached by email on [email protected]