Govt to Revise Rooftop Solar Tariff for Grid Consumers

The government is moving forward with plans to overhaul the rooftop solar tariff policy, aiming to address inequities and financial burdens created by the current system. The proposed reforms intend to transition from a net-metering framework to a gross-metering mechanism, marking a pivotal shift in how solar energy is integrated into the national grid.

Govt to Revise Rooftop Solar Tariff: Current Policy and Its Challenges

Under the existing net-metering system, rooftop solar users sell excess electricity to the grid at a rate of Rs21 per unit and repurchase it during non-generative periods, such as nighttime, at Rs42 per unit. This arrangement has allowed affluent households to recover their investments in solar systems quickly, often within 18 to 24 months. However, the costs of these benefits have largely been shifted to grid-dependent consumers, many of whom are from lower-income groups.

The financial strain on the grid is evident. According to Power Division documents, the current policy has imposed an additional Rs103 billion burden on grid consumers. The tariffs for non-solar users have increased by Rs1.03 per unit due to this imbalance. If the trend continues unchecked, officials warn that the system’s financial burden could escalate to Rs503 billion over the next decade.

Proposed Reforms

The government’s proposed policy seeks to introduce a gross-metering mechanism where all solar-generated electricity is sold to the grid at a reduced rate of Rs8-9 per unit, down from the current Rs21 per unit. This adjustment aims to extend the payback period for rooftop solar investments to approximately 4-5 years, discouraging rapid adoption driven by short-term financial incentives.

Under the gross-metering model, rooftop solar users will no longer achieve zero electricity bills. Instead, they will sell all the electricity they generate to the grid at the revised rate while continuing to purchase electricity from the grid for their own use. This shift is designed to distribute benefits more equitably and reduce the financial burden on non-solar consumers.

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Driving Factors Behind the Revisions

Several factors have prompted the government to reconsider the rooftop solar policy:

1. Rising Adoption of Solar Energy The adoption of rooftop solar systems has surged in recent years. Installed solar capacity increased from 321 MW in 2021 to 3,277 MW by 2024, with the number of net-metering consumers growing to 226,440. While this accounts for just 0.6% of the 37 million electricity users nationwide, the rapid increase has placed a disproportionate financial strain on grid resources.
2. Concentration of Benefits Among Affluent Users Cities such as Lahore, Karachi, Islamabad, and Faisalabad account for 80% of net-metering users, with many residing in affluent areas. These consumers have reduced their electricity costs by up to 35% monthly while shifting a significant financial load onto non-solar users.
3. International Monetary Fund (IMF) Concerns The IMF has raised concerns about the declining demand for grid electricity due to the increasing adoption of solar solutions. As part of broader economic stabilization efforts, the Fund has urged the government to encourage grid electricity usage to mitigate financial risks associated with reduced demand.
4. Surging Electricity Tariffs Electricity tariffs in Pakistan have risen by 155% over the past three years, prompting a widespread shift to rooftop solar systems. A recent study, The Great Solar Rush in Pakistan, highlighted that the country imported 15GW worth of solar panels from China in the last fiscal year, valued at $2.1 billion.

Implications of the Proposed Changes

The proposed tariff revisions aim to create a fair and sustainable framework for rooftop solar integration. However, they are likely to have several implications:

1. Extended Payback Periods The reduction in buyback tariffs will extend the payback period for rooftop solar investments from the current 18-24 months to approximately 4-5 years. While this may slow the rapid adoption of solar systems, it could also discourage middle-income households from investing in renewable energy solutions.
2. Higher Costs for Solar Users Rooftop solar users could face higher costs during non-generative periods. Energy Ministry officials have indicated that these users might be charged Rs60 per unit for grid electricity during peak hours, compared to the current Rs42 per unit.
3. Reduced Financial Burden on Non-Solar Users By lowering the buyback tariffs, the proposed policy aims to alleviate the financial burden on grid-dependent consumers, particularly those from underprivileged backgrounds. This move is expected to balance the benefits of solar adoption across different income groups.
4. Alignment with Market Trends The proposed revisions reflect the declining costs of solar panels and related technologies. Energy experts have emphasized the need to align rooftop solar tariffs with market trends to prevent exploitation and ensure a sustainable energy ecosystem.

Benchmarks and International Comparisons

The government is reportedly considering recent benchmarks, such as K-Electric’s bid of 3.1 cents per unit for its solar plant, to finalize the new buyback tariffs. This approach underscores the importance of aligning rooftop solar rates with competitive market prices to ensure fairness and sustainability.

Globally, several countries have transitioned from net-metering to gross-metering systems to address similar challenges. For example, in India, states like Maharashtra and Gujarat have adopted gross-metering policies to manage the financial impacts of rooftop solar adoption on their grids.

The Road Ahead

The Govt to Revise Rooftop Solar Tariff policy is expected to be finalized by February. Officials have acknowledged that implementing these reforms will require significant political will and stakeholder engagement. The success of the proposed policy hinges on striking a balance between promoting renewable energy adoption and protecting lower-income consumers from undue financial burdens.

Conclusion

The revision of the rooftop solar tariff policy represents a critical step toward creating a more equitable and sustainable energy framework in Pakistan. While the proposed changes may face resistance from some quarters, they are necessary to address the imbalances and financial strains created by the existing system. By adopting a gross-metering mechanism and aligning tariffs with market trends, the government aims to ensure that the benefits of renewable energy are distributed fairly across all segments of society.

As Pakistan navigates this transition, Govt to Revise Rooftop Solar Tariff plans highlight the importance of prioritizing transparency, stakeholder consultation, and public awareness. These steps will build consensus and support for the proposed reforms. Ultimately, the success of the revised policy will depend on its ability to balance the interests of solar users, grid-dependent consumers, and the broader energy ecosystem.