Net metering is a billing mechanism that credits solar energy system proprietors for the power they add to the grid.
In this system, the electricity generated from solar panels is exported to the grid. Net metering gives full credit to the consumer for each kilowatt-hour exported to the grid, allowing the consumer to only pay for the difference.
For example, if the consumer’s power bill credit exceeds his consumption, the credit is normally rolled over to the next month and adjusted in the consumer’s bill. However, the power distribution companies (DISCOs) are not paying back the price of surplus power that the consumer supplies to the grid.
The solar net metering policy was introduced after careful examination of successful models all over the world. In September 2015, National Electric Power Regulatory Authority (Nepra) issued its net-metering regulations that allow DISCOs to purchase excess units of electricity produced by the consumers, and net them off against the units consumed from the grid.
As per these regulations, any customer of the national grid (having a three-phase connection) can avail net-metering facility for small-scale (1kW to 1MW) renewable energy installations.
Renewable energy is a long-term power solution. Solar photovoltaic (PV) technology gives access to affordable electricity supply during the system’s life. Residential and commercial customers can switch their electricity load to renewable energy (RE) and slash their power bills.
Pakistan has immense potential for generating electricity through solar power. Almost all parts of the country are dry and hot, barring a few areas in the northwest.
Despite this, the country produces a meagre 1.16% of its electricity through solar power. In contrast, 64% of the energy needs are met through the burning of fossil fuels.
This huge untapped potential offers a great window of opportunity for the consumers to produce and sell power to the national grid.
So far, over 42 certified vendors and service providers for the installation of wind and solar PV systems for net metering of up to 250kW capacity are registered with the Alternative Energy Development Board (AEDB). Hundreds more are waiting for registration with the department.
The unprecedented potential of and growth in solar power generation poses a serious threat to the vested interests such as independent power producers (IPPs).
Almost 4,000 new net metering licences have been issued in Pakistan in the July-September 2021 quarter, up from 2,000 in the same quarter of 2020. This shows an upward trajectory for the near future.
Solar panels installed by consumers come with multiple benefits. These include offsetting of power bills, assistance to small businesses and increased employment to engineers and youth. This also allows the government to get rid of huge overheads and the recurring cost of hydropower dams and the perennial problem of circular debt attached to IPPs.
The immediate benefits of installing solar panels are (i) Pakistan complies with the Sustainable Development Goal 7 (SDG-7) (ii) It fulfills Pakistan’s obligation under the Paris Agreement and United Nations Framework Convention on Climate Change (UNFCCC) (iii) It also fulfills Pakistan’s response to Agenda 2030 to increase renewable energy in its energy mix (iv) Solar net metering generates thousands of jobs (v) The power produced is clean and acceptable to society and the global community as it does not create global warming (vi) The producer can earn carbon credits for the quantity of power produced through solar panels.
The government, in a surprise move, has started obstructing this highly successful policy intervention without any analytical review. Net metering poses a direct threat to IPPs and consequently, consumers have been facing obstructions in the issuance of net meters since early this year.
These obstacles have likely been created by the IPPs that have already trapped the power sector in a vicious cycle of circular debt.
The government must undertake a review of existing solar net metering and identify gaps in order to improve the mechanism. The government is a net gainer if the gaps are addressed but unfortunately, it seems that powerful lobbies are exerting their influence on government policy and functioning.
Therefore, it is required that the existing net metering policy be supported and further improved based on realistic scientific review, identifying gaps that must be addressed by the government instead of blindly changing its tariff and obstructing supply of net meters to consumers.
Across the world, countries are providing incentives to consumers to install solar panel systems. In Pakistan, however, we see that not only does the government not provide any incentives, it is acting to protect the vested interests who have strangulated the power sector with their monopoly.
The government should allow the net metering policy to work under the market mechanism and not tolerate interference from external actors.
In addition, net metering aligns with Pakistan’s national obligations under the international law already ratified under UNFCCC, Paris Agreement, SDG-7 and Agenda 2030.
The writer has served as an environmental consultant at provincial, federal and international organisations
Published in The Express Tribune, September 26th, 2022.
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