Govt revises solar net-metering buyback rate to Rs10 per unit

ECC approves amendments to net-metering regulations to ease financial burden on grid consumers.

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The government has reduced the buyback rate for electricity under net metering from Rs27 per unit to Rs10 per unit, citing a "significant increase in the number of solar net-metering consumers" and the resulting financial strain on grid consumers.

The Economic Coordination Committee (ECC) of the cabinet, chaired by Finance Minister Muhammad Aurangzeb, approved amendments to the existing net-metering regulations aimed at alleviating the growing financial burden on grid consumers, according to a statement from the Finance Division.

As part of the approved changes, the ECC revised the buyback rate from the National Average Power Purchase Price (NAPP) to Rs10 per unit. The decision follows concerns about the financial impact of the rising number of solar net-metering consumers on the national power grid.

The National Electric Power Regulatory Authority (NEPRA) will now be authorised to revise the buyback rate periodically, ensuring the framework remains flexible and aligned with market conditions.

However, the revised framework will not apply to existing net-metered consumers who have valid licenses, agreements, or concurrence under the NEPRA (Alternative & Renewable Energy) Distributed Generation and Net Metering Regulations, 2015.

These agreements will remain effective until they expire, ensuring the rights and obligations of these consumers are upheld as per the original terms.

The ECC also approved an update to the settlement mechanism for electricity billing. Under the new structure, imported and exported units will be billed separately.

Exported units will be purchased at the new buyback rate of Rs10 per unit, while imported units will be charged according to peak/off-peak rates, inclusive of taxes and surcharges.

The Power Division was authorised to issue proposed guidelines, subject to Cabinet’s ratification, for NEPRA’s incorporation into the regulatory framework to ensure clarity and consistency in the implementation of these changes. The decision follows discussions on the growing impact of solar net-metering on the national power grid.

The Power Division highlighted the need for regulatory adjustments due to the record decline in solar panel prices, which has led to a sharp rise in the number of solar net-metering consumers.

As of December 2024, solar net-metering consumers had transferred a burden of Rs159 billion to grid consumers, a figure that is projected to grow to Rs4,240 billion by 2034 without timely amendments.

The number of solar net-metering consumers surged significantly, reaching 283,000 by December 2024, up from 226,440 in October, 2024. The total installed capacity also grew from 321 MW in 2021 to 4,124 MW by December, 2024, underscoring the rapid expansion of the sector.

However, the increase in solar net-metering consumers has led to a higher cost of electricity for grid consumers, undermining the government’s efforts to reduce power tariffs.

The ECC also discussed how these consumers avoid paying the fixed charge component of the tariff, which includes capacity charges and the fixed expenses of power distribution and transmission, placing a disproportionate financial burden on grid consumers.

The committee also noted that 80% of solar net-metering consumers are concentrated in nine major cities, with a significant portion located in affluent areas. This geographic concentration highlights the need for regulatory reforms to ensure fairness and balance within the energy distribution system.

The amendments approved by the ECC represent a critical step in ensuring the sustainability of the power sector while protecting the interests of all consumers, especially those reliant on the grid for electricity, said the Finance Division.