The government is contemplating a significant reduction in the rates paid to consumers who generate solar power through net metering, a move that may ignite criticism and concern, Business Recorder reported on Thursday.

The potential change comes as solar power adoption in Pakistan has surged, with installed capacity reaching 3,000 megawatts.

Currently, net metering users receive Rs21 per unit for the excess electricity they feed back into the grid. However, the government is considering a drastic cut, bringing the rate down to Rs11 per unit.

The proposed reduction would translate to a loss of Rs10 per unit for solar power generators.

The government’s rationale behind the move is rooted in the financial burden of capacity charges paid to Independent Power Producers (IPPs).

These charges are incurred regardless of whether the government actually purchases electricity from IPPs.

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The widespread adoption of solar panels has disrupted the government’s capacity payment plan.

The sources told Business Recorder that wealthier individuals who can afford solar panels are going solar and recieving zero bills, shifting the cost burden of capacity charges onto poorer consumers who rely on conventional electricity sources.

While the government maintains its support for solar energy, it deems the current net metering rate of Rs21-22 per unit as unsustainable, the sources said.

Officials argue that this rate allows consumers to recover their solar panel installation costs within a mere 18 months, whereas the government aims to extend this payback period to 10 years.

The Power Division contends that consumers install solar systems primarily for their own needs, and therefore, the buyback rate for surplus electricity should align with the purchasing power of then power distribution companies or discos.

Last year a proposal to end net metering was reported in Pakistani media, leading to backlash.

The Solar Association back then voiced strong opposition to rate cuts, leading to a postponement of the decision.