Prime Minister Shehbaz Sharif has ordered the National Electric Power Regulatory Authority (NEPRA) and Power Division to change net metering rules for rationalisation of buyback rates amid concerns from the solar panel installers in the country.

The premier said this while presiding over a meeting on the power sector, according to Business Recorder.

Net metering is a billing tool that allows consumers to send excess energy generated by solar panels to the local grid in exchange for credits to the monthly electric bills.

In view of high electricity rates and the government’s preference, several people switched to solar panels to power their houses. Reports say that the industry and commercial consumers were also shifting to solar energy.

The Power Division and electricity distribution companies (Discos) have expressed concern over the growing popularity of net metering, which has led to a decline in their revenues. The issue of widespread solarization has been discussed with international financial institutions such as the World Bank, Asian Development Bank, and the International Monetary Fund, with the Fund emphasising the “need for consumers to fully cover the cost of electricity”.

In a recent aide-memoire, the ADB acknowledged the Power Division’s concerns about the increasing number of net metering projects and their potential impact on Discos.

The Power Division has presented its case regarding extensive net metering to the prime minister, highlighting its financial implications for Discos, which are already falling short of revenue targets. The Division has proposed revising the buyback rates from the current rate of Rs21 or Rs22 per unit to Rs11 or Rs12 per unit.

It was decided that the Division would submit a summary after refining the following aspects of the rationalization plan: converting the existing net metering system to gross billing with separate rates for importing and exporting units, creating a separate tariff category, revising buyback rates, amending net metering regulations, and establishing a dynamic formula to determine a reasonable payback period.

The Power Division would take the lead in finalising recommendations by May 31, 2024.

In its presentation to the Prime Minister, the Power Division highlighted that 6,000 MW of solar panels were imported during the first nine months of the current fiscal year, mainly due to the availability of low-priced Chinese PV panels.

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Power Minister Awais Leghari ruled out on Wednesday any plans of the government to impose taxation on the solar net metering.

The government would not withdraw its regulations related to net metering for the already installed solar systems, he told a local television channel. The matter could come under consideration in the next few years as the net metering could lead to fiscal losses and an increase in circular debt, he added.

Leghari stated that capacity payments were a big challenge for the government and said reforms had been chalked out to bring improvement in the transmission system in the next four years. He urged the general public to resort to solar power to reduce the load on the system of power generation.

(With input from APP)