New Net Metering Policy: Is Pakistan's Solar Boom in Jeopardy?

by Riaz Haq

Aug 30, 2024

Recent experience in California has shown that changes in incentives have a huge impact on residential adoption of solar power technology. Since the introduction of NEM 3.0 last year, new rooftop solar business in California has dramatically slowed. New residential solar installation applications have plunged 80%, according to Cal Matters. This has driven many solar installers out of business. The business that remains is mostly focused on adding batteries to existing solar installations. 

Impact of California NEM 3.0 on Solar Business. Source: Cal Matters

California Net Energy Metering (NEM 3.0) was launched last year after heavy lobbying by the state's utility companies like PGE and SoCal Edison. It has reduced payments for the excess power exported by the consumer to the grid by 75%. This change means that the consumer is better off with storage batteries to maximize self-consumption of the power generated by the solar panels. Companies such as Tesla Solar with its PowerWall 3 battery are the main beneficiaries of this change. 


With rapidly falling solar panel prices, Pakistan is experiencing a solar power boom. The country imported some 13 gigawatts of solar modules in the first six months of the year, making it the third-largest destination for Chinese exporters, according to Bloomberg.   In addition, there is approximately 2.2 gigawatts (GW) of net-metered rooftop solar PV capacity connected to the grid by June 2024, according to IEEFA. 
What is likely to happen to this solar boom as Islamabad considers changes to its net metering policy? A recent study published by the Institute for Energy Economics and Financial Analysis (IEEFA) attempts to answer this question. 
Net Metering vs Net Billing Payback Period in Pakistan. Source: IEEFA

There are several proposals under consideration by the Pakistani government to change its net metering policy. All are designed to significantly reduce payments to the consumer for energy exported to the grid. One of these proposals likely to be adopted is to switch from "Net Metering" to "Net Billing". 
Net metering transactions are usually one-to-one, so the credits are often equal to the retail rate of electricity (aka what you pay). Net billing credits are often equal to the wholesale rate of electricity (aka what your utility pays), which is less than the retail rate, according to Energy Sage. Utilities tend to oppose net metering programs, so alternative compensation programs are increasingly being used. 
Analysis by Haneea Isaad, an Energy Finance Specialist at IEEFA, shows that the switch from net metering to net billing would still reduce the payback period for 5kW to 25kW solar systems combined with 50% to 70% self-consumption. She concludes that the payback period will be well under 4 years for a system that has a life of 25 to 30 years. It is better than the 5-year payback period in California under NEM 3.0. 
Would consumers without solar be stuck with high electricity bills? It is quite likely because capacity charges paid to independent power producers (IPPs) accounted for 62% of energy expenditure in Pakistan for the 2023-2024 fiscal year. For the 2024-2025 fiscal year, 64% of the total power purchase price is expected to be fixed capacity costs. Lower consumption of grid electricity will result in a disproportionate impact on consumers who rely entirely on grid power.  
Higher levels of self-consumption closer to 100% would require larger batteries which are still quite expensive in Pakistan. This is likely to change as traditional lead-acid battery makers switch to lithium ion batteries in the country. Recent launches of electric vehicle assembly plants in Pakistan are expected to boost the lithium-ion battery production and bring down prices in the country in the coming years, according to Mordor Intelligence. 
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  • Riaz Haq

    AI Overview Pakistan's battery manufacturing sector is undergoing a rapid transition from traditional lead-acid production to lithium-ion assembly and cell manufacturing. Driven by massive surges in solar adoption and EV demand, the industry is backed by the National Lithium-Ion Battery Manufacturing Policy.Key Industry Developments & InvestmentsLithium-Ion Breakthroughs: The country’s first lithium battery plant is beginning operations in the Korangi Industrial Area, Karachi (spearheaded by EV Technologies), focusing on e-bike and e-scooter batteries. Additionally, companies like Zilo Energy and Treet Battery (Daewoo) have launched lithium-ion assembly lines for residential and commercial solar storage.Faisalabad Dry Battery Project: China's Dongjin Group is investing $15 million to establish a dry battery manufacturing facility in Allama Iqbal Industrial City. Under Special Economic Zone incentives, the facility will produce batteries for EVs, telecom, and solar systems, benefiting from a 10-year income tax holiday.Strategic Foreign Partnerships: The Pakistani government is in active discussions with CATL, the world's largest EV battery manufacturer, to bring advanced battery cell manufacturing technology to the country.Existing Market PlayersWhile the shift to advanced lithium-ion production grows, traditional manufacturing in the automotive and industrial UPS/solar sectors remains dominated by established companies, including:Exide Pakistan LimitedAtlas Battery LimitedPhoenix Battery Ltd.Industry Outlook and ChallengesThe sector's trajectory aligns with the National Electric Vehicle Policy, which aims to convert a significant portion of the country's vehicular fleet to electric by 2030. As production scales, the government is updating tariff structures to reduce import duties on battery parts, aiming to transform Pakistan into a self-reliant, green-energy economy.For further details on the transition from simple pack assembly to full cell production, check out this in-depth analysis on the BestMag Market Overview.


    https://x.com/developingpak/status/2043389275870466203?s=61&t=m...

    May 15

  • Riaz Haq

    Pakistan’s operational PV capacity estimated a 51 GW – pv magazine International


    https://www.pv-magazine.com/2026/05/19/pakistans-operational-pv-cap...

    Latest report from Renewables First finds that Pakistan’s solarization continues to grow with households, farms and businesses turning to distributed solar to reduce their reliance on the grid.

    MAY 19, 2026 PATRICK JOWETT

    Pakistan had deployed an estimated 51 GW of solar as of March 2026, according to a new report from Renewables First, with solar module imports reaching 54 GW by the end of the same month.

    The latest edition of the think tank’s flagship report, Pakistan Electricity Review 2026, finds that electrification in Pakistan is accelerating through distributed solar installations despite grid-based indicators suggesting stagnation.

    Figures in the report highlight that electricity generated by utility-scale power sources in Pakistan reached 135 TWh in the period from July 2024 to June 2025, known as fiscal year 2025 (FY25), representing a 2% year-on-year decline. This is the fourth consecutive decline in reliance on utility-scale electricity generation, which peaked at 154 TWh in fiscal year 2022 (FY22).

    Away from these figures, distributed solar, consisting of net-metering, behind-the-meter and off-grid solar deployment, generated 51 TWh in FY25, taking Pakistan's total electricity generation to a record 186 TWh. Renewables First’s report says the 51 TWh generated last fiscal year is equivalent to roughly 46% of grid-supplied electricity over the same time period.

    Speaking during a webinar launching the report earlier today, Renewables First Associate – Energy Insights, Nabiya Imran, explained that new growth in electricity is increasingly being met by distributed solar. “It is being met outside the grid,” Imran said. “Or in other words, the demand that was first entirely on the grid has migrated to behind the meter and net metered distributed solar.”

    The report adds that grid sales, defined as the electricity purchased by consumers from the state-owned central utility network, reached 111 TWh in FY25, a 1.7% increase year-on-year but down on a FY22 peak. “This does not reflect falling electricity demand,” the report explains. “Instead, a growing share of consumption is being met through distributed solar, indicating that underlying electricity use continues to rise but is increasingly bypassing the grid.”

    Renewables First latest report follows previous research that highlighted the scale of Pakistan’s solar market is underrepresented in official statistics. In today’s webinar, Imran explained that there are two parallel systems currently operating in Pakistan.

    “On one side, we have the centralized grid, which is structured around unidirectional power flows, thermal plants and thermal dependence. At the same time, we have consumers investing increasingly in distributed solar, driven by high electricity tariffs and cheaper solar panel costs,” Imran told attendees. “So, there's a mismatch between these two systems. The goal is to bridge that mismatch, because that will help us reduce our fossil fuel dependence and improve macroeconomic resilience.”

    on Tuesday

  • Riaz Haq

    Pakistan’s operational PV capacity estimated a 51 GW – pv magazine International


    https://www.pv-magazine.com/2026/05/19/pakistans-operational-pv-cap...

    Imran added that clean technologies such as solar, batteries and electric vehicles are also an opportunity to localize manufacturing. “And in turn, it supports the broader economic development of the country,” she said.

    In the report’s forward, Sohaib Malik, Senior Fellow – Energy Transitions at Renewables First, wrote that while policymakers are starting to recognize the challenges facing the country’s centralized model of power generation and supply, the full extent of the shift is yet to be appreciated by most stakeholders because of the incomplete and imprecise datasets available to them.

    The report adds that with distributed solar eroding utility revenues faster than thermal capacity can be rationalized, the sector is moving towards an inflection point with insufficient policy frameworks to navigate it.”

    “The sector’s inflection point will depend on how quickly planning and policy frameworks adapt to decentralized, bi-directional electricity flows,” the report says. “A shift in focus from capacity expansion to system optimization (flexibility, storage and demand side management) will be critical to improving efficiency and reducing costs.”

    on Tuesday