Pakistan Introduces Net Metering Policy For Rooftop Solar Panels

[Riaz Haq]

Pakistani power regulators have approved a regulatory framework for solar and wind energy for both commercial and residential installations. The framework includes feed-in tariffs for commercial power producers and net metering for residential applications of up to 1 MW.

Under the new Net Metering Law, NEPRA, the Pakistani power regulator, will grant power generation licenses to solar and wind system owners. The owners will need to register the critical equipment used, particularly the make and model of inverter and generator used. Among other technical considerations, the generator must also install a manual disconnect device to take the system off the network if necessary, according to details published by PV Tech publication.

Source: PV-Tech

Net metering is a billing mechanism that pays solar energy system owners for the electricity they add to the grid. It allows a residential customers with rooftop solar panels to generate more electricity than the home uses during daylight hours and sell it to the power supply company. It will require a bi-directional meter (or two separate meters) for implementation.

Pakistan has already introduced feed-in tariffs (FiTs) for larger renewable power systems to supply electricity to the national grid on a commercial scale.  It paved the way for a 1000 MW Quaid-e-Azam solar park being built in Bahawalpur.

Pakistan's renewable power policy and regulatory frameworks have drawn praise from international law firm Eversheds which has described the country as “one of the most exciting renewables markets globally, with an abundance of potential”. Alternative Energy Development Board (AEDB) of Pakistan's CEO, Amjad Ali Awan has said that "Pakistan’s renewable market is relatively new but it provides an attractive investment opportunity with compelling structures which make it bankable as well as marketable."

Net metering law is necessary but not sufficient to promote widespread use of renewable energy. It will take serious coordinated efforts of Pakistan power regulator NEPRA, the country's nascent solar industry and various utilities like K-Electric to start implementation. Meanwhile, consumers could install a stand-alone rooftop solar system that can be connected to the grid in future. They just need to make sure to select high-quality equipment, particularly inverter and switch, for this purpose which will most likely be acceptable to utilities.

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[Riaz Haq]

Rationalizing Incentives for Solar Photovoltaic (PV) in Pakistan

https://ieefa.org/sites/default/files/2024-08/IEEFA%20Fact%20Sheet_...

The recent surge in rooftop solarization in Pakistan has raised concerns among power distribution companies about
system reliability and increased capacity payments.
The government is considering several changes to current energy policies, including reducing buyback rates,
limiting system sizes, and transitioning from net metering to net billing.
However, even with the proposed changes, the payback period for 5-25 kilowatt (kW) distributed solar PV systems
remains below the 5-year threshold


A mere 50 megawatts (MW) of netmetered solar capacity was added
between 2016 and 2019. However,
consistently high electricity tariffs
and a substantial decline in solar
panel prices have led to a recent
surge in solar PV additions.
Pakistan’s abundant
solar potential offers
specific yields of 3.8
kilowatt-hours per
kilowatt peak (kWh/
kWp) to 6kWh/kWp.
Since 2022, net-metered solar PV
installations have nearly doubled, with
764MW installed in 2023.
In June 2024, Pakistan’s
on-grid net-metered solar PV
capacity was approximately
2200MW.

The recent surge in rooftop solarization in Pakistan has raised concerns among power distribution companies about
system reliability and increased capacity payments.
The government is considering several changes to current energy policies, including reducing buyback rates,
limiting system sizes, and transitioning from net metering to net billing.
However, even with the proposed changes, the payback period for 5-25 kilowatt (kW) distributed solar PV systems
remains below the 5-year threshold



Under the current mechanism, which offers the prevailing National Average Power Purchase Price (NAPPP) of PKR 27 per
kilowatt hour (kWh) as the buyback rate, the relatively higher per kW cost of smaller 5kW and 7.5kW systems results in
extended payback periods ranging between 2.4-4 years. As the system size increases, the payback period decreases, with
a 25kW system recording the shortest payback period of 1.74 years.
• Reducing the buyback rate to the National Average Energy Purchase Price (NAEPP) of PKR 9.69/kWh could lead to a
10%–56% increase in the payback period, depending on the level of consumption and system size. Consumers with smaller
installations and lower consumption experience longer payback periods.
• Reducing the buyback rate to PKR 15/kWh would only result in a 6% increase in the payback period for consumers with
100% self-consumption, while for lower-consumption profiles it may increase by 25%.
• Shifting to a net billing mechanism would increase the payback period for consumers with a higher self-consumption ratio
but could incentivize the installation of oversized systems.

[Riaz Haq]

A solar power policy crisis for Pakistan - Asia Times

https://asiatimes.com/2024/05/a-solar-power-policy-crisis-for-pakis...

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As of August 2024, Pakistan's net metering regulations allow excess energy from solar systems to be sold back to the grid at the National Average Power Purchase Price (NAPPP). This price reflects the average cost per unit of power that the DISCOs purchase.
In June 2024, some speculated that the government might introduce changes to the solar panel policy, including a shift from net metering to a gross metering system. However, the Federal Minister for the power division, Ahmed Khan Lagari, has denied these changes and assured the public that the existing net metering system will remain in place.
A bidirectional meter, which measures both the electricity generated and consumed, can help consumers reduce their reliance on expensive grid electricity. This system can also make solar investments financially viable, promote energy independence, and reduce the strain on the national grid.

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Optimizing solar incentives and grid infrastructure in Pakistan can benefit power distribution companies and energy consumers | IEEFA

https://ieefa.org/articles/optimizing-solar-incentives-and-grid-inf...

The regulations created the framework for the successful adoption of distributed renewable energy in the country, with approximately 2.2 gigawatts (GW) of net-metered rooftop solar PV capacity connected to the grid by June 2024.