In a bid to reduce the financial strain of surplus power on consumers, Islamabad is looking to end the solar net metering system. Earlier this week, reports revealed that the Power Division has almost prepared a policy regarding solar power production that could greatly disadvantage net meter owners in the near future.

 

As per reports, the aforementioned policy draft is almost complete and intends to replace solar net metering with gross metering. Under the current system, net-meter owners provide excess electricity to the national grid for Rs27 per unit and buy it back at variable rates, as prices differ depending on the time of day. 

 

Reports suggest that this has disproportionately benefited households with large solar panel installations, as they consistently provide more power to the grid compared to their consumption.

 

Under a gross-metering system, net-meter holders will no longer be able to achieve zero electricity bills. This is because in a gross-metering system, power from solar panels must be routed to the national grid and must be bought back from the grid for consumption.

 

The current policy is favourable for net-meter owners as consumers are allowed to divert power from their panels to household consumption and only export surplus power to the grid. This mechanism allowed solar users to consistently witness zero or extremely low electricity bills.

 

It merits a mention that the policy draft still has to be approved by both the National Electric Power Regulatory Authority (NEPRA) and the federal cabinet to be passed. If passed, the buyback rate will witness a staggering fall of approximately 60 percent, falling from a respectable Rs27 per unit to a measly Rs11.33 per unit.

 

This proposed change in the buyback rate will only apply to individuals with new solar net meters, with existing users remaining shielded from the cut in the buyback rate. As per reports, the policy proposes linking buyback rates to about 33 percent of the regular electricity tariff, which would set Rs11.33 as a baseline.

 

Authorities have highlighted how the existing net-metering system has resulted in placing financial strain on consumers without solar installations. Data from reports indicates that the net metering system costs the grid approximately Rs159 billion, of which Rs103 billion comes in the form of users having to bear higher costs for electricity generated from solar installations. According to the Power Division, a transition from net metering to gross metering could allow for a more equitable distribution of costs between users with and without net meters.