Govt to revise net metering rates; limits validity of contract for net meter owners

Amid rising concerns regarding buyback rates, authorities have decided to take action to address criticism from net metering consumers. According to credible reports, the National Electric Power Regulatory Authority (Nepra) will now revise the buyback rate at scheduled intervals.

Additional changes include limiting the validity of the contract for net meter owners to five years and mandatory updates to inverter standards. However, many agree that the most significant change is the federal government's shift in stance regarding the buyback rate.

Previously, the government had slashed the buyback rate from a respectable 27 rupees per unit to a measly 10 rupees per unit. This decision was received with significant criticism by net meter owners, leading lawmakers and authorities alike to reconsider the magnitude of the cut in the rate.

The criticism came as net meter owners with solar installations would not be able to recoup their investment in a timely manner given the new buyback rates. Under the old system and rates, it would take approximately two to three years for an investment into solar panels to break even.

As per reports, the power division has already sent ‘policy guidelines’ to Nepra. Officials from Nepra are now supposed to revise the buyback rate, which is expected to be linked to the National Average Power Purchase Price (NAPPP).

Reports claim that the NAPPP faces periodic revisions, which means that buyback rates will now fluctuate as per movements in the NAPPP. These developments emerged after Prime Minister Shehbaz Sharif recently chaired a meeting to address the general public’s concerns regarding net metering.

During the meeting, Shehbaz Sharif issued directives to the power division to make changes to satisfy the public. Some believe, however, that the initial cut in buyback rates was to serve public interest. 

This is because while net meter owners are often met with zero or very low electricity bills, the national grid and its users have to collectively bear an annual cost of 101 billion rupees. 

If left unchecked, this financial burden could balloon to a staggering 545 billion rupees by 2034. A financial burden of such a magnitude would have resulted in non-net meter users bearing an additional cost of 3.6 rupees per unit - which is why authorities initially slashed rates to dampen the rate of solar adoption before the situation deteriorated any further.