Pakistan Abolishes Net Metering: Major Policy Shift Reduces Solar Consumer Benefits Under 2026 Regulations

Pakistan’s solar energy consumers are facing a major policy shift as the government officially abolishes the net metering system and replaces it with a net billing mechanism. This decision has significantly reduced the financial benefits previously enjoyed by solar users, raising serious concerns about the future of renewable energy adoption in the country.

What Was Net Metering and Why Was It Popular?

Net metering allowed solar consumers to export excess electricity to the national grid and later import electricity on a one-to-one unit adjustment basis. This system was widely appreciated because it:

Encouraged investment in rooftop solar systems
Reduced electricity bills significantly
Supported renewable energy growth
Helped ease pressure on the national grid during peak hours

Under net metering, if a consumer exported 100 units of solar electricity, they could later consume 100 units without extra cost, making it financially attractive for households and businesses alike.

Introduction of Net Billing System

Under the new net billing system, exported and imported electricity will no longer be adjusted on a one-to-one basis. Instead:

Solar consumers will sell surplus electricity at a fixed, lower rate
Electricity consumed from the grid will be purchased at the prevailing tariff
The financial advantage of equal unit adjustment has been eliminated

This change marks the end of the most attractive incentive of solar energy usage in Pakistan.

Key Changes Introduced Under Solar Consumer Regulations 2026

1. Reduction in Buyback Rate for Solar Electricity

One of the most significant changes is the sharp reduction in the rate at which DISCOs will purchase surplus solar electricity.

Previous rate: Around Rs 26 per unit
New rate: Approximately Rs 11.5 per unit

This reduction drastically lowers the return on investment for solar consumers, especially households that relied on exporting excess power.

2. One-to-One Unit Adjustment Facility Abolished

Under the new regulations:

Electricity supplied to the grid will not be adjusted against electricity consumed
Solar consumers must now pay full tariff for grid electricity
Exported solar units will only earn a limited monetary credit

This effectively removes the core benefit that made net metering attractive.

3. Higher Cost of Electricity for New Solar Consumers

New solar users will be required to:

Purchase electricity from the grid at applicable market tariffs
Sell surplus electricity at a much lower fixed rate

This imbalance significantly reduces savings for new installations and lengthens the payback period for solar systems.

4. Reduction in Contract Duration

Previously, solar consumers entered agreements with DISCOs for 7 years. Under the new regulations:

Contract duration has been reduced to 5 years
Long-term financial predictability has decreased
Increased uncertainty for investors and households

Comparison: Net Metering vs Net Billing

Feature	Net Metering (Old System)	Net Billing (New System)
Unit Adjustment	One-to-one basis	No unit adjustment
Buyback Rate	~Rs 26 per unit	~Rs 11.5 per unit
Electricity Purchase	Offset by exports	Charged at full tariff
Contract Duration	7 years	5 years
Financial Benefit	High	Significantly reduced
Investor Appeal	Strong	Weak

Impact on Existing and New Solar Consumers

Impact on Existing Consumers

Existing consumers may retain some protections, but future benefits are limited
Reduced incentive to expand solar capacity
Lower earnings from surplus electricity

Impact on New Consumers

Longer payback period for solar systems
Reduced motivation to invest in rooftop solar
Increased dependence on grid electricity

DISCOs’ Justification for Policy Change

Distribution companies (DISCOs) argue that net metering was negatively affecting the power sector’s financial stability. According to senior journalist Sanaullah Khan, DISCOs claim that:

Grid infrastructure costs are not being recovered properly
Solar consumers still rely on the grid but contribute less financially
Maintenance and operational expenses are increasing

DISCOs believe that net billing ensures fair cost-sharing among all consumers.

Concerns Raised by Experts and Analysts

Energy experts and environmental advocates have raised several concerns:

Solar adoption may slow down significantly
Pakistan’s renewable energy targets may be affected
Public trust in energy policy consistency could decline
Middle-class households may face increased energy costs

Many analysts believe the decision contradicts global trends, where governments are expanding incentives for renewable energy instead of reducing them.

Environmental and Economic Implications

Environmental Impact

Reduced solar adoption may increase reliance on fossil fuels
Higher carbon emissions
Increased pressure on imported fuel resources

Economic Impact

Slower growth of the solar industry
Job losses in solar installation and manufacturing sectors
Reduced foreign and local investment in renewable energy

Conclusion

The abolition of net metering and the introduction of net billing under NEPRA Solar Consumer Regulations 2026 represent a major shift in Pakistan’s energy policy. While authorities and DISCOs argue that the move is essential for grid sustainability and infrastructure cost recovery, the policy has significantly reduced financial incentives for solar consumers.

The sharp reduction in buyback rates, elimination of one-to-one unit adjustment, shorter contract periods, and higher electricity tariffs for new consumers may discourage future solar investments. At a time when Pakistan faces rising energy costs and climate challenges, the long-term impact of these changes remains a subject of serious debate.

Balancing grid sustainability with renewable energy growth will be critical if Pakistan hopes to secure an affordable, clean, and reliable energy future.