Pakistan’s net metering policy, once introduced to encourage renewable energy, has unintentionally transformed into a subsidy scheme for the privileged at the cost of millions who consume grid electricity. While rooftop solar adoption has risen drastically, it has created a financial imbalance that requires urgent correction in policy. Reducing the buyback rate of Rs.10 per unit is not an attack on solar energy. It is a necessary step to protect grid consumers from bearing unfair costs hence its implementation will be justified.
In the fiscal year 2023-24 alone, the government disclosed that PKR 159 billion in grid-fixed costs were effectively shifted from solar users who both consume and produce solar energy to non-solar grid users. This reverse subsidy means that a growing number of privileged households, who can afford solar panels, are selling their excess electricity to the grid at exchange prices without contributing to the infrastructure that enables this exchange however, if no corrective measures are taken, this burden is projected to reach about PKR 550 billion by 2034. The cost of inaction would directly translate into a Rs. 3.6 per unit increase in electricity tariffs for grid consumers, many of whom already struggle with rising energy costs. The Ministry of Energy has determined that the burden on 40 million grid consumers currently stands at Rs. 1.5 per unit.
Earlier, a study called the ‘Distributed Divide’ by Arzachel found that the usage of rooftop solar had led to an 8-10% drop in national grid electricity demand. This decline, while advocates for sustainable energy, has triggered a severe financial burden on the power sector. According to the study, even a 5% drop in demand shifts around PKR 131 billion in fixed costs annually to non-solar users. A 10% drop escalates this cost shift to a staggering PKR 261 billion per year closely aligning with the government’s own estimates.
What was meant to be a clean energy solution has now become a structural injustice. The rapid rise in net metering (solar usage) has intensified this challenge. Pakistan’s net-metered solar capacity rose from just 321 MW in 2021 to over 4,000 MW by the end of 2024. In just two months, from October to December 2024, the number of net-metered consumers surged from 226,440 to 283,000. At this pace, an additional 1,000 MW is expected to be added annually, further eating into grid demand.
Let’s be clear-this is not a fight against solar energy. In fact, Pakistan desperately needs solar to diversify its energy mix and reduce reliance on imported fuels. However, the current buyback mechanism benefits a small, financially capable segment of society while pushing the financial weight of the grid onto those who are already under strain. Most citizens cannot afford solar installations, nor can they tap into the buyback scheme. Yet, they’re paying for the poles, wires, and transformers that solar users depend on to sell electricity.
This reform is a long-overdue reset, not a punishment. The policy revision although has been paused, it aims at creating a balance between grid and solar net metering consumers. By reducing the buyback rate, the government will not be discouraging solar power; it will in fact be restoring equity and must be appreciated for this move. The goal is simple – if you’re selling electricity to the grid, you should be compensated fairly, but not at the cost of those who never benefited from the arrangement in the first place. A revised net metering structure that pays solar users closer to the actual cost of utility-scale generation while allowing room for fair returns can still promote adoption without undermining the public interest. Tiered tariffs, infrastructure cost-sharing, and focused support for low-income solar adoption could pave a more benefitting path forward.
For now, reducing the Rs.10 buyback rate is not just economically necessary but morally imperative. Let us ensure our energy future is not just clean, but also fair.
