or Zakir, a retired banker with no pension, it was becoming challenging to maintain his standard of living post-retirement. He had availed the option of buying an asset, his house.

As utility bills soared, he looked for a cost-effective option for his power needs. Installing solar panels seemed to be a viable option. “I installed a 10-kilowatt solar system on the KE network more than two years ago. For me, it has been a highly satisfying experience. It resulted in monthly savings of about Rs 30,000. Not only did I not have to pay anything for the electricity consumed, I accumulated a hefty credit balance to pay for higher bills in the summer months,” he said, adding, “With no end to Karachi’s heat in sight, we used air conditioning at our convenience without having to worry about the bills.”

There is another side to this matter, however.

Faraz, a lower-middle-class wage earner, relies on the electricity grid. For him, solar power is a luxury. He doesn’t own a house. For several months now his electricity bill has been rising. He recently requested the utility to allow him payment in installments.

It has been argued that Zakir’s savings and a part of Faraz’s higher bills are the two sides of the same coin in that the decline in Zakir’s use of IPP-generated power has resulted in more capacity payments and higher tariffs, including for consumers like Faraz.

The consumers increasingly leaving the grid had been paying not only for their own electricity use but also part of what was due from protected and lifeline users. If a significant number of them leave, the financial impact of unfunded subsidies and fixed costs will result in quicker accumulation of circular debt and higher bills for the remaining users.

The growing trend of rooftop solar installations could defeat recent government initiatives to lower energy costs for favoured users at the cost of unsuspecting regular consumers.

The unregulated nature of supply by net-metering customers can also cause voltage fluctuations and destabilise grid operations. Low-quality solar equipment and installations beyond approved capacity can to operational pressure on the grid.

Energy purchased from net-metered solar systems can be sold to the grid at the National Average Power Purchase Price of Rs 27 ($0.097)/kWh. Solar energy adoption has seen an upward trend due to rising electricity prices, making it a practical alternative for many households across the country as well as some businesses. Given the average cost of installing rooftop solar ranging between Rs 1 million to Rs 1.5 million, the payback period ranges between 1 and 3 years.

According to Bloomberg New Energy Finance, Pakistan imported 13 gigawatts capable solar panels during the first six month of 2024.

In a recent seminar organised by the Institute of Policy Studied on solarisation, experts warned about the Rs 1.5 to Rs 2 per unit shift on non-solar grid customers and recommended net metering customers to shift to battery energy storage system. 

According to NEPRA’s State of Industry Report, the total number of net-metering consumers in the CPPA-G system was about 56,000 as of June 30, 2023, nearly 33 percent higher than the preceding year. LESCO territory had most of these consumers, around 17,000.

Some of the speakers at a recent seminar organised by the Institute of Policy Studies warned of a Rs 1.5 to Rs 2 per unit shift for non-solar grid customers and recommended net metering customers to shift to battery energy storage system for frequency and voltage regulation. According to the Power Division, net metering customers represent an annual burden of Rs 110 billion.

In the United States, California has transitioned from a net metering to a net billing system. As a result, the solar energy captured by homeowners is compensated at a lower rate than the retail price by the utilities.

This approach incentivises homeowners to use more of the solar energy than exporting it to the grid, as the compensation for exported energy is nearly 75 percent lower than the retail rates. Australia and Vietnam have time of use tariffs for management of solar output.

The government has taken several initiatives to encourage the development of renewable energy. These includes a feed-in tariff system that provides guaranteed prices for electricity generated from renewable sources, the establishment of a renewable energy agency to oversee the sector and tax incentives for investors.

The Alternative and Renewable Energy Policy was introduced in 2019 to facilitate the development of renewable resources in the country with the main objective of producing a favourable development environment for renewable power projects and increasing the share of green energy capacity by 20 percent and 30 percent by 2025 and 2030 respectively.

The need for equitable policies is of utmost significance to harmonise solar adoption with grid dependence. One approach could be to exclude fixed costs for new solar installations and keep the current rates for existing licences for no more than 12 months after which they can be treated under the new scheme.

Policy adjustments to net metering may be necessary. It is imperative that Pakistan develops equitable, forward-thinking policies to support solarisation without impacting the subsidised consumers. Net billing could be another alternative.

Yet another option is to maintain the current net metering rate for residential solar systems up to 10 kW while introducing lower rates for larger installations. Such a tiered structure will let smaller users continue to benefit from the contracts without significantly affecting grid costs. Such revisions can help balance solar adoption with the financial sustainability of the energy sector.

Meanwhile, a nationwide solarisation strategy focused on utility-scale projects, combined with resilient infrastructure development, particularly in regions like Balochistan could ultimately provide a robust framework for energy security. Effective policy revisions now will not only stabilise the grid but also pave the way for a more inclusive energy sector.

The writer is a senior staff reporter