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Net-metering is rapidly catching on in the country. The fall in solar panel costs and the incentive of selling electricity to the grid means that more and more people are covering their rooftops with solar panels in order to generate electricity for their own consumption while selling any surplus units back to the grid.

In any other country except Pakistan with different power sector dynamics, this might be a welcome move. But encouraging consumers to sell electricity back to the grid might not be the wisest move if one takes into consideration the surplus quagmire that the county is facing.

The need of the hour is to sell as much electricity units as possible due to the ballooning capacity payments that have to be paid even if no power is purchased by the government due to the take-or-pay contracts. Even though the benefits for consumers might be substantial when it comes to net metering, it is warranted to look at things from a holistic perspective to consider the trade-off involved in a better manner. According to Nepra’s estimates in its advert for net-metering, a 6kWp Solar PV panel system can produce 26 units daily on average which means 780 electricity units a month based on Islamabad climate data. With an assumption of let’s say an off-peak rate of Rs10/unit, the total benefit to the consumer is Rs7800.

However, that means that the consumer is now taking 780 units less from the grid. The other consideration that needs to be taken into account is the net-off mechanism. While the consumer is generating electricity in non-peak hours and supplying them to the grid, they are taking electricity in peak-timings when the unit price is considerably higher. This means that consumers are supplying cheaper electricity to the grid while taking more expensive units but the net-off mechanism does not take this into account and only considers the number of units.

Net-metering is being adopted rapidly in the bigger cities with the more affluent class being able to afford and install it. The net-off mechanism is only subsidising relatively richer people and the economics needs to be rethought of especially in light of the mushrooming capacity payments on the horizon.

Copyright Business Recorder, 2019

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