The debate surrounding solar net metering in Pakistan is often framed as a matter of citizen empowerment, energy autonomy, and climate responsibility. Rooftop solar, many argue, enables households and businesses to reduce bills, contribute to sustainability, and hedge against a grid which some consider unreliable.
Yet as adoption accelerates, a more complex question emerges: are net-metered consumers becoming, in effect, the new independent power producers (IPPs)? And if so, what are the implications for Pakistan’s energy economy?
When IPPs were introduced in the 1990s, they were hailed as a breakthrough, bringing private capital to bridge Pakistan’s energy shortfall. Although they succeeded in expanding generation capacity, rigid contracts and capacity payments led to the infamous circular debt crisis.
As of August 2025, Pakistan’s energy sector circular debt stands at over PKR 1.6 trillion. Furthermore, as per the latest news, the federal government has signed a PKR 1.225 trillion financing agreement with a consortium of 18 banks to reduce the power sector’s remaining circular debt. Of this, Rs659 billion will be used to repay loans taken by Power Holding Limited (PHL), with repayments routed through the existing Debt Service Surcharge (DSS) already included in electricity bills.
The arrangement will be serviced over four to six years without adding new tariffs or charges, ensuring no extra burden on consumers.
As of June 2025, total net metering-based system commissioned approved by regulator stands more than 373,642 with the cumulative capacity of, 5681 MWp contributed by more than 350 PPIB/AEDB certified installer/vendors. While amazingly 2481 MWp out of this capacity (with an increase of 174,000 commissioned project) have been added only within the year 2024, while the rest 1531 MWp took six years to materialize since first net-metering installation in early 2016.
The average system size is approximately 15.3 kWp per prosumer. It is estimated that about 277 MW capacity is being added to the system on a monthly basis by all DISCOs.
At first glance, rooftop solar appears fundamentally different. Net-metered consumers are typically households or SMEs investing their own capital to reduce their electricity bills. However, when these consumers export surplus electricity to the grid, they enter into a contractual arrangement that resembles the IPP model, except they offset consumption rather than receive direct payments.
Net-metered consumers have been compensated at the National Average Power Purchase Price (NAPP) of PKR 27 per unit, now PKR 25.98. Despite this adjustment, the financial burden remains significant. Earlier in March this year, the Economic Coordination Committee (ECC) had proposed reducing the buyback rate from PKR 27 to PKR 10 per unit for new net metering consumers. However, the policy change prompted a backlash and later the government decided to consult all stakeholders and reconsider the amendments.
The financial impact of net-metered consumers on grid-dependent users has become increasingly significant, with projections indicating a steep and unsustainable rise to trillions of rupees over the coming decade if current policies remain unchanged.
Pakistan’s rooftop solar adoption has surged dramatically. In 2024 alone, the country imported 17GW of solar panels, making it the third-largest global importer. Rooftop installations have led to a 9.1 percent drop in grid electricity demand, while daytime demand in July 2025 fell by nearly 2,000MW compared to the previous year. This “duck curve” effect (the mismatch between solar energy production and electricity demand throughout the day) resulting in a “duck-shaped” pattern, followed by sharp evening surges, forces utilities to rely on expensive fuel-based generation during peak hours.
The equity challenge is clear as affluent households with rooftop solar reduce their contribution to grid maintenance, while lower-income consumers, often without access to solar, bear a disproportionate share of fixed costs. This mirrors the IPP dynamic, where guaranteed off-take and fixed payments created systemic imbalances.
Pakistan must avoid repeating the mistakes of the IPP era. A rooftop solar boom without a revised framework risks creating a new class of privileged producers, financed by those least able to afford it. Instead of resisting solar adoption, the country must embrace it with foresight and fairness. Regulators should consider net billing, time-of-use tariffs, and grid usage charges to ensure that all users contribute equitably to infrastructure upkeep.
These reforms are already underway in markets like California and Germany, where net metering has been recalibrated to protect grid equity and financial sustainability.
This is a rather significant stage for Pakistan, challenged by climate change and increasing circular debt simultaneously. The solar revolution is real, and it must be embraced, but not blindly. Policymakers must learn from the IPP chapter and design a solar framework that is clean, fair, and financially sustainable.
For utilities and power distributors, this is a call to lead and not resist, by engaging constructively with regulators and consumers to shape a balanced energy future. For consumers, energy independence must not come at the expense of collective resilience. And for regulators, the message is clear; reform now or risk another cycle of imbalance that undermines the very progress we seek.
The future of solar in Pakistan must be a deliberate, inclusive redesigning of the energy landscape. All stakeholders including regulators, consumers, and utilities should come together and build a solar policy that delivers sustainability without sacrificing equity. The time to act is now.
Copyright Business Recorder, 2025
The writer has served at the Energy Conservation Fund, NEECA. He can be reached at: energyexpert.pk@gmail.com