EDITORIAL: First things first, Federal Minister for Power Sardar Awais Khan Leghari has defended recent regulatory changes relating to solar net-metering while responding to a Senate resolution seeking protection for rooftop solar users and alignment of proposed regulations with national renewable energy policy.
The resolution was later deferred after debate in the upper house for further consideration. Moreover, prime minister Shehbaz Sharif has stepped in to seek a review of power regulator’s (Nepra’s) revised rules for rooftop solar users.
It is important to note that the government, as usual, had made a sudden policy change without properly deliberating on stakeholders’ comments (mainly prosumers). It shifted the net metering policy to net billing for both existing and future consumers, while keeping the buying price unchanged for existing users. Altering the net-metering policy is, in principle, a step in the right direction and is consistent with how many other countries have dealt with it.
In the 2010s, when solar panels were expensive and clean energy penetration was still low, many economies offered subsidies and generous incentives to encourage early adoption. Pakistan did the same, including mark-up subsidies for solar panel purchases.
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However, over time, solar prices collapsed while grid prices surged globally — and especially in Pakistan (due to inefficiencies in grid pricing, and the absence of taxes and duties on solar panel imports). The incentive structure became lopsided, and the country was flooded with solar adoption. With higher solar adoption — especially among net-metered users — there are negative externalities for the grid and for non-net-metered consumers.
Grid tariffs increase because the system still carries the responsibility of providing power to net-metered users during non-solar hours, often at rates that do not fully reflect the cost. There are also grid stability issues, including high power inflows during peak solar hours — particularly when many prosumers install panels exceeding their sanctioned load.
In other economies such as Australia and South Africa, the policy was adjusted swiftly and incentives were gradually reduced. In Pakistan, however, authorities kept mulling over changes for around a year. Meanwhile, net metering connections continued to rise, further adding to the system’s cost burden.
Had the government acted in time, it could have kept the policy unchanged for existing users and applied the new framework only to future connections. However, after connections doubled within a year, the situation became different. While the government may have legal cover to alter terms for existing users, it damages sentiment and deepens mistrust — even though applying a new policy for new users is reasonable.
The onus lies with the government for remaining indecisive and allowing the number of consumers to grow to an uncomfortable level. Some argue this was due to pressure from the solar panel and inverter importers’ lobby. Whatever the case, the government should be criticised for delaying the right policy framework and thereby creating a bigger controversy.
Policy inconsistency — and having different rules for different consumers and investors — is one of the biggest impediments to investment. The government often does not think policies through. This has been evident in Pakistan’s power policies since 1994. For instance, it continued approving new IPPs (Independent Power Producers) during periods of crippling shortages. Once these plants came online, the country moved into expensive surpluses. Costs rose, and circular debt expanded.
Over the past three decades, the government has held three rounds of negotiations with IPPs, and each time the burden largely fell on local investors, while the government hesitated to challenge foreign investors. Even today, the highest capacity payments are linked to Chinese IPPs and their associated debt, yet the government appears to have effectively given up on negotiations with them.
Net-metered prosumers feel betrayed. These roughly 450,000 users are relatively affluent and contribute significantly to the economy. This is not a positive development. That said, net metering does not impact 90 percent of grid users. Another important fact is that nearly 90 percent of solar adoption is not by net-metered prosumers — it is either by poorer households operating outside the net-metering framework, or by large industrial consumers.
It is important to note that Pakistan emerged as a climate stressed country and was urged to undertake appropriate measures and the Fund extended a Climate Resilience and Sustainability Facility loan by May 2025. Renewables as an alternate was rightly considered as the way forward.
The incumbent government extended incentives; however, it failed to take account not only of the numbers —mostly middle income earners and above — who opted to take advantage of the incentives but the consequent decline in demand for electricity from the national grid which caters to 37.6 million people. This ill-advised policy of course has upped the capacity payments, which are the major reason behind Nepra’s change in solar rules.
Overall, solar adoption may remain uninterrupted despite the policy change, and battery-based solutions may expand — which could be beneficial for the economy. However, the bottom line is that the government has unnecessarily created controversy around a policy that was directionally correct, and the episode may further dampen investor and public sentiment.
Copyright Business Recorder, 2026