Shared power: Net Metering: What Is the Real Issue Behind the Debate?
On 9 February 2026, NEPRA notified the Prosumer Regulations 2026, abolishing Pakistan’s decade-old net metering framework and replacing it with a net billing system. The decision unleashed a storm of public protest, a Prime Ministerial intervention, and a hastily issued amendment to protect existing connections. But beneath the political theatre lies a genuine and structurally important question: who pays for the grid, and on what basis?
What Net Metering Did and Why It Was Contested
Under the net metering framework established by the Alternative and Renewable Energy Distributed Generation Regulations of 2015, rooftop solar consumers could offset imported units against exported units on a one-to-one basis at the prevailing retail tariff. When retail tariffs were Rs 16 per unit, this was a modest benefit. When tariffs rose to Rs 48 to 60 per unit by mid-2024, the arrangement became extraordinarily generous, and financially devastating for distribution companies. By April 2025, net-metered solar capacity stood at 5.3 GW across 466,000 connections. Cumulative buy-back obligations at retail rate had shifted approximately Rs 159 billion in costs onto non-solar consumers by December 2024. NEPRA warned that if the framework remained unchanged, that cost transfer could balloon to Rs 4.24 trillion by 2034.
The net-metered consumers shifted Rs 159 billion in fixed costs to non-solar consumers by December 2024, a burden projected to reach Rs 4.24 trillion by 2034 without reform.
The Structural Problem: Fixed Costs in a Variable World
The fundamental issue is that Pakistan’s electricity tariff was designed to recover fixed costs, capacity payments, transmission charges, and DISCO operating expenses, through volumetric consumption. In FY2024, capacity payments to power producers exceeded Rs 1.9 trillion, a 46 percent year-on-year increase. These payments are contractually fixed regardless of how much electricity is actually consumed. When a large consumer installs solar and reduces grid consumption by 80 percent, they continue using the grid for backup, nighttime power, and frequency stability, but their contribution to recovering those fixed costs collapses. The shortfall is spread over remaining grid consumers, who are disproportionately lower-income households that cannot afford solar.
The sustainable solution is a fixed network access charge levied on all grid-connected consumers, regardless of solar generation, which recovers the unavoidable infrastructure costs fairly.
The New Regime and Its Controversies
Under the Prosumer Regulations 2026, DISCOs purchase surplus generation at the National Average Energy Purchase Price, approximately Rs 11 per unit, while consumers pay retail tariffs of Rs 40 to 60 per unit for grid consumption. This asymmetry reflects the actual commodity value of solar electricity rather than the retail value inflated by network and capacity charges. The model is economically coherent. But its implementation was legally problematic: NEPRA initially applied it to existing consumers mid-contract, breaching seven-year agreements signed under the 2015 regulations. Following public pressure, the authority confirmed that existing valid contracts would be honoured until expiry.
The Real Reform Still Required
Net billing is a necessary correction, but it is not sufficient reform. The deeper structural problem, that Pakistan’s tariff recovers network costs through volumetric consumption, remains unaddressed. The sustainable solution is a fixed network access charge levied on all grid-connected consumers, regardless of solar generation, which recovers the unavoidable infrastructure costs fairly. Until that reform is made, tariff instability and cost-shifting will continue to incentivise grid defection rather than grid integration, which is the opposite of what the country needs.
References
NEPRA, ‘Prosumer Regulations 2026’ (SRO 251(I)2026, 9 February 2026) <https://www.nepra.org.pk/Legisltion/3 Reg/3.35%20NEPRA%20%20Prosumer%20Regulations%202026/NEPRA%20Prosumer%20Regulations%20(SRO%20251(I)2026)%2009-02-26.PDF> accessed 10 April 2026
Ferozpower, ‘NEPRA Prosumer Regulations 2026: A Setback for Solar Users’ (6 March 2026) https://www.ferozepower.com/prosumer-regulations-nepra-2026-solar-users-pakistan accessed 10 April 2026
Profit (Pakistan Today), ‘How Will Existing Solar Net Metering Users Be Affected by NEPRA’s New Regulations?’ (12 February 2026) <https://profit.pakistanto day.com.pk/2026/02/11/how-will-existing-solar-net-metering-users-be-affected-by-nepras-new-regulations/> accessed 10 April 2026
REN21, ‘GSR 2025 Snapshot: Pakistan’ (2025) https://www.ren21.net/gsr-2025/snapshots/pk/ accessed 10 April 2026
Renewables First, ‘Pakistan Electricity Review 2025’ https://uploads.renewablesfirst.org/Pakistan_Electricity_Review_2025_89f0b613d6pdf accessed 10 April 2026
The Express Tribune, ‘NEPRA Rolls Out New Regulations Abolishing Net Metering’ (9 February 2026) https://tribune.com.pk/story/2591628/nepra-rolls-out-new-regulations-abolishing-net-metering accessed 10 April 2026
Copyright Business Recorder, 2026