Solar Power Adoption in Pakistan is increasing. Along with that people are opting for net metering. SO what exactly is net metering? Net metering is a system that allows solar power users to send excess energy to the grid. The energy is measured and credited to the consumer’s account. Consumers can use these credits to offset future electricity usage. The buyback rate is usually set by the government or utility. It helps reduce electricity bills and encourages solar energy adoption.
Introduction
A new report by IEEFA talks about a possible change in solar energy rules in Pakistan. It looks at the effect of switching from net metering to net billing. The government is thinking about lowering buyback rates and limiting system sizes.
What is Net Metering?
Net Metering in Pakistan
Pakistan started net metering in September 2015. By June 2024, 2.2 GW of rooftop solar systems were connected to the grid. Under net metering, extra energy from solar systems can be sold back to the grid. The current buyback price is PKR 27 ($0.097)/kWh.
This pricing has helped solar power grow fast. People are installing solar systems with sizes between 5 kW and 25 kW. The payback period for these systems is 2 to 4 years.
Concerns from Power Utilities
The growth in solar power is good for the environment. But power utilities are worried. More rooftop solar could put stress on power distribution. This may lead to higher costs for other consumers. These worries are pushing the government to rethink current rules.
Proposed Changes
The report suggests a possible solution. One idea is to lower the buyback rate to PKR 15/kWh. This would still allow for payback periods under five years. It could also slow down the rapid growth of solar energy.
Haneea Isaad, an energy expert at IEEFA, said this change would help both consumers and power companies. However, timing is important. If the rules change, they should be phased in gradually. Existing customers should not be affected suddenly.
Surge in Solarisation in Pakistan
Solar capacity through net metering has grown significantly, from 633 MW in 2021-22 to 2498 MW in 2023-24, a 294% increase over two years.
Annual Growth Rate
This surge represents an annualised growth of 71%, reflecting rapid adoption of solar energy.
Increase in Consumer Numbers
The number of net metering consumers has nearly doubled, growing from 75,724 in June 2023 to 157,844 by the end of 2024.
New Solar Additions
During this period, 1188 MW of additional solar capacity has been installed across the country.
Net Billing: What It Means
The report also talks about net billing. Net billing is different from net metering. Under net billing, customers would no longer get the same off-peak rates. Instead, the grid would have separate tariffs for importing and exporting energy.
Effects of Net Billing
Switching to net billing could increase payback periods for consumers. People who use more solar energy might take longer to get their money back. It might also lead people to install bigger systems to earn more. The report suggests that a 25 kW system might pay back in one year.
Oversized Systems and Solutions
To avoid very large systems, the government may need to limit system sizes. This would prevent people from installing too many solar panels. The report also suggests promoting hybrid systems with battery storage. This would allow consumers to store energy for later use.
Combining Policies for Better Results
The government needs to work on improving the grid. Digital technology and smart systems are needed to support changes to solar power rules. Consumers should also choose the right size of system. This will help them get the most value from their solar investment.
Current Solar Power in Pakistan
As of the end of 2023, Pakistan had 1,244 MW of total solar power. This is according to data from the International Renewable Energy Agency (IRENA).
Difference between Net Metering and Gross Metering
In net metering, excess solar energy is sent to the grid, and consumers receive credits for it. In gross metering, all solar energy generated is sent to the grid, and consumers are paid for the total amount produced. Net metering allows consumers to use credits to reduce future bills. Gross metering does not provide the option to offset personal consumption. Net metering is generally more favourable for consumers who use less energy than they generate.
FAQs
What is net metering?
Net metering allows consumers to sell excess solar power to the grid.
What is net metering?
Gross metering is a system where all the electricity generated by a solar panel is sent to the grid. Consumers are paid for the total amount of energy they produce, regardless of their own consumption.
Why is the government considering changes?
The government is worried about the effect of more solar power on the grid.
What is net billing?
Net billing is when customers pay different rates for energy they buy and sell.
What is the Future of net metering in Pakistan?
The future of net metering in Pakistan is uncertain as the government is considering changes to reduce buyback rates and limit system sizes. A shift to net billing could slow the rapid growth of rooftop solar, but may lead to longer payback periods for consumers.
How would net billing affect payback periods?
Payback periods may be longer for consumers with more self-consumption.
What is the current size of solar power in Pakistan?
Pakistan had 1,244 MW of solar power by the end of 2023.
