Ending Unit-for-Unit Net Metering Law Will Crush Solar Investments: PSA

The Pakistan Solar Association (PSA) has warned that proposed changes to Pakistan’s net metering policy could severely damage rooftop solar investment and consumer savings. In a formal letter to Prime Minister Shehbaz Sharif and Power Minister Awais Leghari, PSA raised alarm over plans to abolish the current unit-for-unit net metering mechanism and replace it with a flat buyback rate of Rs. 10 per unit for solar electricity exported to the grid. The Association said this would cut consumer savings by up to 85 percent. Under the current system, solar users offset imported electricity, costing Rs. 50–70 per unit, with equivalent exports. PSA explained that where a consumer importing and exporting 1,000 units would currently pay nothing, saving Rs. 50,000–70,000. Under the proposed Rs. 10 buyback, the same export would earn only Rs. 10,000, while full import charges would still apply, eroding over 80 percent of the savings. PSA also warned that the payback period for solar systems, typically 2–2.5 years, would stretch well beyond loan tenures, especially for small systems. PSA particularly grilled the proposed 18 percent sales tax on exported solar units, which requires DISCOs to apply sales tax on total electricity supplied, regardless of how much is offset by solar exports. PSA said most countries exempt or zero-rate renewable energy to support adoption. The Association warned that the change would prolong reliance on costly capacity payments to independent power producers (IPPs), keep electricity tariffs high, and undercut Pakistan’s 30% renewable energy target for 2030. PSA urged the government to adopt successful regional practices from India and Bangladesh, engage with SAARC countries or bilateral partners, and form a committee of industry experts under the Economic Coordination Committee and Ministry of Energy. PSA also proposed a minimum one-year transition period before implementing any major policy changes to ensure investor confidence and market stability.