Govt Limits Net Metering Contracts

The government has decided to limit net metering contracts to five years and reduce the buyback rate for surplus electricity to Rs. 10 per unit, with periodic revisions when the authorities feel they’re losing money, reported Business Recorder. The move follows criticism from net metering consumers over the sharp reduction from Rs. 27 per unit. The National Electric Power Regulatory Authority (NEPRA) has been directed to revise the buyback rate based on the National Average Power Purchase Price and update settlement mechanisms. Exported units will be purchased at the approved rate, while imported units will be billed at peak or off-peak rates. Consumers will receive credits for excess electricity but will not be allowed to cash them out. Distribution companies must conduct studies within six months to set hosting capacity limits on each transformer and feeder. NEPRA will also enforce updated inverter standards requiring new net metering consumers to install compliant inverters with grid interaction features, remote monitoring, and anti-islanding protection. The revised framework also mandates that net metering capacity cannot exceed a consumer’s sanctioned load. If export levels exceed 10 percent of this limit, surplus units will not be credited. The government argues that net metering consumers currently avoid fixed charges, contributing to rising electricity tariffs. In FY24, net metering reduced sales by 3.2 billion kWh. This shifted the financial burden of Rs. 101 billion onto other consumers and increased tariffs by Rs. 0.9 per unit. This financial impact is projected to grow, with a sales reduction of 18.8 billion kWh by FY34, translating into an additional burden of Rs. 545 billion and raising tariffs by Rs. 3.6 per unit.