The government is weighing a major cut in the solar net metering rate, potentially reducing the buyback price from Rs22 per unit to around Rs11.30 per unit.

The move comes after officials warned that the existing policy is placing a growing financial strain on conventional grid users.

Official data reveals that the rapid expansion of rooftop solar systems has already dented grid electricity sales by nearly 3.2 billion units in FY2024. This decline has cost power distribution companies an estimated Rs101 billion in lost revenue, forcing an average tariff hike of Rs0.9 per unit for other consumers.

Experts say the issue could worsen in the coming years. Projections from the Power Division suggest that by FY2034, the shortfall may reach 18.8 billion units, translating into a Rs545 billion financial impact and a possible Rs5–6 per unit rise in electricity tariffs for grid-connected consumers.

Recognizing the severity of the situation, the prime minister has stepped in, directing the Power Division and NEPRA to “review and verify” the buyback rate and its broader impact before finalizing reforms. An energy official explained that many solar users are using the national grid as a “virtual battery,” selling excess power at high rates while avoiding fixed charges — costs that are ultimately passed on to other consumers.

Adding to the imbalance, new solar power plants are being contracted at rates below Rs10 per unit. Officials argue that the current solar net metering rate of Rs22 per unit is no longer economically justified. The proposed revision to Rs11.30 per unit aims to align buyback prices with current market realities and curb further tariff hikes.

Pakistan’s solar capacity has grown rapidly, with net-metered installations now estimated at around 6,000MW nationwide. However, this expansion is also creating operational challenges for the grid, especially during winter when electricity demand dips to 8,000–9,000MW, raising concerns about potential over-generation during daylight hours.