EDITORIAL: Recent weeks have seen much confusion prevail with respect to the government’s existing solar net metering policy – enacted in 2015 – causing considerable consternation among users of rooftop solar power-generated electricity.
The May 19 statement of Minister for Power Owais Leghari may provide some comfort to this segment as he has clarified that the government has no plans to change the solar net metering policy for existing users, under which they currently receive Rs22 per kwh from power utilities in exchange for feeding the excess electricity generated from their solar panels to the power grid.
At the same time, the minister has indicated that there may be changes in net metering regulations on newly installed solar panels, stating that a review is in progress to assess the effect of solar net metering on consumers of grid electricity, and if there is an adverse impact on this segment, the government may revise its net metering policy.
The minister’s clarification follows media reports that had revealed that Pakistani authorities have indicated to the IMF that they plan to phase out the net metering policy for rooftop solar panels entirely, and replace it with a gross metering system, where solar energy generated on rooftops will be directed towards the national grid, and owners of solar panels will then draw their electricity solely from the grid, essentially paying more than they would under a net metering system.
The minister’s clarification notwithstanding, all the recent talk about lowering of the net metering rate or switching to a gross metering system has revealed the power bureaucracy’s resistance to the widespread adoption of solar energy, in sharp contrast to the global trend of moving towards alternative energy sources. Those within the bureaucracy have been at pains to point out the negative impact of solar net metering on poorer segments.
According to the Power Division, those with net metering licences are inflicting an annual burden of Rs110 billion on those who are on the grid, with the government essentially subsidising the largely well-to-do segment of solar energy users to the tune of Rs1.90 per unit.
While the concern for poorer consumers of grid electricity may be valid, one cannot help but wonder at the logic of fretting over the additional impact of Rs1.90 per unit that results from net metering instead of the Rs17 per unit that the government has to pay as capacity payments to IPPs (independent power producers) even when power plants remain idle.
Moreover, as has been pointed out in this newspaper by experts, the Power Division has failed to renegotiate the very favourable terms under which solar IPPs are operating in the country as they continue to receive substantial quarterly increases in tariffs as well as significant financial reimbursements under various heads from the government, something that rooftop solar energy generators do not enjoy.
There is a need to acknowledge that the seeds of this present state were sowed by the flawed deals negotiated with IPPs, the power bureaucracy’s decades-long inability to effectively deal with the inefficiencies of the system and its insistence on protecting itself from the impact of a technology whose time has come.
Nevertheless, given the serious economic impact that those on the grid have to bear, there may be a need to devise some changes to the net metering policy, where the government could consider maintaining the existing net metering rate for those with solar generation units of up to 10kw, while lowering it for those with units generating power in excess of 10kw.
The government must also evaluate the environmental impact of its decisions as that has become essential in a world wracked by the effects of climate change. Policies whose main aim is to protect the interests of consumers instead of making things simpler for the power bureaucracy are the need of the hour.
Copyright Business Recorder, 2024
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