To achieve a win-win solution for all stakeholders—solar users, non-solar consumers, utility companies, and the government—it is necessary to strike a balance between supporting renewable energy and ensuring that the financial burden of system maintenance is equitably distributed. This article’s final part provides actionable ideas to address the growing concerns raised by net metering, which has unwittingly transferred grid maintenance expenses onto non-solar customers.
By reforming legislation and incentivising major technical breakthroughs, we can ensure that both solar and non-solar consumers gain while the country makes significant progress towards its renewable energy targets.
The first step towards a win-win solution is slightly modifying the net metering mechanism rather than immediately switching to gross metering. A modified net metering model, in which distributed generators continue to earn credits for electricity generated while paying a small grid usage cost, could help address the imbalance.
Net metering: Balancing the scales—IV
The grid fee would cover infrastructure maintenance costs and support utility operations. In addition, the other system charges like FC surcharge and electricity duty should be shared equitably. Solar customers would still enjoy lower bills from self-generation while contributing their fair part to system maintenance.
The cost might be calculated as a proportion of their generation, ensuring the system remains fair and reasonable. This strategy maintains the incentive for solar adoption while eliminating the hidden subsidy that non-solar consumers currently provide.
The second solution is to alter the time-of-use billing further. Under this model, power tariffs would vary throughout the day (ideally four different blocks), with higher prices during peak demand periods and lower rates during off-peak hours, and demand shall be tilted by incentivising off-peak consumption. Peak hours should be modified so that expensive fuel-based projects are rarely required.
Furthermore, the differential between peak and off-peak tariffs should be increased to shift demand towards daylight hours. This pricing structure shall encourage consumers to shift their electricity use to periods of lower demand, which can benefit both solar and non-solar users. This adjustment would enable utilities to better control the supply-demand balance, particularly during peak hours when conventional power plants operate at full capacity and incur higher costs.
Next, a subsidy or low-interest loan scheme for solar systems with battery storage for deserving consumers would be an essential step towards a more balanced energy system. Batteries would enable deserving consumers to store extra electricity produced during the day and use it at night, minimising their reliance on the grid during peak hours.
Net metering: Balancing the scales—III
Although battery systems need a significant initial investment, government incentives can help make them more affordable to a wider variety of consumers. By boosting battery use, solar users will become more self-sufficient, relieving grid stress and lowering the need for utilities to rely on costly thermal plants during peak periods. Non-deserving consumers would also benefit indirectly? from lower overall electricity costs as peak demand fell.
Another crucial step is to move new solar installations to gross metering progressively. The government can protect early adopters’ financial investments by allowing existing distributed generators to continue to benefit from the amended net metering system.
On the other hand, new solar consumers might be enrolled in a gross metering plan, selling all of their generated electricity to the grid at a fixed tariff and purchasing back the electricity they consume at retail rates.
This dual strategy provides fairness for current and future solar consumers while avoiding unexpected financial shocks for those already invested in rooftop solar. Over time, the system can adapt to guarantee that all consumers are treated fairly while encouraging solar adoption.
Replacing traditional thermal power facilities with hydropower for peak and baseload supply is a long-term option to address peak demand costs.
The trend shows that imported coal and nuclear projects serve as baseload throughout the day while RLNG projects and existing hydropower capacity work together to meet the peak demand.
Net metering: Balancing the scales—II
The run of river hydropower projects shall work well with intermittent solar generation during the daytime to serve the base load, while reservoir-based projects can replace the expensive RLNG generation during peak hours. Hydropower is cleaner, cheaper, faster to ramp up, flexible, and helps reduce reliance on fossil fuels. It can meet variable demand and supply peak loads, benefiting both solar and non-solar consumers and aligning with the country’s net-zero emissions goal.
Long-term planning and policy stability are essential components of these strategies. Abrupt changes in energy policies cause uncertainty, which might deter local and international investments in renewable energy.
By offering a clear plan for the energy industry’s future, the government can instil trust in all stakeholders, including consumers, utility firms, and investors. This roadmap should include milestones for the transition to renewable energy, incentives for technical advancements such as battery storage, and an open plan for how the grid will evolve to accommodate increasingly distributed generation sources.
By providing predictability and stability, the government can attract the investment required to modernise the grid and support long-term growth in the energy sector.
Net metering: Balancing the scales—I
Smart grid investments are also crucial for managing the complex energy situation. The smart grid will optimise real-time power flow, improve supply and demand management, include renewable energy sources, reduce transmission losses, and enhance grid resilience.
Consumers can make informed energy decisions using real-time data, such as moving consumption to off-peak hours, reducing the grid demand.
Finally, combining these ideas opens the door to a more fair and sustainable energy system in Pakistan. By changing net metering, implementing time-of-use billing, incentivising battery storage, progressively transitioning to gross metering, investing in hydropower for peak demand, and guaranteeing policy stability, the government can create a win-win situation for all parties.
Distributed generators will continue to benefit from their renewable energy investment, while non-solar consumers will no longer pay an unjust portion of grid costs.
A more balanced financial structure will also benefit utility firms, allowing them to invest in the grid and help the country move to a greener energy future. It is a solution for today and a roadmap for a sustainable energy future that benefits everyone.
(Concluded)
Copyright Business Recorder, 2024
The writer is a chartered management accountant working in the power sector for 23 years. He can be contacted at [email protected].
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