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In a move that could shake up the country’s rapidly expanding solar energy market, the Power Division is gearing up to introduce major changes to net-metering regulations in the upcoming Budget 2025-26, sources revealed to Influx Energy.
Sources close to top officials say the government, after a failed attempt to slash the solar buyback rate from Rs. 27 to Rs. 10 per unit, has acknowledged the need for more drastic measures to curb the growing number of solar net-metering users. To control this rise, significant adjustments will be made to power tariff laws.
Expect to see a hike in equipment fees, the introduction of a new tax structure on service and installation charges, and a standard import fee applied through the Revenue Division. These changes are expected to impact both consumers and the solar industry alike.
In Pakistan, the IMF loan is often seen as a beacon of hope, a lifeline to stabilize an economy teetering on the edge. However, while it’s hailed as a major milestone, the reality on the ground tells a different story. The looming energy crisis, marked by skyrocketing Independent Power Producer (IPP) surcharges, is one of the clearest examples of the limitations of this assistance. Despite the IMF’s backing to reduce power tariffs, the situation continues to worsen.
Grid users, many of whom are already grappling with steep charges, are quietly making the switch to alternative energy solutions like solar. It’s not just a matter of preference—it’s a necessity. These IPP surcharges are projected to rise further, even with IMF-backed tariff reductions.
The government’s revised plan to bring down the buyback rate from the National Average Power Purchase Price (NAPP) to Rs. 10 per unit had initially been set for implementation. However, this proposal faced fierce resistance and was rejected by the federal cabinet. Sources indicate that a future sales tax hike and a further reduction in the buyback rate for new users is likely. A more permanent solution could be the Finance Bill 2025, which would enable a one-time rate reduction starting in July 2025, making it more difficult for new adopters to benefit from solar power.
But for current net-metering customers, the news is a bit more reassuring. They are protected from these changes, but only until their contracts expire. For those considering making the switch to solar power in the coming fiscal year, things will get more complicated as the government plans to overhaul the net-metering settlement system in February 2025. Under this new system, solar power exported back to the grid will be bought at the drastically reduced Rs. 10 per unit rate, while electricity drawn from the grid will continue to be billed at inflated tariffs, stacking up with taxes and surcharges.
The government is increasingly worried about the rapid expansion of solar energy in the country. As the price of solar panels continues to plummet, the number of people turning to net-metering systems has surged. This shift has placed a staggering Rs. 159 billion burden on grid consumers by December 2024, and if left unchecked, it could balloon to a mind-boggling Rs. 4,240 billion by 2034.
The country’s installed solar capacity has grown from 321 MW in 2021 to 4,124 MW by the end of 2024, a growth that has caught the government off guard. With no efficient way to store surplus solar energy, this expansion is creating grid instability, pushing up costs for everyone.
The crux of the issue is clear: while the IMF loan may provide temporary relief, the government needs to adopt more comprehensive energy reforms. The growth of solar energy presents both an opportunity and a challenge. Without proper regulation and support, the surge in solar adoption will only exacerbate the existing challenges for grid consumers, leaving Pakistan in a precarious position.
As Pakistan grapples with rising electricity costs, solar energy users face a daunting future. The government’s budget proposal includes plans to increase fixed charges for net-metered solar users, adding new costs linked to capacity charges and power distribution networks. These additional expenses are aimed at easing the financial burden on conventional grid consumers, who are already feeling the strain of tariff hikes.
Sources from the Power Division indicate that these measures are critical to balancing the financial equation for the grid, but they come at the expense of solar energy growth. While the proposed changes are still pending Cabinet approval, it’s clear: Pakistan’s solar boom is at a crossroads. With the upcoming budget likely to put more pressure on renewable energy, the future of solar adoption in the country is uncertain.
As these shifts unfold, the question remains—can Pakistan continue to champion solar energy, or will rising costs push the industry into a difficult reality?
Influx Energy is a well-known and reputed source in the renewable energy market of Pakistan. We take pride in executing residential, industrial, and agricultural projects for clients from different walks of life.