ISLAMABAD: The federal government announced a substantial decrease in the buyback rate for solar net metering electricity producers, lowering it from Rs27 per unit to Rs10 per unit.
The decision was reportedly taken with the aim of ‘alleviating’ the financial burden on grid consumers. It was made during a meeting of the Economic Coordination Committee (ECC) chaired by the Finance Minister Muhammad Aurangzeb.
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The amendments to the existing net metering regulations are expected to have far-reaching implications for both, current and prospective solar energy users.
The rationale behind this decision stems from the rapid increase in the number of solar net metering consumers, which has reportedly increased to over 283,000. The growth has raised concerns regarding the financial strain on grid consumers, prompting the government to take ‘action’.
The revised buyback rate will apply to all exported solar electricity, significantly impacting those who had expected financial returns from their solar investments.
While the new regulations will not affect existing net-metered consumers with valid licenses or agreements under the NEPRA (Alternative and Renewable Energy) Distributed Generaiton and Net Metering Regulations (2015), they will face changes once their current contract expires.
The maximum term for these contracts is seven years, after which the revised terms will come into effect.
Under the new policy, rooftop solar panel owners will sell electricity at the reduced rate of Rs10 per unit while being required to purchase power from the national grid at prevailing market rates, which currently range between Rs65 and Rs70 per unit.
This creates a stark price disparity of over 550 per cent, raising concerns and anger about the finical viability of solar energy for new consumers.
The government has justified such a drastic change by citing additional burden of 90 paisa per unit on non-solar consumers.
The ECC also introduced new technical specification for solar panel installations, aimed at ensuring higher quality and performance standards. The capacity limit for distributed generation facilities was also revised from a ratio of 1.5 times the sanctioned load to a one-to-one ratio, further discouraging new solar installations.
The implications of these changes extend beyond individual consumers, as the solar energy sector, which was experiencing growth due to declining solar panel prices, may face huge setbacks.
Critics argue that the government’s decision could deter future investment in renewable energy, undermining the country’s broader goals for sustainable energy development.
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The ECC also approved other measures, including the export of potassium sulphate fertiliser from the Gwadar Port and allocations for the Federal Minister of Education and the Ministry of Industries.