Pakistan's Energy Ministry Addresses Solar Power Subsidy Concerns

The increasing popularity of solar power among wealthier households in Pakistan has raised concerns about its impact on the country's energy sector. The current net-metering system, which allows consumers to sell excess solar energy back to the grid, is under scrutiny for favoring affluent users and burdening other customers financially.

According to the Energy Ministry, the growing number of solar installations by affluent consumers has resulted in a subsidy cost of Rs 1.9/kWh on domestic, industrial, and government entities. With around 3,000MW of domestic solar capacity in Pakistan, the government is taking steps to control further expansion by reducing the buy-back rates for domestic solar power.

This move aims to address the concerns of around 25 to 30 million economically disadvantaged consumers who are feeling the impact of the subsidy on their electricity bills. If left unchecked, regular customers could face a significant increase of at least Rs 3.35/kWh in their energy costs.

NEPRA, the regulatory authority, regularly sets tariffs for net-metered electricity procurement. The recent decision forecasts a national average power purchase price of Rs 22.42/kWh for the upcoming year. The government's rationale for differentiating between thermal and renewable energy costs underscores the importance of reducing expenses associated with thermal generation.

By promoting the use of renewable sources like solar power, the government aims to lower overall electricity costs and reduce carbon emissions. The proposed strategy aligns with the 'merit order' principle in electricity dispatch, prioritizing the use of the most cost-effective generators to benefit all consumers.

The shift towards a more balanced approach to solar power integration in Pakistan's energy mix is crucial for ensuring affordability and sustainability. By implementing policies that promote fairness and economic efficiency, the country can harness the benefits of renewable energy while safeguarding the interests of all stakeholders in the energy sector.