The government of Prime Minister Shehbaz Sharif may face political backlash as solar net metering becomes virtually dead after the National Electric Power Regulatory Authority (Nepra) abolished the exchange of electricity units, dealing a blow to consumers hoping to shift to renewables.

At present, the buyback rate for solar net generation stands at Rs25.9 per unit, which may be reduced to Rs11 per unit, while the contract period has been cut from seven to five years.

The burden of Independent Power Producers (IPPs) capacity payments is now being shifted to solar consumers. Distribution Companies (Discos) will charge their own electricity rates, which may reach Rs50 per unit, while purchasing daytime power from consumers at a possible Rs11 per unit.

The new buyback rate has not yet been officially notified but was discussed at Rs11 per unit during stakeholder consultations. Solar net consumers will have to pay the net difference to Discos once the exchange-of-units regime comes to an end.

The policy will not apply to existing consumers, but after contract expiry, Discos have been authorised either to terminate agreements or shift users to the new policy framework.

The power regulator has overhauled the country’s net metering regime, moving rooftop solar and other small generators to a new ‘net billing’ system under the NEPRA (Prosumer) Regulations, 2026, fundamentally changing how electricity producers are paid and repealing the decade-old framework.

Under the new rules, notified on Monday by Nepra, utilities will be required to purchase excess electricity from prosumers – households, businesses and industries generating up to one megawatt – at the national average energy purchase price, while selling electricity back to them at the applicable consumer tariff, effectively ending one-to-one net metering.

The regulations apply to solar, wind and biogas systems and take effect immediately, replacing the Nepra Alternative and Renewable Energy Distributed Generation and Net Metering Regulations, 2015.

Existing prosumers will continue under their current agreements until expiry, but all future renewals will fall under the new billing structure.

Nepra has capped the maximum size of a distributed generation facility at one megawatt and limited system capacity to the sanctioned load of the consumer, with a key technical restriction barring new connections if generation on a transformer reaches 80% of its rated capacity.

Systems of 250 kilowatts or above must undergo a mandatory load flow study. Utilities are required to process applications within strict timelines, acknowledging requests within five working days, completing technical reviews within 15 days, and installing interconnection facilities within 15 days after payment.

Prosumers must also obtain formal concurrence from Nepra, which the regulator says will be issued within seven working days.

Financially, all interconnection costs, including meters and grid upgrades, will be borne by the prosumer, while Nepra has introduced a non-refundable concurrence fee of Rs1,000 per kW. Metering must support two-way measurement, either through a single bidirectional meter or dual meters.

The standard agreement term has been set at five years, down from seven, renewable by mutual consent, while utilities retain the right to disconnect systems in cases of faults, non-compliance or maintenance, with or without notice. Prosumers are barred from selling power to third parties using the utility’s network.

Nepra has also granted itself broad powers to revise purchase rates during the life of agreements, issue binding directions, demand operational data, impose penalties, and relax or modify provisions where necessary.

The shift to net billing marks one of the most significant policy reversals in Pakistan’s renewable energy sector, redefining the economics of rooftop solar and signalling a tighter regulatory grip as the number of distributed generators continues to surge.

The power division had made two attempts to get the approval of the prime minister and cabinet. However, it faced a political backlash so the burden was shifted to Nepra to avoid public wrath.

At present, the consumers have been paying over Rs 2 trillion capacity payments to idle power plants which have not been operating. Now, this burden had been shifted to the solar consumers to continue paying hefty amount to idle plants.

The country’s agriculture sector had mostly shifted to the offgrid solar power and the recent changes in the net metering regime will push more consumers to offgrid. According to industry officials, the country will be forced to pay almost $1 billion every year on import of solar net metering.

The world was encouraging renewables but the present government had forced the solar consumers to shift to the grid system to pay the bill of those power plants which were not operating but they had been receiving trillions of rupees every year.