The government has introduced significant changes to the net metering policy, limiting contracts to five years and reducing the buyback rate for surplus electricity to Rs. 10 per unit, down from the previous Rs. 27 per unit. The revised rates will be periodically adjusted based on financial considerations, according to a report by Business Recorder.

The National Electric Power Regulatory Authority (NEPRA) has been directed to revise the buyback rate in line with the National Average Power Purchase Price and update settlement mechanisms. Under the new framework, exported electricity will be purchased at the approved rate, while imported units will be billed at peak or off-peak rates. Consumers will receive credits for surplus electricity but will no longer be allowed to cash them out.

To ensure grid stability, distribution companies have been instructed to conduct studies within six months to determine hosting capacity limits for each transformer and feeder. Additionally, NEPRA will enforce updated inverter standards, requiring new net metering consumers to install compliant inverters with grid interaction features, remote monitoring, and anti-islanding protection.

The revised policy also caps net metering capacity at a consumer’s sanctioned load. If export levels exceed 10 percent of this limit, surplus units will not be credited. The government argues that net metering consumers currently avoid fixed charges, which contributes to rising electricity tariffs for other users.

In FY24, net metering reduced electricity sales by 3.2 billion kWh, shifting a financial burden of Rs. 101 billion onto other consumers and increasing tariffs by Rs. 0.9 per unit. This impact is expected to grow significantly, with a projected sales reduction of 18.8 billion kWh by FY34, resulting in an additional burden of Rs. 545 billion and raising tariffs by Rs. 3.6 per unit.

The changes have drawn criticism from net metering consumers, who have expressed concerns over the sharp reduction in buyback rates. The government, however, maintains that the revised framework is necessary to address the financial strain on the power sector and ensure equitable distribution of costs among all electricity users.