NEPRA Net Billing Policy 2026: How the New Solar Buyback Rates Affect You

 

The End of an Era: Pakistan’s Shift from Net-Metering to Net-Billing

Pakistan’s renewable energy landscape is undergoing a seismic shift. Following months of speculation, the National Electric Power Regulatory Authority (NEPRA) has officially notified the Prosumer Regulations 2026, marking the end of the traditional net-metering system and replacing it with a "net-billing" framework.

This move has ignited a fierce debate between the government, which cites grid stability and financial equity, and solar users who feel penalized for investing in clean energy.

What is Changing? From 1:1 Exchange to Buy-Back Rates

Under the previous Net-Metering system, solar prosumers (consumers who also produce energy) enjoyed a 1:1 unit exchange. If a household exported one unit of electricity to the grid during the day, it could offset one unit consumed at night.

The new Net-Billing policy fundamentally changes this math:

• Buy-back Rate: Excess electricity exported to the grid will now be purchased by utilities at the "national average energy purchase price," estimated at approximately Rs. 11 per unit.
• Retail Rate: When these same users pull electricity from the grid at night or during peak hours, they will continue to pay the full retail tariff, which often exceeds Rs. 40 per unit.
• Taxation: Former Finance Minister Miftah Ismail highlighted a further disparity: the Federal Board of Revenue (FBR) adds an 18% sales tax on the Rs. 40 units purchased but may deduct tax from the Rs. 11 units sold back, widening the financial gap for solar owners.

New Regulatory Constraints

The 2026 regulations introduce several technical and administrative hurdles:

1. Reduced Contract Length: The standard contract term for new solar connections has been slashed from seven years to five years.
2. Capacity Caps: Residential systems are limited to the consumer's "sanctioned load" and capped at a maximum of 1 megawatt.
3. Grid Restrictions: New connections will be barred if solar generation on a local transformer reaches 80% of its rated capacity.
4. Added Costs: Prosumers must now pay a non-refundable "concurrence fee" of Rs. 1,000 per kilowatt and bear all costs for grid upgrades and bi-directional meters.

The Government’s Defense: Equity and Grid Stability

Power Minister Sardar Awais Khan Leghari defended the changes in the Senate, arguing that they are necessary "regulatory adjustments" rather than a policy reversal. The government’s core argument rests on two points:

• The Burden on Non-Solar Users: With 466,000 net-metering users generating nearly 7,000 MW, the government argues that maintaining high buy-back rates places an unfair financial burden on the 34 million consumers who cannot afford solar and must cover the fixed costs of the national grid.
• Legacy Protection: The Minister clarified that existing contracts will be honored until their expiry, meaning current users will not see an immediate retrospective change.

Expert Criticism and Public Backlash

The policy has drawn sharp criticism from across the political spectrum and energy sector:

• "Punishing Efficiency": Senator Sherry Rehman argued the rules "punish citizens for producing clean energy" and contradict Pakistan’s global climate commitments.
• Inefficiency Shield: Critics like Mohammad Zubair and Ammar Rashid claim the policy aims to protect the interests of Independent Power Producers (IPPs) and cover the inefficiencies of Distribution Companies (DISCOs) rather than solving the underlying debt crisis.
• The "Off-Grid" Threat: Former ministers Taimur Saleem Jhagra and Hammad Azhar warned that by making the grid less attractive, the government is incentivizing users to invest in batteries and go completely off-grid. This could lead to a "death spiral" for the national grid as more high-paying consumers leave the system.

The Outlook for Solar in Pakistan

While the government maintains that these reforms are essential to stabilize electricity tariffs for the masses, the shift to net-billing significantly extends the "payback period" for rooftop solar investments.

As the Senate defers resolutions against the policy and the regulator stands firm, the solar industry in Pakistan faces a new reality: the era of "free" unit-for-unit storage in the national grid is over. For many, the next logical step will be a shift toward hybrid systems with battery storage, further distancing private citizens from a struggling national power infrastructure.