Net Metering Is Being Replaced with Net Billing in Pakistan

Pakistan’s solar energy policy is undergoing an important change as the National Electric Power Regulatory Authority (NEPRA) moves toward replacing the existing net metering system with a new net billing framework. The proposed shift is part of broader reforms aimed at addressing financial challenges in the power sector while continuing to support renewable energy growth.

Net metering has played a key role in the rapid expansion of rooftop solar across Pakistan over the past decade. However, regulators now believe that the current model needs adjustment to ensure long-term sustainability of the electricity system.

Understanding Net Metering in Pakistan

Net metering allows electricity consumers to generate power through rooftop solar panels and export surplus electricity to the national grid. The exported units are adjusted on a one-to-one basis against the electricity imported from the grid. This means that consumers are billed only for the net difference between what they consume and what they export.

This system became highly popular due to rising electricity prices and frequent tariff hikes. Many households and businesses were able to reduce their electricity bills significantly, while some managed to eliminate monthly bills entirely.

What Is Net Billing and How It Works

Net billing introduces a different method of compensation for solar users. Under this system, consumers will still be able to export surplus electricity to the grid, but the exported power will be purchased at a fixed rate set by the regulator. Electricity imported from the grid will continue to be charged at the applicable consumer tariff.

In practical terms, this means that electricity is bought and sold at different prices. As a result, exporting electricity will not offset imported units on a one-to-one basis, and consumers may still receive electricity bills even if they produce surplus solar power.

Key Differences Between Net Metering and Net Billing

While both systems support rooftop solar, there are important differences in how they benefit consumers:

Net metering adjusts exported and imported electricity units equally
Net billing compensates exported electricity at a lower, fixed rate
Net metering allows greater bill reduction, sometimes to zero
Net billing focuses more on self-consumption than exports

These differences have a direct impact on the financial returns of solar installations.

Why Pakistan Is Replacing Net Metering

The decision to replace net metering with net billing is driven by several factors linked to the financial health of the power sector. As more high-consumption users shifted to net metering, electricity sales from the grid declined. However, the fixed costs of running the electricity system remained the same.

Officials have also highlighted concerns related to cross-subsidies. In Pakistan, higher-income electricity consumers help subsidize lower-income users. When wealthier households reduce grid consumption through net metering, the cost burden shifts to consumers who cannot afford solar installations.

Another concern raised by regulators is the installation of oversized solar systems designed mainly to export electricity to the grid rather than meet self-consumption needs. According to authorities, this trend created operational and planning challenges for the grid.

NEPRA’s Draft Prosumer Regulations 2025

NEPRA has proposed the transition through its draft Prosumer Regulations 2025. Under these proposed rules, new solar consumers will fall under a net billing system rather than net metering. The surplus electricity exported to the grid will be purchased at a rate linked to the national average cost of power generation instead of retail electricity tariffs.

The draft regulations also allow for periodic revision of buyback rates and changes in agreement durations. NEPRA has stated that these measures are necessary to align rooftop solar compensation with market realities and protect the power sector from further financial strain.

What This Means for Existing Net Metering Users

One of the biggest concerns among solar users is whether existing net metering connections will be affected. Current indications suggest that consumers who already have approved net metering agreements will be allowed to continue under existing terms until their contracts expire.

This means that existing users will continue to enjoy the benefits of net metering for now. However, there is uncertainty about what will happen after contract expiry, as future policies may require a transition to net billing.

Impact on New Solar Installations

For new solar installations, the move to net billing changes how systems should be planned. Under the new framework, exporting large amounts of surplus electricity may not be financially attractive. Instead, consumers will benefit most by using solar power directly during daytime hours.

Solar experts now advise:

Installing systems based on actual electricity usage
Avoiding oversized systems meant mainly for exports
Considering energy-efficient appliances to increase self-consumption

These adjustments can help consumers maximize savings under net billing.

Effect on Residential Consumers

Residential consumers are expected to feel a greater impact from the shift to net billing. Many households that previously reduced their electricity bills to zero may now receive partial bills even with solar systems installed.

Despite this, solar energy remains a valuable option for households due to rising electricity prices. Solar systems still provide long-term savings, protection from tariff increases, and greater energy independence.

Commercial and Industrial Perspective

For commercial and industrial consumers, the impact of net billing is likely to be less severe. Most businesses operate during daylight hours, allowing them to consume a large portion of solar-generated electricity directly. This reduces reliance on export compensation and keeps solar projects financially viable.

Industry analysts believe that solar adoption among businesses will continue, although payback periods may become slightly longer.

Public Response and Policy Outlook

The proposed replacement of net metering with net billing has generated mixed reactions. Solar consumers and industry stakeholders have expressed concerns that reduced incentives could slow the growth of renewable energy in Pakistan. At the same time, power sector officials argue that reforms are necessary to prevent further financial losses and ensure grid stability.

NEPRA has invited public feedback on the draft regulations, and changes may still be introduced before the rules are finalized.

Conclusion

The transition from net metering to net billing represents a major shift in Pakistan’s solar energy policy. While the new system reduces the financial benefits of exporting solar electricity, it aims to create a more balanced and sustainable electricity market.

Existing net metering consumers are likely to retain their benefits for the time being, while new solar users will need to adapt to a model focused on self-consumption. As electricity prices continue to rise, solar energy will remain an important solution for Pakistan, even as the policy framework evolves.