ECC Slashes Solar Buyback Tariff to Rs10 per unit

ISLAMABAD: The cabinet’s Economic Coordination Committee (ECC) has lowered the buyback tariff of solar rooftop consumers from Rs 27 per unit to Rs 10 per unit.

This development came as the ECC convened under the leadership of Finance Minister Mohummad Aurang Zeb with the intention of approving a number of changes to the existing netting meters rules towards lessening the rising financial stress on consumers of the grid, as per the Finance Division statement published on Thursday.

“This decision has been taken considering the increase in the volume of consumers availing of net solar meters and the financial burden that comes with it for the consumers of the grid,” said the statement.

“Under the changes approved, the ECC has brought down the buyback price from the National Average Power Purchase Price (NAPP) to Rs 10 per unit,” the statement said.

They clarified, however, that the new framework will not be applicable to existing net-metered consumers “who hold a valid license, concurrence or agreement under the Nepra (Alternative & Renewable Energy) Distributed Generation and Net Metering Regulations 2015.”

These contracts still hold until a given license or agreement expires. This allows these consumers to retain their rights and obligations, including the set tariffs, as per the statement’s terms.” “In addition, the committee, with cabinet approval requested later, endorsed giving the National Electric Power Regulatory Authority (Nepra) authority to change this buyback rate as is necessary from time to time, in order for the rate to be responsive to the market,” Other changes to how settlements are done also received the nod from the ECC.

Under the new scheme pegs, imported and exported units will no longer be bundled into single entities per the billing system. The revised buyback rate shall be set at 10 rupees per unit for exported units; imported units will be charged at the applicable peak/off-peak rates, including taxes and surcharges, during the monthly billing cycle.

“The Power Division was also allowed the charge to develop proposed directions to be given to Nepra, pending cabinet approval, to integrate into the applicable regulatory guidance,” In making these directives, the cabinet hopes to give power and consistency to the changes made.

The decision follows extensive discussions on the growing impact of solar net-metering on the national power grid.

The statement explained that there has been a stark rise in the number of solar net-metering consumers alongside a record decline in solar panel prices, thus reinforcing the necessity for regulatory changes from the Power Division.

The burden that solar net-metering consumers have placed on grid consumers is expected to increase from Rs 159 billion in December 2024 to Rs 4,240 billion in 2034, sans appropriate changes in regulations by the government.

The ECC has been presented with information that indicates a steep increase in the number of solar net-metering consumers to 283,000 as of December 2024, which is a large jump from 226,440 on October 2024.

The expansion of the net-metering sector is further indicated by the growth in total installed capacity from 321 MW in 2021 to 4,124 MW in December 2024. However, the growing numbers of solar net-metered consumers have negatively impacted the cost of electricity for grid consumers, which has reduced the ability of the government to lower power tariffs.

The rising numbers of solar net-metering consumers also result in the avoidance of paying a portion of the tariff that comprises the fixed charge, capacity charges, and the fixed costs of power distribution and transmission. The ECC has considered the impact of these changes from the consumer perspective.

“This bias has placed an undue economic strain on consumers of the grid, which leads to increased tariffs for electricity while simultaneously diminishing the sustainability of the energy sector.”

The committee also noted that over eighty percent of total consumers of solar net metering institutional sites are concentrated within nine primary cities, a good number of them being wealthy. This geographical concentration further calls attention to the imbalance and unfairness that exist in the system, and, therefore, the need for policy changes is urgent, it remarked.

The statement continued, saying approval of these amendments by the ECC is a landmark towards maintaining the power sector’s sustainability while serving all users, especially grid ones.