- Rooftop solarization and net metering reduce grid demand by 8-10%.
- Solar users save up to Rs20 per unit cost for net metering setup.
- Report suggests bill of Rs 1,000 for domestic net metering users.
ISLAMABAD: In a worrying revelation, it has emerged that unregulated solarization in the country has led to non-solar consumers bearing an additional burden that crossed Rs 200 billion in the financial year 2023-24, News reported Saturday.
A report titled “The Distributed Divide – How Solar Expansion Affects Non-Adopting Consumers and Utility Economics” reveals that there has been a tariff increase of Rs 2 per kilowatt hour in the financial year 2023-24 and warns of a further intensification of the tax burden in the absence of immediate measures. regulatory and political action.
It estimates that a 5% reduction in grid demand due to solar integration will transfer an additional 131 billion rupees per year to non-solar consumers, essentially doubling to 261 billion rupees with a 10% reduction. .
The ruling regime has terminated the power purchase agreements (PPAs) of five independent power producers (IPPs) which would bring down the electricity tariff by Rs 0.60 per unit and is also in talks with 18 IPP to persuade them to move to take and pay mode to further reduce the electricity tariff from Rs0.70 to Re1 per unit, but this expected reduction in tariffs has already been offset by the unregulated adoption of the ‘solar energy on rooftops due to which non-solar systems consumer tariff increased by Rs2 per unit.
The 83-page study, led by ARZACHEL, also warns of a potential “death spiral” – a dangerous cycle in which rising tariffs push more consumers toward solar power – further reducing grid demand and imposing additional rate increases on remaining non-solar users.
To avoid this, the report highlights a series of solutions. These include introducing fixed network access charges to fairly spread the costs of network service, moving from net metering to net metering or feed-in tariff (FiT) systems with lower tariffs aligned with marginal system costs, and implement dynamic pricing models that adjust rates in real terms. time depending on fluctuations in supply and demand.
It also advocates the creation of an ancillary services market to improve grid reliability, the incentivization of battery energy storage systems (BESS) to combat the intermittency of renewable energy and the revision of the distribution code to manage bidirectional energy flows.
To ensure fairness, the report recommends conducting a distributive equity assessment (DEA) to protect non-solar consumers from disproportionate financial impacts while modernizing rates to reflect equitable distribution of costs.
These targeted reforms are essential to balancing the economic and operational sustainability of Pakistan’s energy sector with the benefits of solar energy expansion.
According to the findings, solar adoption, driven by rooftop installations and behind-the-meter systems, has reshaped the energy landscape by reducing grid demand by 8-10% during the day.
Solar power users avoid costs of up to Rs 20 per unit for net metering setups and Rs 7 per unit for behind-the-meter installations. While this benefits solar users, it leaves the fixed costs of grid maintenance and infrastructure upgrades on non-solar consumers.
The study proposes a minimum bill of Rs 1,000 per KW per month for domestic net metering users, and Rs 2,500 per KW per month for industrial and commercial consumers using net metering, ensuring that they contribute to the cost network maintenance even if they offset the majority of their consumption through self-production.
This transition has also introduced technical challenges for distribution companies (nightclubs), including voltage instability, reverse power flows and increasing demand for frequency regulation and reactive power support. These problems, compounded by falling incomes, require significant investments in infrastructure.
The study indicates that if solar penetration and installation rates continue at their current pace, Pakistan’s grid is predicted to experience a “duck curve” over the next two years. The grid will face significant challenges in maintaining energy stability over the coming winter, particularly in clear weather, due to the lack of flexible resources to handle high levels of distributed solar generation.
This uneven demand trend complicates network management and drives up costs, putting a strain on already strained resources. Approximately 438.46 gigawatt hours of energy were purchased by Discos via net metering in the 2023-2024 financial year, replacing 9,942 GWh of grid demand due to both net metering and solar generation behind the counter.
The study also mentions that highly distributed solar generation poses challenges to the grid, such as voltage instability, reverse power flows, and increased demand for ancillary services such as frequency regulation and power support. reactive power. These changes require infrastructure adjustments and careful balancing of demand to maintain grid stability and efficiency.