Nepra replaces net metering with net billing under new prosumer rules

Pakistan has formally transitioned away from its net metering regime after the National Electric Power Regulatory Authority (Nepra) notified new rules shifting rooftop solar and other small-scale power producers to a net billing system.

Under the Nepra (Prosumer) Regulations, 2026, power utilities will now purchase surplus electricity generated by prosumers—households, businesses and industries with systems of up to one megawatt—at the national average energy purchase price, while electricity consumed from the grid will be charged at the applicable consumer tariff.

This replaces the previous net metering framework, which allowed one-to-one unit adjustment between electricity exported to and imported from the grid.

The new regulations, which took effect immediately, repeal the Nepra Alternative & Renewable Energy Distributed Generation and Net Metering Regulations, 2015, and apply to solar, wind and biogas systems. Existing prosumers will continue under their current contracts until expiry, but all new connections and renewals will fall under the revised net billing framework.

Nepra has reduced the standard agreement period to five years, down from seven, with renewals subject to mutual consent. Any excess credit generated by prosumers will either be adjusted in subsequent bills or paid out quarterly.

The regulator has capped distributed generation capacity at one megawatt and restricted system size to the consumer’s sanctioned load. New connections will not be allowed if generation on a distribution transformer exceeds 80 per cent of its rated capacity, while systems of 250 kilowatts or more will require a mandatory load flow study.

Prosumers will be responsible for all interconnection costs, including meters and grid upgrades, and must pay a non-refundable concurrence fee of Rs1,000 per kilowatt. Utilities are required to meet set timelines for processing applications, technical reviews and interconnection.

Under the new structure, electricity exported to the grid will be purchased at the national average energy purchase price—currently around Rs11 per unit—while electricity drawn from the grid will continue to be billed at prevailing consumer tariffs, which in many cases exceed Rs50 per unit.

Officials say the move aims to address rising financial losses, tariff distortions and grid stability risks linked to rapid rooftop solar expansion. Total rooftop solar capacity is estimated at around 6,000 megawatts nationwide, largely among urban residential, commercial and industrial users.

According to official data, grid electricity sales declined by 3.2 billion units in FY2024, resulting in revenue losses of nearly Rs101 billion for distribution companies. Power sector officials say these losses were absorbed into tariffs, contributing to higher costs for non-solar consumers.

Regulators argue that the earlier net metering system disproportionately benefited higher-income consumers while shifting fixed system costs onto the broader consumer base. Power Division projections indicate that without reform, cumulative financial losses could reach Rs545 billion by FY2034.

Energy analysts say the revised policy is expected to lengthen payback periods for rooftop solar systems designed primarily for export to the grid, while systems focused on self-consumption are likely to remain economically viable.