Report reveals how increased solar energy use overburdening power consumers

The rise in the use of solar energy has resulted in a burden of over Rs 200 billion on electricity consumers, with grid-dependent consumers facing a Rs 2 per unit increase in electricity rates due to the unregulated and rapid growth of solar energy systems.

A recent research report by Arzaikel reveals that the increased use of solar energy during the fiscal year 2023-24 has led to this extraordinary financial burden on grid-dependent consumers.

The increase in solar energy use has resulted in a hike of Rs 2 per unit in electricity prices for these consumers, highlighting financial strain and inequality caused by the unregulated spread of solar energy via net metering.

The report warns that if immediate government action is not taken, the financial burden on grid-dependent consumers will continue to grow.

The study predicts that if solar energy use reduces grid demand by 5% in the current fiscal year, the additional burden on grid-dependent consumers could reach Rs 131 billion. If grid demand drops by 10%, this burden could double to Rs 261 billion.

To address the rapid and unregulated transition to solar energy, the report stresses the need for immediate reforms and policy changes to ensure fair distribution of electricity prices and grid stability.

The report suggests various measures, including shifting from net metering to net billing or Feed-in Tariff (FiT) systems with lower rates, introducing fixed grid fees to reflect actual costs, and establishing ancillary services markets to improve grid stability.

It also calls for amendments to the distribution code to regulate bi-directional power flow, ensuring fair distribution of electricity costs while balancing the benefits of renewable energy with grid sustainability.

The report highlights the significant impact of rooftop solar system installations on energy demand in Pakistan.

According to the study, consumers with an average 10 kW net metering system can save up to Rs 20 per unit in grid costs, while behind-the-meter installations help save around Rs 7 per unit in fixed costs.

Although solar energy users benefit from substantial savings, the resulting drop in grid electricity demand during the day has led to an 8-10% decrease in electricity sales, transferring the burden of grid maintenance fixed costs to non-solar energy consumers.