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  • Policy shift from net metering to gross metering represents a significant change in Pakistan’s approach to solar energy

Pakistan’s industrial sector is a major engine of the national economy. Nonetheless, it has formidable energy-related obstacles, such as elevated energy requirements and skyrocketing running expenses. Industries in Pakistan are going more and more towards industrial solar solutions to get over these obstacles and clear the path for a sustainable future. These solar-powered technologies revolutionise energy use and provide several advantages for Pakistani enterprises. We all are already aware of the fact that Pakistan’s industries have a substantial appetite for energy including manufacturing, textiles, and agriculture in which heating, ventilation, and cooling systems, heavy machinery, and industrial operations are the main areas where these energies are utilised. However, companies find it difficult to maintain competitiveness in the global market due to the high operating expenses associated with reliance on traditional energy sources, such as fossil fuels.

To confront the challenges related to competitiveness, industries decided to use the transformative approach to satisfy their energy demands by installing solar energy systems and solar panels specially designed for industry, which not only reduces the cost but enhances the competitiveness in the international market by producing clean, renewable energy on-site and lessen their reliance on conventional energy sources and related expenses by using Pakistan’s plentiful sunshine.

Solar energy has emerged as a popular energy source, as it offers several benefits such as cost savings, sustainability, and environmental responsibility. Solar energy is harnessed using solar panels and is a clean and renewable source of energy that does not emit harmful greenhouse gases into the environment.

A few years back, the Government of Pakistan also recognised the importance of solar energy for businesses and offered a range of tax incentives and rebates to businesses that use solar energy. This includes tax credits, exemptions, net metering, and other financial incentives to help offset the cost of installing solar panels. These incentives can significantly reduce the upfront costs of solar energy implementation for businesses but the recent announcement of the government (as per requirement of IMF) to shift from net metering to gross metering for solar panels has sparked considerable concern. This policy move intends to discourage solar panel adoption by changing how users are reimbursed for the power they create. It is motivated by the need to solve financial issues in the energy industry but the possible consequences of this action would make power even more expensive and hinder Pakistan’s efforts to develop alternative energy sources.

Many sources highlighted that an increase in the use of solar panels may raise the burden on non-users as low electricity consumption (replaced by solar) will add the extra cost of capacity charges (from IPPS) to non-users.

According to a statement from the Power Division, affluent people were installing solar panels in large quantities, which resulted in 25-30 million household, industrial, and government users as well as the government bearing the cost of Rs1.90 per unit under the subsidy category.

In addition to stating that the Net Metering Policy 2017 was designed to encourage the use of alternative energy in the system, the statement warned that “if this trend continues, the bills of poor consumers will surge at least Rs3.35 per unit.” The rate of solarisation increased dramatically after 2017. It stated that a new rate needed to be announced and that the entire system was currently being evaluated. Changes and proposals were being discussed to relieve the impoverished customers of additional load. It decided that the government would safeguard investments made through 1.5 to 2 million net metering.

The Author is MD IRP/Faculty Department of H&SS, Bahria University Karachi