Beyond Net Metering: Pakistan’s Electricity Woes and the Search for a Sustainable Solution

The introduction of net metering regulations in 2015 marked a significant step towards promoting renewable energy use in Pakistan.

Pakistan’s electricity sector faces a critical challenge. While the country generates 94,121 GWh of electricity annually, translating to a theoretical per capita consumption of 392 kWh/year for its 240 million citizens, reality paints a concerning picture. The National Electric Power Regulatory Authority (NEPRA) reports a significantly higher actual per capita consumption of 644 kWh/year. However, despite this higher figure, it still falls short of global averages, representing only 18% of the world’s average, 7% of developed countries, and 12% of China’s average.

This low consumption hinders economic growth and social well-being. Recent strides in renewable energy adoption, particularly through net metering policies, offered a promising path forward. However, a proposed shift to gross metering threatens to undermine this progress. A comprehensive strategy is essential to ensure a sustainable and affordable energy future for Pakistan.

The Rise of Net Metering and its Benefits

The introduction of net metering regulations in 2015 marked a significant step towards promoting renewable energy use in Pakistan. This policy incentivized consumers to install solar panels or other renewable energy systems by allowing them to become mini power producers. Consumers could not only utilize the electricity they generated but also sell any excess back to the grid. This system, tracked by a special meter, resulted in substantial financial benefits for consumers through reduced electricity bills and fostered energy independence.

Net Metering empowers consumers to become more energy independent and rely less on the national grid.  According to the Private Power and Infrastructure Board’s (PPIB) website, by June 2023, Pakistan witnessed a remarkable increase in net-metering based solar installations, with over 63,700 systems boasting a cumulative capacity of 1,055 MW.

The Challenge of Gross Metering

The proposed shift from net metering to gross metering throws a wrench into the dream of energy independence for Pakistani citizens. In Gross metering system, all electricity generated by rooftop solar would be fed into the national grid. Consumers would then be forced to buy back their electricity needs from the power companies, often at significantly higher retail rates.

This disparity is stark. Consumers would be forced to sell their electricity at a meager rate of around $0.070 per kWh (19.32 rupees per unit), while repurchasing during the peak hour at a much steeper price of approximately $0.22 per kWh (62 rupees per unit) after factoring in surcharges. This massive price difference makes investing in solar panels financially unappealing, potentially leading to a sharp decline in rooftop solar adoption and hindering progress towards energy independence.

Pakistan’s Existing Electricity Sector Issues

Pakistan’s electricity sector faces deeper problems than just the net metering versus gross metering debate. A recent report by NEPRA reveals a troubling picture: significant financial losses due to inefficiencies. The report highlights a critical discrepancy – DISCOs ((Distribution Companies) are only allowed for losses of 13.41%, but actual losses are a staggering 17.13%. This massive gap, nearly quadruple the global average of 6-8% for technical and distribution losses, points towards serious issues within the system.

Furthermore, exorbitant electricity tariffs and persistent load shedding act as a double whammy for the system, particularly in areas with low bill recovery rates. This vicious cycle not only burdens consumers, who are forced to choose between paying high bills for unreliable electricity or resorting to expensive alternatives like private generators, but also creates difficulties for DISCOs in collecting crucial revenue streams.

In fact, the unreliable electricity supply has compelled Pakistani consumers to seek alternative solutions for power outages. Households in flats and housing societies have installed standby generators, while those with rooftop space have opted for solar panels.

Another significant issue exacerbating Pakistan’s electricity sector woes is the persistent reliance on outdated and fuel-inefficient power plants. These aging facilities demand costly maintenance, operate with lower energy conversion efficiencies, and heavily contribute to air pollution. The lack of policies aimed at phasing out these obsolete plants perpetuates a cycle of financial strain and impedes advancements towards a more contemporary and efficient energy sector.

The Looming Threat of Circular Debt

A major challenge plaguing the electricity sector is the issue of circular debt. This complex phenomenon arises from a multitude of factors, including unpaid bills by consumers, inefficiencies within DISCOs, and government subsidies for electricity that are not fully funded. This creates a financial bottleneck where DISCOs struggle to pay power producers, who in turn, are unable to invest in infrastructure upgrades or fuel purchases. This cycle not only stifles investment in the sector but also discourages new entrants and hinders overall growth.

The Role of Transmission Constraints

Pakistan’s power transmission infrastructure also presents a significant hurdle. The current network struggles to efficiently deliver electricity throughout the country, resulting in power losses and hindering efforts to integrate renewable energy sources. Upgrading and expanding the transmission network is crucial to ensure reliable and affordable electricity access for all citizens.

The Need for Technological Innovation

Technological advancements offer exciting opportunities to modernize Pakistan’s electricity sector. Smart grid technologies, for instance, can help optimize energy distribution, reduce losses, and improve overall efficiency. Additionally, advancements in energy storage solutions can facilitate the integration of intermittent renewable energy sources like solar and wind power into the national grid. Investing in research and development, as well as creating a regulatory framework that encourages the adoption of these technologies, is essential for a sustainable energy future.

The Human Factor: Capacity Building and Public Awareness

A successful transition to a sustainable and efficient energy sector requires not only infrastructure development and policy changes but also investment in human capital. Capacity building programs for engineers, technicians, and policymakers are essential to ensure the skilled workforce needed to manage a modern energy system. Additionally, public awareness campaigns can play a crucial role in promoting responsible energy consumption and encouraging citizen participation in renewable energy initiatives.

The Path Forward: A Comprehensive Strategy

The path forward for Pakistan’s electricity sector demands a bold and comprehensive strategy. A reliable and affordable electricity supply is the cornerstone of both economic prosperity and social well-being.

To unlock its full potential, Pakistan must break free from the stranglehold of high costs and short-sighted policies. The solution lies in a multi-pronged approach. Innovative financing mechanisms, such as public-private partnerships and green bonds, can attract much-needed investment in renewable energy projects. Additionally, establishing stable and predictable regulations is crucial to foster private sector confidence. However, a sustainable future requires going beyond just economics.

Pakistan’s energy strategy must seamlessly integrate economic, environmental, and social considerations. By taking these decisive steps, Pakistan can finally unshackle itself from the constraints of its outdated electricity sector and unlock a brighter future powered by clean, affordable, and reliable energy.

Abdul Waheed Bhutto
Abdul Waheed Bhutto
Prof Abdul Waheed Bhutto is a distinguished academic, accomplished researcher, and visionary administrator with over two decades of experience. He serves as a Professor and Pro-Vice-Chancellor at Dawood University of Engineering and Technology (DUET), Karachi. His work focuses on climate change, renewable energy, and sustainable development, with numerous high-impact publications. He is widely recognized for his expertise and commitment to education and sustainability. His insights on these topics are frequently featured in international current affairs forums.