Despite government explanation, net metering and tax controversy clouds future of Pakistan's solarization
KARACHI: Despite the government's ambitious plans, disputes over net metering and imposition of new taxes cast a cloud over Pakistan's solar energy transition, officials said on Monday, adding that the situation remains uncertain. He added that he was in a safe condition.
In 2017, Pakistan approved a net metering policy that allows consumers to sell excess electricity generated by their solar PV systems to electricity distribution companies, resulting in significant savings on their monthly bills.
However, the Department of Energy controversially declared last month that net metering encourages “unsound investments” in solar installations by wealthy households and industrial consumers and suggested lower buyback rates. brewed.
“Before this [controversy]people were moving to solar power [energy] I even thought Pakistan was 100 percent solar energy-embraceable,” Zulfiqar Ali, a solar panel importer, supplier and installer, told Arab News on Monday.
“Now, amid talk of a government review of solar energy policy, we are witnessing a stark contrast, a slowdown in inquiries and stalled projects.”
Mr Ali said the net metering issue had a huge impact on the market as purchasing bodies suddenly went silent and ongoing transactions stalled. “Planned projects are idle and people can't say yes or no,” he added.
Recent reports by local media about new taxes and the abolition of net metering policies have further complicated the situation, prompting Energy Minister Awais Leghari to explain the government's position on the issue.
“We completely reject these stories. The contracts we have with net metering customers will not be changed in any way for five, six or seven years and the government will We will not damage the reputation of the company or cause any inconvenience to net meter users,” Leghari said at a press conference in Lahore on Sunday.
He said the government was fully committed to renewable energy and solar power and was in favor of continuing the net metering policy.
“We will review this over the next few months and, if amendments are necessary, we will do so responsibly, in consultation with stakeholders,” Legali said.
“We will streamline this as necessary once we have government-wide approval. At this time, we are committed to fulfilling all the contracts we have entered into with various people. We will protect our integrity and move forward together.”
But despite government assurances, there is an atmosphere of uncertainty in the South Asian country when it comes to solar power.
“I wanted to install solar panels on my roof to reduce the impact of high electricity bills, but I can’t make a decision now because the government wants to tax the panels or cut net meter benefits.” said Khalid Abbas. The Karachi resident added that he would wait for clarification on the matter.
Solar panel suppliers said people who had sold their cars or jewelry to buy solar panels had stopped buying the equipment.
“Residential consumers who wanted to install 5-20KW panels are standing still and waiting for clarity,” Zulfikar said.
Pakistan's energy problems are mainly due to high electricity costs due to capacity charges as high as 65 percent, meaning the country has to pay electricity companies even though power plants are shut down.
According to Pakistan's indicative tariffs for the fiscal year, the power purchase price (PPP), or average price per unit based on the cost of generation, is Rs 20.60, which includes capacity charges of Rs 14.09, fuel charges and variable charges of Rs 6.21. . From 2023 to 2024.
Pakistani energy experts believe the increase in solar energy is still “insignificant” and accounts for less than 1 percent of the country's total electricity generation.
“But given what is happening in Pakistan, a significant portion of the net metering will probably be done from Pakistan,” energy economics expert Dr. Khalid Waleed told Arab News. “About 2,000MW will be delivered through net metering. So we should not be discouraged at all.”
When consumers switch to solar power, other consumers incur capacity charges, ultimately increasing their electricity bills, Walid said.
Experts say the country will not be able to eliminate capacity charges by 2050 because of long-term contracts with power companies.
