SOLAR net metering reforms are back in the limelight. On Thursday, Power Minister Awais Leghari announced that he will soon present a revised strategy for reforming the existing policy. One can expect another round of heated debate to follow. It is important to understand what is at stake. The current policy allows solar users to sell their surplus electricity to the national grid at generous rates. With moderate investments, many users have been able to drastically slash their electricity bills thanks to this policy. Its spillover costs, however, are now increasingly being borne by ordinary grid users, ie, those who do not or cannot have solar net metering. The economics behind this are straightforward: the fixed costs of energy production, transmission, and distribution have to be passed on to ordinary users, whose numbers are falling. Not only that, but the current tariff structure also subsidises underprivileged segments at the expense of the country’s elite by charging different rates based on consumption. Since most net metering customers typically come from privileged segments, Discos are losing consumers who were previously absorbing the costs of subsidies for ‘protected’ classes.

It is, therefore, quite simple to see why this is a significant problem. The authorities believe they may be able to mitigate the unanticipated fallout of the solar transition by revising the policies that incentivise solar adoption. This is not, in principle, an unfair move, whatever critics may say. The costs of maintaining a functioning and adequate national power generation and supply infrastructure cannot be borne disproportionately by those who can least afford it. What does seem unfair, however, is how policymakers appear more concerned about curtailing solar than about controlling other factors that contribute to high tariffs. For example, curtailing transmission and dispatch losses will substantially lower tariffs, but this doesn’t seem to be as high a priority. This tendency, to reach for the lowest hanging fruit instead of taking difficult measures, has defined Pakistani policymaking for decades. It is why solar policy reform remains politically difficult: the people are just not convinced. A credible reform package would require the government to tackle deep-rooted inefficiencies, such as transmission losses and theft, alongside changes to solar incentives. Without that, public trust will erode further, and those with means may simply exit the system altogether, leaving a weaker grid and a heavier burden on the poorest.

Published in Dawn, July 12th, 2025