IN what appears to be a rushed, unilateral decision, the National Electric Power Regulatory Authority (Nepra) drastically slashed the incentives for rooftop solar adoption, replacing net-metering with net-billing for all existing and future prosumers.

The move aims to protect grid stability and contain solar penetration to prevent consumers going off-grid, but critics warn it raises regulatory risk and undermines investor confidence in renewable policy stability. Both the government side and the regulator have blamed prosumers with higherthan-approved solar capacity and non-metered solar homeowners for grid challenges and higher capacity charges.

The contractual changes were introduced through a predetermined set of regulations that had been published as a draft for public opinion on the proposed changes, but were notified without any change only a couple of days after the public hearing; even at the public hearing, reports suggest that Nepra restricted dozens of relevant consumers, independent think tanks and business representatives from suggesting alternative solutions.

That the regulator notified the same draft without changing a single clause indicated a predetermined conclusion.

‘Attempting to repair 100pc of the sector by tightening rules on 1pc of the national electricity system defies logic and distracts from deeper structural distortions’

The notification effectively terminates unit-for-unit energy exchange between prosumers and the grid under the net-metering framework.

Existing seven-year contracts will continue, but shift immediately to net billing with export credits reduced from three months to one month.

New applicants will receive five year contracts, and surplus power will be purchased from them at the National Average Energy Purchase Price of around Rs10 per unit compared to Rs26 under the existing contracts, while their grid consumption will be billed at Rs37-55 per unit, depending on the relevant slab, excluding taxes, surcharges and duties.

Capacity limits have also been tightened. Under the new regulations, prosumers will not be allowed to install solar systems for net-metering beyond their original sanctioned load, effectively reducing the capacity limit by 50 per cent.

The regulator stated that the new prosumer regulations provide clearer procedures, stricter technical requirements and a shift in billing methodology, aiming to better integrate small scale generation into the national grid while safeguarding system stability.

Compounded by heavy taxes, levies and surcharges, particularly the Debt Servicing Surcharge, these factors have collectively inflated electricity costs for consumers. The result has been a shifting of consumers towards decent ralised or off-grid solutions, further weakening demand for grid-based electricity, Nepra said.

During a parliamentary debate on a call-attention notice, Power Minister Awais Leghari defended the revised net-metering rules, arguing the move was about fair pricing, not being anti solar. He said total distributed solar generation was estimated at 20,00022,000 megawatt, of which only 6,000-7,000 MW was under net metering. Of this, around 2,200 MW was used by industrial units and 4,800 MW by commercial and domestic consumers.

Only 456,000 consumers use net-metering, he noted, dismissing claims that the wider public would suffer. Mr Leghari argued that these investors` annual returns would fall from 50pc to 37pc. Even so, he maintained that if general electricity tariffs declined by Rs1-1.5 per unit while investors still earned 37pc, the policy would serve the public interest.

Terming the revised policy broad daylight robbery, PPP leader Sharmila Faruqui objected to his “shifting the blame to net-metering users for burdening the national grid”.

“These consumers are the ones who followed the governments clean energy policy, she said, stressing that the government had taken a U-turn on their policies Now they are justifying it by blaming people who were at the forefront of your policy, Ms Faruqui said. She maintained that the Power Division was compensating for the cost incurred from line losses and transmission losses, their own inefficiency, inconsistency, corruption, line losses, and capacity payments from the people.

Rooftop solar has been one of Pakistan`s market-driven successes in expanding renewable energy. By dismantling net metering without a credible transition framework, the new regime risks pushing compliant solar users toward off-grid systems and weakening alignment with global energy transition trends that actively incentivise distributed generation, analysts say.

A Policy Research Institute for Equitable Development researcher told Dawn that the decline in electricity demand and the sector`s mounting financial stress are systemic problems.

They cannot be resolved by singling out one category of consumers and portraying them as a burden on others. Solarised prosumers account for barely 1pc of the national electricity system; attempting to repair 100pc of the sector by tightening rules on 1pc defies logic and distracts from deeper structural distortions.

According to him, these regulations must also be viewed within a broader policy narrative that increasingly frames solarisation as a threat to the grid. `The impression being cultivated is that net-metered consumers constitute a privileged class benefiting unfairly while shifting costs onto others. This is an oversimplification. Not every prosumer is affluent, and distributed solar adoption has often been a rational response to high tariffs and unreliable supply.

Seen alongside the tax on imported solar panels, he maintained, the amendments suggest a deliberate effort to slow solar growth through centralised control.

Far from an isolated move, this may signal further steps aimed at containing the country`s expanding solar transition.

In its detailed critique of the revisions in the rooftop solar adoption, the Sustainable Development Policy Institute said the changes framed as a corrective intervention to stabilise Pakistan`s power sector appear reactive and risk deepening, rather than resolving structural weaknesses.

Besides, the amendments raise questions about regulatory autonomy.

Interventions of this scale should emerge from independent, evidence-based analysis. When such deci-sions appear driven by short-term administrative pressures, they create the perception of diluted regulatory independence an unhealthy precedent for sector governance.

Moreover, it argued, the planning philosophy underpinning the amendments is fundamentally flawed. Pakistans electricity crisis is structural in nature, rooted in rigid capacity payments, longterm take-or-pay contracts, exchangerate indexed tariffs, and chronic demand suppression caused by high electricity prices. Net-metering did not create these distortions; it exposed them.

`Instead of treating net-metering as a regulatory inconvenience, policymakers should view it as a strategic asset.

Under the World Bank Country Partnership Framework, financing priorities could shift from adding new generation capacity to strengthening transmission networks, deploying storage solutions, and upgrading digital control systems. With distributed solar expanding, the binding constraint has shifted from generation scarcity to grid flexibility and resilience,` it ended.

Net-metering can also support fiscal reform. Under commitments made through the International Monetary Fund`s Resilience and Sustainability Facility, Pakistan has pledged to reduce untargeted power subsidies. Providing solar or solar-plus-storage systems to protected consumers, rather than recurring tariff subsidies, would permanently lower electricity bills and reduce fiscal burdens aligning welfare policy with energy reform.

In sum, the amendments offer shortterm cosmetic relief while sidestepping the hard reforms needed to address excess capacity, contract rigidity, and tariff misalignment.

Published in Dawn, The Business and Finance Weekly, February 16th, 2026