Solar or not? Inefficient energy sector makes case for revisiting solar energy policy

Solar or not? Inefficient energy sector makes case for revisiting solar energy policy


Capacity payments on the rise amid less consumption from the national grid

  • The attractive off-grid solution is producing now 3,000 megawatts of electricity as affluent consumers are rushing towards cheaper alternate energy
  • Sources say people from low income groups using on-grid power can see Rs3.35 per unit tariff hike
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ISLAMABAD (Dunya News/Web Desk) – Pakistan’s economic woes are so complicated that it isn’t ready to take advantage of the record decrease in the prices of solar panels and related products, as the inefficient power sector can’t afford the transformation despite the tall claims made by the government.

Read more: Maryam approves solar energy pilot project for low-income groups

That’s the Ministry of Energy has started working on drafting a new solar energy policy, sources say, after the expedited process of solarisation became a challenge for national grid, which is suffering from line losses and costly power generation – a product of rupee devaluation and the agreements signed with independent power producers (IPPs), through which the tariffs are set in dollar.

Hence, rising capacity payments despite a constant decline in electricity consumption due rising tariffs and economic stagnation means the authorities can’t afford the affluent consumers shifting to solar power.

Ironically, it was the PML-N government which had introduced the current net metering policy in 2017 to boost the alternate energy sources and the same party in 2024 is going for revisiting the initiative to fight “too much solarisation” – despite a favourable global market .

The reason is simple: The wealthy consumers use the bulk of electricity and opting for solar energy means a reduced power consumption, when the government has to pay the capacity charges according to the generation capacity, not the actual generation.

After the formulating the policy, the sources say, the ministry will present the document before the federal cabinet for final approval.

It is said that a total of 55 million units of electricity were purchased from those producing solar energy, who sale the sell the excess production through net metering and the ministry wants to reduce the rate.

According to the sources, net metering results in an additional burden of Rs110 billion to the on-grid consumers – those who buy electricity from national grid. The revised rates, they added, would help dealing with the capacity payments.

The extent of the solar panel rush can be gauged by the fact that there has been a 60 per cent increase in solar power consumers in just one year, propelling the total solar power production to 3,000 megawatts.

It is claimed that net metering for solar power consumers is resulting in an additional burden of Rs1.90 per unit for both the consumers and the government and the low-income on-grid consumers will see another electricity tariff hike of Rs3.35 in case the policy remains unchanged.

Meanwhile, the current state of affairs also means that Pakistan isn’t able to promote alternate energy, also called renewables, and reduce dependence on fossil fuels at a time when it is one of the worst-affected countries by global warming/ climate change.