Nepra Proposes Major Overhaul of Net-Metering Policy, Cutting Solar Incentives
A new regulatory framework released by Pakistan’s National Electric Power Regulatory Authority (Nepra) seeks to significantly curtail the benefits of net-metering for solar power consumers, a move intended to stabilize the nation’s struggling power utilities. The proposed regulations, open for public comment for 30 days, would drastically reduce the size, lifespan, and financial returns of net-metered solar installations.
ISLAMABAD – In a decisive move to address the financial strain on Pakistan’s power sector, Nepra formally released the draft Prosumer Regulations, 2025, on Tuesday. This action precedes the planned repeal of the Alternative and Renewable Energy Distributed Generation and Net Metering Regulations, 2015. The overhaul aims to strike a balance between the interests of electricity providers and consumers, while simultaneously preventing net-metering from becoming a highly profitable venture.
Shrinking Solar Capacity and Contract Lengths
Under the proposed rules, prosumers – individuals and businesses who both consume and produce electricity through solar power – will face significant limitations. They will be restricted from installing solar systems with a capacity exceeding their originally sanctioned load, effectively cutting potential capacity by 50%. For instance, a consumer with a 10-kilowatt (kW) sanctioned load would now be limited to a 10kW solar net-metering system.
Currently, prosumers are legally permitted to install solar systems up to 150% of their sanctioned load. A 10kW consumer can presently utilize a 15kW solar system for net-metering. However, existing consumers with systems already in place will not be affected by these changes until their current seven-year contracts expire.
Furthermore, the lifespan of new net-metering contracts will be reduced from seven years to five, with renewal possible for an additional five years only through mutual agreement between distribution companies and consumers, and without any guaranteed obligation.
Reduced Payments for Surplus Energy
A key component of the proposed regulations involves a substantial reduction in the rate paid to prosumers for surplus energy fed back into the national grid. Prosumers will now receive the National Average Energy Purchase Price (NAEPP), estimated at approximately Rs13 per unit, a significant decrease from the current rate of around Rs26 per kilowatt-hour (kWh).
Addressing Utility Concerns and Grid Stability
The move comes after repeated unsuccessful attempts by the power division to address the growing financial challenges faced by distribution companies (Discos). According to a senior official, the regulations are an attempt to protect “an expensive and inefficient power utility business from irrelevance and complete collapse.”
Just last week, Nepra itself described the quality of service provided by Discos as “sub-optimal,” noting that high taxes, levies, and surcharges contribute to inflated electricity costs. This has led to a growing trend of consumers shifting towards decentralized and off-grid solutions, further diminishing demand for grid-based electricity. On-grid solar installations have already surpassed 6,000MW, with total solar capacity exceeding 13,000MW.
The proposed regulations also aim to improve the integration of small-scale power generation into the national grid while ensuring system stability. This will be achieved through clearer procedures, stricter technical requirements, and a revised billing methodology.
Streamlined Application Process and Technical Scrutiny
The new regulations outline a detailed and time-bound application process for prosumers. Discos are obligated to provide all necessary information and Nepra-approved documents free of charge within two working days of a request. Licensees must acknowledge applications within five working days, indicating completeness, and applicants have three working days to submit any missing documentation.
A critical restriction involves a capacity cap at the transformer level. Discos are prohibited from approving new applications if the cumulative distributed generation capacity connected to a specific distribution transformer reaches 80% of its rated capacity, preventing potential overloading and technical instability.
For larger installations – those exceeding 250kW – applicants will be required to submit a load flow study conducted by either the Disco or a third-party consultant registered with the Pakistan Engineering Council. The Disco will then conduct a technical review within 15 working days to assess feasibility.
Following agreement execution, Discos must provide an estimate for connection charges within seven working days, and prosumers are required to remit payment within another seven days. Interconnection and commissioning must then be completed within 15 working days.
The proposed regulations represent a significant shift in Pakistan’s net-metering landscape, signaling a concerted effort to address the financial vulnerabilities of the power sector and ensure a more sustainable energy future.
Published in Dawn, December 17th, 2025.
