The hybrid model seems to be no longer working. Recent policy changes have started a never-ending debate among solar consumers in the country who feel betrayed by the government. Nepra’s shift from net metering to ‘net billing’ is perhaps the most significant in rooftop solar policy since distributed generation first took off. Taking note of the outrage by a section of solar consumers, or those who were getting some return on their solar investment by selling surplus units to the government, the prime minister has now ordered the Power Division to appeal Nepra’s decision. According to experts, Pakistanis installed rooftop solar at an unprecedented pace in 2024, slashing national grid demand and diesel sales as households and farmers embraced cheaper, decentralised power. Their rapid adoption of solar caused national diesel sales to plummet by 35 per cent in a single year.
With rising rooftop installations, the country is now experiencing a visible duck curve. In high-solar months like March, midday demand collapses while evening peaks remain stubbornly high. As the sun sets, the grid faces a steep double ramp and a predictable price spike, what some analysts aptly call a sunset tax. On one level, the regulator has a point. Net metering has allowed solar consumers to sell low-value midday electricity at high retail prices and buy back expensive evening power, pushing costs onto everyone else. On this logic, experts suggest, moving towards net billing with export credits linked to the system marginal price (SMP) while compensating batteries and flexible resources for peak support is economically sound. Separating payments for capacity and networks (fixed charges) from energy (marginal pricing) is the right direction if Pakistan wants a fair, investable and stable grid. But there is another angle to it. Solar power made up less than 2.0 per cent of the energy mix in 2020 and reached 10.3 per cent in 2024, according to the global energy think tank Ember. But in a remarkable acceleration, it more than doubled to 24 per cent in the first five months of 2025, becoming the largest source of energy production for the first time.
But rooftop solar did not spread because of government generosity. It gained popularity because grid power became unaffordable, unreliable and inefficient. Households and businesses invested their own capital to cope with outages, soaring tariffs and systemic mismanagement. At a time when the country experienced extreme heatwaves, the people were left to deal with prolonged power outages. If the power was available, it came with another stress: soaring electricity bills that forced some households to sell their low-lying assets. From consumers’ perspective, the state failed first. What they did was a reaction. Now the rules are being changed. The recent debate also highlights the importance of consultations with all stakeholders. The PM’s latest directive also shows the administration’s lack of preparedness. Policies must be announced after all angles are carefully analysed. For now, the big challenge is to do something about transmission losses, governance failures, delayed reforms and entrenched cross-subsidies. If these structural problems persist, squeezing rooftop solar will not magically stabilise the grid.
