Following a 3 year consultation process between the Alternative Energy Development Board (“AEDB”) and the National Electric Power Regulatory Authority (“NEPRA”), and a period of consultation from various stakeholders, NEPRA has approved Net Metering Regulations for Pakistan (“Regulations”).

The Regulations, which take effect from 1 September 2015, are one of a number of government initiatives introduced this year aimed at increasing investment in distributed renewable energy in Pakistan, the other initiatives being:

  • the elimination of the 32.5% import tax on solar panels; and
  • the so-called “Green Market” - a scheme approved by the State Bank of Pakistan and AEDB whereby financial institutions can provide loans for residential solar installations as housing finance rather than personal finance, meaning lower interest rates and longer terms.

The Regulations only apply to solar and wind installations up to 1MW.

Net metering

Net metering is a billing mechanism for homes and businesses which generate renewable electricity on site (eg, through solar PV panels) and provide that energy to the grid. A net metered property draws electricity from, and delivers electricity to, the grid. There is a single connection point to the grid, where a two-way meter is (or two meters are) installed which measures the quantity of outgoing electricity and the quantity of incoming electricity and nets them off against each other.

At the end of each month, if the property produced more electricity than it consumed then the electricity supply company will pay the owner for the excess electricity supplied at the going off-peak tariff rate (excluding taxes and levies, etc), which tariff is set by the Government. If the property consumed more electricity than it produced then the owner must pay the electricity supply company for the excess electricity consumed at the going tariff rate (including taxes and levies, etc).

Any payments that are due to the owner are credited against the next month’s bill or paid quarterly.

Participation in the scheme

To participate in the net metering scheme, the applicant must:

  • be a 3 phase 400V or 11kV customer of a distribution company (a “DISCO”) in Pakistan;
  • ensure the works above are undertaken in accordance with the requirements set out in the Regulations, and notify the DISCO once the works are complete so the DISCO can arrange for an electrical inspector to test the system and, if satisfied, connect the system to the grid;
  • pay connection charges to the DISCO (for connecting the system to the grid), and reimburse the DISCO for the reasonable cost of any improvements/works to the grid which are needed solely to accommodate the particular connection;
  • pay a one-off fee to NEPRA of up to PKR 5000, depending on the size of the installation; and
  • obtain and maintain insurance for third party personal injury and general commercial liability.

Once connected:

  • the DISCO has the right to enter the property at reasonable times to test the system;
  • the DISCO may disconnect the system at any time if there is a fault with the connection or supply (eg, if the technical requirements of the electricity supplied are not met);
  • the Connection Agreement continues for 3 years, at which time it is automatically renewed unless the DISCO has NEPRA’s approval to terminate it; and
  • if the owner sells their house or business premises, they must obtain the DISCO’s consent to the Connection Agreement being assigned to the new owner, which must not be unreasonably withheld or delayed by the DISCO.

Impact

The introduction of the Net Metering Regulations (along with the Pakistan Government’s other renewables initiatives) should encourage an increase in distributed renewable energy generation, which would help ease stress on the national grid.