Pakistan is witnessing a paradox rarely seen in developing economies: citizens are moving faster towards clean energy than the state itself. Rooftop solar has spread across urban neighbourhoods and semi-urban settlements not because of idealism or climate commitments, but because grid electricity has become prohibitively expensive and unreliable. Yet just as this bottom-up energy transition began easing pressure on household finances and foreign exchange reserves, the government has once again chosen to change the rules.
The recent recommendation by the National Electric Power Regulatory Authority (NEPRA) to shift from net metering to gross metering, alongside reduced buy-back tariffs for new solar consumers, has reopened a fundamental question Pakistan has avoided for decades: why does the country revise energy policy every year, sometimes every quarter, and why can it not commit to a long-term framework?
Over the past four years, Pakistan has imported more than $4 billion worth of solar panels, while rooftop solar capacity under net metering has crossed 6,000 megawatts. In financial year 2024 alone, grid electricity sales declined by 3.2 billion units, causing losses of roughly Rs 101 billion to distribution companies. This shift also exposed a deeper structural flaw in the power sector: capacity payments to independent power producers (IPPs), which now exceed Rs 1.9 trillion annually, are payable regardless of whether electricity is consumed or not.
Faced with falling demand and rising fixed costs, the state opted for a familiar response: tariff adjustment instead of structural reform. Under the proposed gross metering regime, new solar users will sell electricity to the grid at around Rs 11.30 per unit, while purchasing grid power at full consumer tariffs that can exceed Rs 50 per unit. Existing net-metering consumers will retain the earlier rate of Rs 22 per unit only until their seven-year contracts expire.
Technically, this may stabilise distribution company accounts in the short term. Strategically, it sends a deeply damaging signal: any investment in Pakistan’s energy sector remains vulnerable to policy reversal.
Energy transitions do not occur under uncertainty. Countries that successfully scaled solar and renewables, from China and Vietnam to India and Morocco, did so by offering 10- to 20-year tariff visibility, not by revisiting policy every budget cycle. Pakistan, by contrast, has normalised instability.
Pakistan does not need a perfect energy policy; it needs a predictable and credible one
This volatility has consequences far beyond solar. Despite recent macroeconomic stabilisation, business activity remains subdued. Investors hesitate not because tariffs are low, but because they can change overnight. Households hesitate because today’s incentive may become tomorrow’s penalty. In effect, policy uncertainty has become an invisible tax on confidence.
Capacity payments are the real problem. The prevailing narrative increasingly frames rooftop solar as a burden on the grid and on poorer consumers. This framing is incomplete. The true burden lies in rigid power purchase agreements signed over decades, where private producers face minimal risk while consumers absorb all volatility.
When demand falls, capacity payments remain fixed. When solar reduces grid consumption, costs are merely redistributed to those still dependent on the grid, largely middle- and lower-income households. Penalising solar users does not resolve this distortion; it merely conceals it.
The rational response would be to expand electricity demand, not suppress clean generation.
Pakistan’s failure to electrify transport is the clearest illustration of policy myopia. If surplus electricity exists, why is it not being consumed by electric motorcycles, rickshaws, buses, and cars?
Across Asia, governments have answered this decisively. India mandates charging points in commercial buildings and fuel stations. China pairs time-of-use tariffs with mass electric vehicle adoption. Bangladesh has electrified large segments of its informal transport through electric three-wheelers.
Pakistan, meanwhile, has a handful of charging stations in major cities, no mandate for petrol pumps to install chargers, no affordable night-time charging tariff, no national electric motorcycle policy, and no coordinated plan to electrify urban transport.
Paying capacity charges for unused power while importing billions of dollars’ worth of fuel is not an energy strategy; it is economic negligence.
Another troubling narrative suggests solar primarily benefits wealthy households. While early adopters are indeed better off, this ignores solar’s transformative potential for rural Pakistan, where many villages still lack reliable grid access. Just as mobile phones and branchless banking integrated millions into the formal economy, decentralised solar can integrate rural households into productive energy use: powering irrigation, small workshops, cold storage, and home-based enterprises. But such outcomes require long-term planning, concessional financing, and institutional coordination, none of which can survive under constantly shifting tariffs.
Pakistan does not need a perfect energy policy; it needs a predictable and credible one. At the very least, the government must commit to 10–15-year solar tariff frameworks with transparent schedules so households and investors can plan without fear of sudden reversals. All existing solar investments must be unambiguously grandfathered, with contracts honoured in both letter and spirit, because policy credibility collapses the moment retrospective changes are introduced.
At the same time, the focus must shift decisively from endless additions to generation capacity towards creating electricity demand, particularly through electric mobility—motorcycles, rickshaws, buses, and cars—so surplus power is productively consumed rather than paid for as idle capacity. Structural reform of capacity payment arrangements is equally urgent; their costs must be addressed at the source, not socialised across consumers while clean energy adopters are penalised.
Finally, Pakistan needs an independent energy transition body, staffed with experts in energy economics, grid management, climate policy, and technology, rather than generalist administrators, so long-term planning can replace reactive, short-term decision-making.
Solar energy is not the problem. Citizens adapting to survive are not the problem. The problem is a state that governs reactively rather than strategically.
A country that revises its energy policy every year cannot industrialise, decarbonise, or plan its future. Stability is not a luxury; it is the most powerful incentive a government can offer. If Pakistan is serious about clean energy, economic revival, and intergenerational equity, it must stop improvising and start committing—not for the next quarter, but for the next decade.