Net metering has, in recent months, become one of the most heated and polarising policy debates in Pakistan. For some, it represents a progressive, green reform that encouraged clean energy adoption and reduced pressure on the national grid. For others, including the government, it became an unsustainable subsidy that transferred costs from wealthier households to lower- and middle-income electricity consumers.
The government has now effectively ended net metering in its previous form. Its reasoning is straightforward: the policy was resulting in a cross-subsidy in which those who could afford to invest millions of rupees in rooftop solar systems were able not only to eliminate their electricity bills but also to sell surplus power back to the government-run grid at favourable rates.
The financial burden created by this arrangement did not vanish into thin air. It was absorbed by distribution companies, whose losses were ultimately passed on to ordinary consumers, disproportionately those who could not afford solar installations in the first place.
It is important to clarify what ending net metering does and does not mean. It does not mean that households or businesses with solar panels will stop saving on their electricity bills. They will continue to benefit from generating their own electricity and reducing their reliance on the grid. What has changed is that they will no longer be able to sell unused units back at rates that effectively turned their solar systems into profit-generating ventures.
Over the past few years, solar adoption surged dramatically. Rising electricity tariffs, frequent load-shedding, and falling solar panel prices made rooftop systems an attractive investment. Grid consumption dropped by billions of units as more affluent consumers shifted to self-generation. On the surface, that might sound like a success story — reduced demand on the grid and cleaner energy production. But beneath that narrative was a growing financial imbalance.
Power distribution companies still carry fixed costs: maintaining transmission lines, servicing debt, paying capacity charges to independent power producers, and keeping the system operational. When high-consumption, high-paying customers reduce their draw from the grid, the system’s fixed costs do not shrink proportionally. Instead, they are redistributed among the remaining consumers. In Pakistan’s case, this reportedly contributed to losses running into over Rs 100 billion in recent years — losses that were ultimately socialised across the broader consumer base.
The core principle is simple: public policy should not create a system where the relatively poorer consumer finances windfall gains for the relatively richer one
The result? A regressive transfer. Those unable to afford a Rs 2 to 3 million solar installation — typically lower- and middle-income households — ended up paying higher tariffs in a system that also rewarded wealthier consumers with windfall gains. That is the core equity question at the heart of this debate: why should public policy subsidise those who are already better off, especially when the subsidy is financed by those who are not?
Supporters of net metering argue that early incentives are necessary to promote renewable energy and that rooftop solar reduces the country’s reliance on imported fuels. Both points carry weight. Pakistan urgently needs to diversify its energy mix and reduce its circular debt crisis. Distributed solar can play a role in that transition. But policy design matters. Incentives that may have been justified at an early adoption stage can become distortive once uptake accelerates and fiscal pressures mount.
There is also a conceptual distinction that deserves emphasis. Installing solar panels to reduce one’s electricity bill is an efficiency decision. Turning that installation into a revenue stream guaranteed by the state is something else entirely. The purpose of rooftop solar, for most households and businesses, should be cost savings and energy independence — not arbitrage against a financially strained public grid.
Ending net metering in its earlier form does not eliminate the attractiveness of solar. It recalibrates it. Those who invest in solar will still shield themselves from tariff hikes and outages. They will still enjoy lower monthly bills compared to those fully dependent on grid power. What they will not enjoy is the additional windfall that came from exporting excess units at generous buyback rates.
Critics fear that the policy shift could slow renewable energy growth. That risk should not be dismissed. The government must ensure that any transition is managed carefully and transparently. Clear communication, fair buyback mechanisms aligned with actual avoided costs, and long-term regulatory certainty are essential. Abrupt or poorly explained policy reversals can undermine investor confidence not only in the energy sector but across the economy.
At the same time, the broader public interest cannot be ignored. Pakistan’s electricity system is already burdened by structural inefficiencies, capacity payments, and chronic circular debt. Any reform that exacerbates inequities or deepens financial imbalances must be reconsidered. If the state is to subsidise anyone, it should be the most vulnerable — not those with the capital to install private generation systems.
The debate ultimately comes down to fairness and sustainability. A green transition that widens inequality will struggle to maintain political legitimacy. A policy that reduces emissions but increases tariffs for the poor risks backlash and instability. Conversely, a recalibrated approach that promotes renewable energy while protecting lower-income consumers can strike a more durable balance.
Solar energy is not the villain here. Nor are those who invested in it under the previous rules. The issue is structural design. Incentives should accelerate adoption without distorting markets or imposing hidden costs on others. As solar technology becomes cheaper and more widespread, the justification for generous cross-subsidies diminishes.
In the end, the core principle is simple: public policy should not create a system where the relatively poorer consumer finances windfall gains for the relatively richer one. If rooftop solar continues to offer significant savings, and it will, that alone is a powerful incentive. It does not need to double as a state-backed profit scheme.
Pakistan’s energy challenges are immense, and no single reform will solve them. But aligning incentives with equity is a necessary starting point. The transition away from net metering as it existed may be contentious, but it raises a legitimate question: who pays, and who benefits? In a country where affordability remains a daily struggle for millions, that question cannot be brushed aside.