How to Apply for Net Metering in Pakistan? The Ultimate Guide
Net Metering in Pakistan: Pakistan’s energy landscape has long been suffered by problems such as insufficient supply, rising costs, and heavy dependence on fossil fuel-based energy resources. Pakistan also regularly experiences power outages that not only disrupt daily life but also hamper economic development and growth. With the exponential increase in electricity demand, it becomes essential to find innovative and sustainable solutions to bridge this widening energy gap.
In this context, net metering represents a beacon of hope for Pakistanis. Using renewable energy sources such as solar panels, net metering offers a way out: taking pressure off the national grid while giving individuals and businesses more control over their energy use. Net metering is an empowering mechanism that allows consumers to generate their own electricity through solar panels, reducing reliance on conventional sources and reducing pressure on an already overburdened energy infrastructure.
In this article, we delve into the concept of net metering in Pakistan and highlight its importance in the country’s energy environment. Let’s start with the basics.
What is Net Metering?
Net metering is a mechanism that allows consumers to generate electricity from renewable sources, such as solar panels or wind turbines, and send the excess electricity they generate back into the grid to offset their energy use.
Net metering works on a straightforward, simple principle:
When a consumer’s renewable energy system produces more electricity than they need, the excess electricity is automatically sent back to the grid and then credited back to the bill, effectively moving their meter backward.
However, at other times, when their production falls below their demand, they draw power from the grid as usual.
A distinctive feature of net-metering is its “net” component, which measures the difference between energy consumed from the grid and exported back to the grid. Customers are only billed for the “net” electricity consumed, i.e., the energy consumed minus the energy produced.
In this sense, it offers individuals and businesses the opportunity to become active participants in energy production, not only by reducing dependence on conventional energy sources but also by feeding clean green energy back into the grid.
In the following sections, we delve deeper into how net metering works in Pakistan, the stakeholders, and the policy and regulatory framework that guides its implementation.
How Net Metering Work in Pakistan?
Net metering in Pakistan operates under a well-defined policy and regulatory framework that provides guidelines and mechanisms for its implementation. The regulatory body overseeing net metering in the country is the National Electric Power Regulatory Authority (NEPRA).
In 2015, NEPRA introduced the Net Metering Regulations for Renewable Energy Systems, which laid the foundation for the implementation of net metering. These regulations describe eligibility criteria, technical requirements, and billing mechanisms for consumers participating in net metering programs.
Under NEPRA regulations, net metering is available to domestic (residential), commercial, industrial, and agricultural consumers who install renewable energy systems with a capacity between 1 kW and 1 MW. Renewable energy sources include solar, wind, biomass, and hydropower.
Under the net metering policy, distribution companies (DISCOs) like IESCO, LESCO, PESCO, KE, MEPCO, etc. play a vital role in facilitating the implementation process. DISCOs are responsible for assessing applications, inspecting renewable energy systems, and installing a two-way meter that measures energy imported and exported to the grid.
Once the net metering system is installed, DISCOs are responsible for monitoring and recording electricity consumption and exports. They calculate the net energy consumed and bill the consumer accordingly. If the consumer produces more electricity than they use in the billing period, the excess is transferred as a credit to adjust in future electricity bills.
NEPRA’s net metering policy promotes an enabling environment for consumers to invest in renewable energy systems and benefit from the associated financial incentives. It supports the growth of a sustainable energy market in Pakistan and supports the country’s overall energy goals.
Eligibility Criteria for Net Metering in Pakistan
You can only use the benefits of net metering if you meet the following criteria:
- You are installing a system for residential, commercial, industrial, and agricultural use. It covers pretty much every industry, so most consumers qualify.
- The capacity of the renewable energy system should be at least 1 kilowatt and should not exceed 1 MW.
- The consumer must have a 3-phase 400V connection. Some consumers who do not have a 3-phase connection may request a 3-phase connection before requesting network metering.
- The customer must have a valid and active electricity connection from the Distribution Company (DISCO). Again, most consumers would qualify.
- The consumer should own or have a long-term lease agreement for the premises where the renewable energy system is installed.
- A renewable energy system should meet the technical standards and requirements set by the National Electricity Regulatory Authority (NEPRA).
For example, grid-connected inverters must comply with UL 1741, which deals with the electrical interconnection design of various forms of production equipment. Other standards that DG devices should adopt are IEEE 1547 2OO3 (standard for interconnection of distributed energy sources), IEC 61215 for crystalline PV modules, and IEC 61646 for thin-film PV modules.
- The consumer must obtain all necessary permissions and approvals from the relevant authorities, including DISCO and NEPRA. You don’t have to worry about it—your solar installer will take care of it for you.
- It is the responsibility of the consumer to ensure that the renewable energy system is installed by an accredited and certified installer.
- The consumer must comply with safety regulations and obtain the required certifications for the renewable energy system.
- The consumer must sign a net metering agreement with the DISCO, which sets out the terms of participation in the net metering program.
It is important for consumers interested in net metering to read the specific guidelines and requirements laid down by the respective DISCOs and follow the application process outlined by the regulators. Adherence to the eligibility criteria ensures smooth and compliant participation in the net metering program in Pakistan.
How Are You Compensated for Net Metering in Pakistan?
In Pakistan’s net metering program, participating consumers are compensated for the excess electricity they generate and feed back into the grid. The compensation mechanism ensures that consumers receive fair value for the excess energy they contribute.
As per NEPRA net metering rules, the compensation is primarily based on the concept of ‘clean energy billing’. This means that consumers are charged for the net electricity consumed from the grid, which takes into account both imported and exported electricity.
Let’s simplify how the net metering process works in Pakistan:
1. Billing Calculation
The Distribution Company (DISCO) measures the electricity consumed by the consumer and the electricity exported to the grid using a two-way meter. This meter accurately records energy flow in both directions.
2. Net Energy Calculation
DISCO calculates the net energy consumed by subtracting the exported energy from the imported energy during the billing period. Net energy is the electricity consumed by the consumer after accounting for the excess electricity produced.
3. Billing Adjustment
The consumer is charged only for the net energy consumed from the grid. If the consumer produces more electricity than he consumes during the billing period, the excess energy is transferred as a credit.
4. Credit Utilization
Credit accumulated from excess energy can be used to offset future electricity bills. It is applied against the future net energy consumption of the consumer, thereby reducing the amount payable to the DISCO.
If you produced more than you consumed, the credit will roll over to the next month. If next month, the credit will be transferred again. After three months, when the exported energy is greater than the energy you consumed, you will be compensated for the excess electricity.
5. Tariff of Net Metering in Pakistan
Currently the net tariff in Pakistan is Rs. 19.32/kWh, as per NEPRA rules. In the last quarter of 2022, NEPRA considered reducing the tariff to Rs. 9/kWh but was strongly opposed by civil society, stakeholders, and solar activists. As a result, they decided not to revise the tariff.
When considering the purchase price of electricity, it is also worth mentioning that DISCOs buy back electricity at off-peak prices. Off-peak rates are low compared to peak times. Regardless of when you send electricity back to the grid, you will be compensated off-peak.
It is also important to note that the specific compensation mechanism may vary slightly between different DISCOs or according to applicable regulations. Consumers should therefore read the terms of their net metering contract to understand the compensation structure and billing process specific to their DISCO.
The Application Process for Net Metering in Pakistan
1. Preparing Documentation
Start by gathering the necessary documentation needed for your application of net metering in Pakistan. This usually includes identification documents, proof of ownership or a long-term rental agreement, and a copy of the most recent electricity bill.
2. Selecting an Accredited Installer
Get a certified and accredited installer to install your renewable energy system. Make sure they have the necessary expertise and experience in setting up the specific type of system you plan to install.
3. Technical Evaluation
The distribution company (DISCO) will carry out a technical evaluation of the proposed system of renewable energy sources. This assessment also ensures that the system meets the technical requirements and safety standards set by the National Electricity Regulatory Authority (NEPRA). DISCO may visit the premises to assess the feasibility and compliance of the installation.
4. Application Submission
Submit the completed net metering application to DISCO along with all required documentation. The application form can be obtained from the website or from the DISCO office. Sample requests and agreements are listed in the annexes of this document.
Make sure all fields are filled in accurately and all supporting documents are provided.
5. Application Review and Approval
DISCO will review and also verify the application for eligibility criteria, technical details, and regulatory compliance. This process may take some time, and additional information or clarification may be requested. Once the application is approved, the DISCO will provide an acceptance letter or notification.
6. Installation and Inspection
Once you receive approval, coordinate with an accredited installer to proceed with the installation of the renewable energy system. DISCO will schedule an inspection to ensure that the installation meets the technical and safety requirements of the Net Metering Regulations.
7. Meter Installation
The DISCO will install a two-way green meter as shown below, which will accurately measure imported and exported electricity. This meter enables accurate billing and calculation of net energy consumed.
8. Agreement Signing
Before putting the net metering system into operation, the consumer must sign a net metering contract with the DISCO. This agreement describes the terms of participation in the net metering program, including billing, compensation, and liability of both parties.
It is important to note that the application process may vary slightly between different distribution companies (DISCOs). Your installer will take care of this, but if you’re planning to DIY, visit your DISCO branch to get an accurate idea of the process.
Benefits of Net Metering in Pakistan
Net metering offers a number of significant benefits to both consumers and the overall energy environment in Pakistan.
Here are some key benefits of implementing net metering in Pakistan:
1. Cost Savings
Net metering allows consumers to generate their own electricity, reducing their dependence on the conventional electricity grid. By offsetting their energy consumption with the excess energy they produce, consumers can significantly reduce their electricity bills over time. This leads to long-term cost savings and increased financial stability for households, businesses, and industry.
2. Return on Investment
Installing a renewable energy system for net metering can also provide an attractive return on investment. The initial investment in solar panels can be recouped through reduced energy bills and potential income from exporting excess electricity. Over the lifetime of the system, consumers can benefit from a positive return on their initial investment.
3. Energy Independence
With the right size of your solar system, you can become energy self-sufficient. By generating your own electricity, you are less dependent on the price fluctuations of traditional energy sources and are insulated from blackouts and supply interruptions. This increased energy independence increases the reliability and stability of energy supply for consumers, especially for us, as power outages are frequent here.
4. Environmental Sustainability
One of the significant advantages of clean meters is its positive impact on the environment. By encouraging the use of renewable energy sources such as solar and wind power, net metering reduces reliance on fossil fuels that contribute to air pollution and climate change.
5. Grid Stability and Efficiency
Net metering facilitates the integration of distributed power generation into the existing power grid. Excess electricity produced by net metering participants is fed back into the grid, contributing to overall grid stability and reducing pressure on centralized electricity generation.
Also read: How Many Solar Panels Required For 1 And 1.5 Ton AC?
Net Metering in Pakistan: Concluding Thoughts
Net Metering in Pakistan: In short, net metering is an exciting opportunity for solar panel owners to generate additional units and reduce their electricity bills. Not only will it help you save on your monthly bills, but it will also shorten the payback period of your solar system. Although we have covered many things in this article, if you still want more information, please write to us in the comments section below, and we will be happy to answer.
Also read: KPK Solar Panel Scheme 2024: How to Apply Online?