Pakistan Ends Net Metering for Solar Energy in 2026, Impact on Solar Industry

The Government of Pakistan has introduced a major policy change in the solar energy sector. In February 2026, the popular net metering system for rooftop solar users was replaced with a new net billing mechanism under updated regulations issued by the National Electric Power Regulatory Authority (NEPRA).

This shift has triggered strong reactions across the country among homeowners, businesses, solar companies, and renewable energy advocates.

With solar installations rapidly increasing in cities like Karachi, Lahore, and Multan, the policy change could significantly affect electricity costs, solar investments, and the future growth of renewable energy in Pakistan.

What Changed: From Net Metering to Net Billing

Net Metering (Old System)

Under the previous net metering system, solar users could:

• Generate electricity from rooftop solar panels
• Send extra electricity to the national grid during the daytime
• Receive unit-for-unit credits on their electricity bills

For example, if a household exported 100 units of electricity during the day, it could offset 100 units consumed at night.

This system made solar highly attractive because many users could reduce their electricity bills to very low levels.

Net Billing (New System)

As of February 9, 2026, NEPRA replaced net metering with net billing.

Key differences include:

• Solar users now sell excess electricity to the grid at around Rs. 11 per unit (national average energy price).
• When they buy electricity from the grid, they still pay full consumer tariff, usually Rs. 25–50 per unit, depending on usage slabs.
• Exported electricity therefore receives much lower compensation.

This means solar owners now earn less value for the electricity they send to the grid.

Why the Government Changed the Policy

According to officials from the Power Division, including Energy Minister Awais Leghari, the policy change was made for several reasons:

1. Protect Non-Solar Consumers

Net metering subsidies were believed to increase electricity costs for people without solar panels.

2. Improve Grid Stability

Rapid solar expansion was creating unpredictable energy flows into the grid.

3. Align Pricing With National Energy Economics

The government wants electricity pricing to better reflect actual production and supply costs.

Officials reported that Pakistan already had over 466,000 net-metered consumers and 6–7 GW of rooftop solar capacity, part of the country’s 20–22 GW solar energy base.

Government Response After Public Backlash

The decision sparked strong criticism from solar users and industry groups.

On February 11, 2026, Prime Minister Shehbaz Sharif ordered a review of the policy.

As a result:

• Existing net-metered users will continue under old agreements until their contracts expire.
• New solar installations must follow the new net billing rules.

This move provided temporary protection for current solar users while keeping the new policy for future systems.

Why Solar Users Are Concerned

Many solar owners and industry experts argue that the new system:

• Reduces solar financial benefits by 60–70%
• Doubles the payback period for rooftop solar systems
• Discourages new solar installations
• Pushes users toward expensive battery storage solutions

Many early adopters invested heavily in solar expecting long-term savings, and they now fear reduced returns on their investment.

Winners and Losers of the Policy

Winners

Non-Solar Households

• Lower risk of hidden electricity tariff increases
• Fairer distribution of grid costs

Grid Operators

• More predictable electricity supply
• Lower risk of grid instability from solar exports

Losers

Rooftop Solar Owners

• Reduced financial returns
• Longer recovery time for installation costs

Solar Companies and Installers

• Possible slowdown in demand for new solar systems
• Uncertainty in the renewable energy market

High Solar Producers

• Those exporting large amounts of electricity now receive lower payments.

What This Means for New Solar Buyers

If you are planning to install solar panels in Pakistan, experts recommend:

• Carefully calculating expected savings under the new net billing system
• Considering hybrid systems with battery storage
• Increasing self-consumption of solar energy
• Comparing grid-connected vs off-grid solar options

Under net billing, using your own solar power during the day becomes more valuable than exporting it to the grid.

Possible Future Developments

Energy experts believe the policy may continue evolving. Possible future adjustments include:

• Higher buyback rates for exported solar power
• Time-of-use pricing for peak solar generation hours
• Incentives for battery storage systems
• Support for local renewable energy manufacturing

Growth of Battery and Off-Grid Systems

Because exported electricity now earns less money, many households may:

• Install solar batteries
• Switch to hybrid solar systems
• Move toward fully off-grid energy setups

This could accelerate growth in the battery storage market in Pakistan over the next 1–2 years.

Final Summary

• Pakistan replaced net metering with net billing in 2026.
• Solar users now receive lower payments for exported electricity.
• The policy aims to protect non-solar consumers and stabilize the power grid.
• Existing net-metering contracts remain valid until expiration.
• New solar installations must follow net billing rules.
• The change may slow solar adoption but boost battery storage demand.

The future of Pakistan’s solar industry will depend on how the government balances energy costs, grid stability, and renewable energy growth in the coming years. ☀️⚡