Gross metering or Net metering: what’s the better choice?

Would you sell an item at a lower cost and buy it at higher? This is what might happen if government implements the much-debated gross metering policy in Pakistan.

Pakistan has seen a surge in Solar panels installation over recent months. Solar panels installed on rooftops are not just changing the skyline; they’re revolutionising how households’ harness and distribute electricity.

Pakistan had targeted 1,920MW of rooftop solar capacity by the year 2026, according to its latest Indicative Generation Capacity Expansion Plan. In reality, we have already met that threshold in 2023, if not sooner. With the advent of net metering in 2017, homeowners are not only embracing solar power for personal use but also contributing surplus energy to the national grid. Despite the initial investment hurdle, the promise of long-term savings and environmental benefits is reshaping attitudes towards renewable energy adoption.

Lately, a term known as ‘gross metering’ has sparked a debate. Gross metering is a method under which electricity generated by rooftop solar panels would be fed into the national grid. Owners of solar panels would then consume units from the grid. This new system would involve separate meters to measure in-house generation and consumption, as opposed to the current bidirectional meter that calculates both rooftop generation and grid electricity import during nighttime.

Energy Minister Awais Laghari has denied rumors about the government’s plan to switch from net-metering to gross metering. However, as the debate over the potential transition from net-metering to gross metering continues, it’s crucial to delve deeper into the implications for consumers in Pakistan.

Under net-metering, consumers benefit from credits for excess energy exported to the grid, effectively reducing their electricity bills. However, with gross metering, consumers may lose this incentive and instead have to rely solely on the savings from generating their own electricity, potentially affecting the return on investment for solar panel installations.

Under gross metering, consumers would likely sell electricity to the grid at 11 rupees per unit and buy it back at retail rates, which can go up to 62 rupees per unit after including various surcharges and adjustments. This disparity would make solar investments financially unviable, leading to a decline in solar adoption.

Additionally, the infrastructure required for gross metering, such as separate meters for generation and consumption, may pose logistical challenges and additional costs for both consumers and utility providers. This could potentially slow down the adoption of solar energy and hinder progress towards renewable energy targets.

Renewable energy expert Syed Faizan Ali, terms net metering in its current form as a viable and customer friendly regime.

‘’Net Metering in its current form is the most viable and consumer-friendly regime considering the deployment of Solar Roof Top distributed generation due to lower Solar PV panels prices, payback unit rate of PKR 22 (Average Power Purchase Price) and lower pay back periods. However, it is observed that residential energy demand is shrinking on year-on-year basis which is a cause of concern for the government due to the revenue-based tariff mechanism in vogue.”

Ali suggests that in order to make the Power Sector financially viable, the government must explore various models of tariff regimes for the solar roof top segment and with consensus of the relevant stakeholders, shall select the option most feasible technically.

He suggests, “One such solution can be the Net Billing mechanism with a suitable buy back rate to ensure a viable payback period for the Distributed Generation consumers. However, for the existing consumers, the government must ensure that the same Net Metering regime shall be allowed to continue for at least a year.”

Another renewable energy expert Mustafa Amjad seconds Ali and states that some form of incentives including an arrangement for net metering would remain necessary if the government is serious about encouraging adoption of solar power among masses.

In the ongoing debate between net and gross metering, it’s imperative not to overlook the inherent value of solar energy itself. Solar power offers a dual advantage: it’s a renewable, clean energy source and a significant cost-saving measure. Thus, even in the absence of metering initiatives, prioritising solar panel implementation remains a prudent and forward-thinking decision for individuals.

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