Pakistan’s new solar regulations cut incentives for households and businesses

Pakistan has introduced sweeping changes to its solar energy policy, replacing the 2015 Net Metering law with the NEPRA Prosumer Regulations 2026. The move significantly reduces financial incentives for new solar users, imposes stricter technical limits on installations, and is expected to slow the rapid growth of renewable energy adoption in the country.

Analysts and industry stakeholders say the reforms could reshape the solar market, affecting households, commercial users, and Pakistan’s broader clean energy ambitions.

In the latest episode of On My Radar, Kamran Khan highlighted the impact of the regulatory shift. He said the new rules effectively cut the profitability of solar for new users, while existing net metering consumers will retain current benefits only temporarily. “The government will now purchase surplus electricity from new users at nearly half the previous rate, reducing returns and discouraging further investment in rooftop solar,” Khan explained.

Under the 2015 net metering framework, households and businesses with solar panels could feed excess electricity into the national grid, reducing their monthly bills and recovering installation costs in three to four years. A typical one-kilowatt system, costing around PKR 200,000, produced 4-5 kilowatt-hours daily, saving approximately PKR 5,000–6,000 per month. This model helped Pakistan emerge as the third-largest solar market globally, with on-grid net metering capacity reaching 7,000 MW and off-grid solar exceeding 12,000 MW.

The NEPRA Prosumer Regulations 2026 introduce a “net billing” system for new users. Contracts are reduced from seven to five years, and surplus electricity will be purchased at PKR 11 per unit, compared with around PKR 26 per unit under net metering. Distribution companies may sell electricity at PKR 40-50 per unit, meaning households could pay more for power while earning less from solar production.

The new rules also impose caps on system size and technical restrictions. No consumer can install more than one megawatt, and transformers already operating at 80 percent capacity cannot accommodate additional solar connections. Larger systems of 250 kW or above must undergo mandatory load flow studies, with consumers responsible for all grid-connection costs. Bill adjustments for excess electricity will now be limited to one month instead of three, reducing financial flexibility for net metering users.

Industry experts warn that these changes could slow Pakistan’s solar momentum and increase electricity costs for households, potentially undermining the clean energy progress achieved over the past decade.