How Net Metering Works in Pakistan
We live in a world that has seen an evolution in aspects that were once deemed unachievable. However, through time humanity has progressed and has brought us to this advanced, technological, and fast-paced world. The use of renewable energy, an energy reserve that never exhausts, is certainly one of those remarkable feats conquered through time. Renewable energy’s use has gone from an industrial level to a personalized level. Nowadays, renewable energy is mainly used for consuming or generating electricity for personal use, which has brought about a change in electricity billing. This mechanism is known as Net Metering, which dates back to its discovery in 1979 with its origins in the U.S. Net Metering was introduced in Pakistan in September 2015.
What is Net Metering?
The question arises that what net metering actually is and how it works. Net metering is a billing mechanism that credits solar energy system owners for the electricity they add to the grid. If a consumer installs a solar energy system and wants the system to be net-metered, the first requirement is to connect it to a grid system as it is not compatible off-grid. The next thing required is a three-phase meter which allows a large amount of power to be metered back and forth the grid. The system comes with its limitation too: a parameter of the load is set that can be consumed by the house. This is known as sanctioned load, which is lesser than the system capacity, i.e., a 2KW sanctioned load for a 3KW system. These components then constitute the billing at the end of a month. For example, if a resident has a PV system installed in their house, it may generate excess energy, which they can sell back to the original grid with relevance to peak hours and off-peak hours. Peak hours (5 pm – 10 pm depending on the season) are the hours when electricity costs more to the user as the import units from the grids are at their
maximum. Off-peak hours are less costly to the user as they export units to the grid in the case of generating excess units. In the case of a conventional off-peak net-metered house, the electricity meter runs backward to provide credit for the excess they generate after fulfilling their home’s electricity use.
Customers are only billed for their “net” energy use which is the sum of the units the user consumed from the grid subtracted from the units they export to the grid. If a user exports more than they can consume, the units are adjusted in the future bills. On average, only 20-40% of a solar energy system’s output ever goes into the grid, and this exported solar electricity serves nearby customers’ loads.
Sources of Net Metering
The primary source of energy for net metering is solar energy. Although other means of energy, such as wind energy, are also used; however, their use is scarce around Pakistan. The 23 licensed powered Electric Distribution Companies (DISCOs) in Pakistan are companies under the Pakistan Electric Power Company (PEPCO). They buy electricity from Water and Power Development Authority (WAPDA), PEPCO, and other private Independent Power Producers (IPPs), through which they then sell this electricity to their customers in the respective areas in which they operate.
In 2015 National Electric Power Regulatory Authority (NEPRA) allowed the DISCOs to purchase excess units of electricity from customers and balance it out with the consumed units from the grid and make a net total. In this period of inflation, the rates for net metering are varying across the country and by demand. While an entire system’s costs vary by brand, demand, and consumption, the unit rates are somewhat similar for all the systems. A residential system and buying costs around Rs 18.64 per unit, and commercial buying stand at the highest with Rs. 22.2 per unit and Rs 11.3 for industrial use as per incentivized net metering policy and Wapda unit price in Pakistan.
However, in Net Metering, its installation and use come with abiding by a certain set of guidelines and procedures. For example, if a consumer living in Lahore installs solar panels, they have to apply to their Punjab energy department for approval according to the SRO 892 (2015) rule authorized by NEPRA. The energy departments then approve and inspect the applicant and the system after which they issue a NOC (certificate). A three-year agreement is signed between the regulating DISCO of the area and the customer. Verification through NEPRA issues a general license, which allows the customer to sell the surplus energy to the DISCO and the institution then activates the Net Meter, which allows the process to begin.
Pros of Net Metering
Net metering comes with its perks that the customers enjoy but also with a spec of its drawbacks. Net metering is a very reliable method for decreased bills and definitely a great long-time investment. When selling the surplus to the grid, a lower future bill is ensured, which is a great incentive in this time of inflation. It also results in increased control of one’s own bills. It’s a means of jobs and private investments and it results in increased employment giving financial and economic advantages as a whole.
Cons of Net Metering
The creation of smoother demand and supply of power due to solar energy systems has created ease in dealing with energy supply and distribution frameworks as well as a decreased power loss in long-term transmission as this transmission rate lowers when a solar energy system is installed. However, this also impacts the solar economics since the laws and rates are not set in stone which can affect future energy rates putting the user at a disadvantage. In addition, it is a long-term and prolonged payback to what the consumer invests in the system. It is also not economical in every state. Varying weather conditions also affect the demand and supply and create unpredictable savings and uses due to the solar energy system. This naturally puts both the business and the customer at disadvantage.
The Takeaway
With the pros outweighing the cons, solar energy investment is definitely something that holds a greater scope for growth in Pakistan. Net metering is a great way to attain lower bills, and it is a worldwide acclaimed use of renewable energy that many have invested in. Not only is it a useful method to provide us electricity without conserving the environment, but it is also a fruitful opportunity to create business and create more jobs, which will be a substantial contribution to our economy.
