The Pakistani government is preparing to drastically reduce the buyback rate for net-metered solar power—by more than 60%—in a bid to save Rs4.3 trillion ($15.1 billion) over the next decade, according to sources familiar with the matter.
Officials at the Ministry of Energy are drafting a revised solar policy that would overhaul the current net-metering system. At present, the government buys excess electricity from domestic, commercial, and industrial solar producers at Rs27 per kilowatt hour (kWh). The proposed policy would slash this rate to around Rs10 per kWh, aligning it with what large-scale solar utilities like Quaid-e-Azam Solar Power (Pvt.) Ltd currently receive (between Rs9 and Rs11 per kWh).
“The aim is to eliminate the pricing disparity and bring net-metering buyback rates in line with international practices,” said an official from the Ministry’s Power Division, who spoke on condition of anonymity.
The new solar policy is expected to be submitted to the federal cabinet within a month. Under the proposal, buyback rates will be linked to the national base tariff and standardized across distributed solar producers—domestic, agricultural, commercial, and industrial alike.
“The key question is: at what rate should the government buy electricity from these small-scale producers? That’s what we’re finalizing now,” the official added.
The initiative is part of Prime Minister Shehbaz Sharif’s broader energy reform agenda, supported by the International Monetary Fund (IMF), which approved a $7 billion loan for Pakistan last September. A major goal is to cut dependence on costly oil imports—already down 5% to $15 billion from July 2024 to May 2025.
Solar adoption in Pakistan has surged in recent years. According to Reuters, citing data from energy think tank Ember, solar capacity imports have increased more than fivefold since 2022. This rapid growth helped solar energy become Pakistan’s largest electricity source by 2025—up from fifth place just two years earlier.
Yet, fossil fuels still dominate Pakistan’s energy mix: 56% from thermal sources, 24.4% from hydropower, 8% nuclear, and 12.2% from renewables. As of March 2025, total installed electricity generation capacity stood at 46,605 megawatts (MW), up 2% from the previous year. Of this, 2,813 MW came from net-metered solar systems.
The widespread adoption of rooftop solar systems has been driven by generous net-metering incentives and rising grid electricity prices. Shankar Talreja, head of research at Topline Securities, said:
“The buyback rate—over Rs20 per kWh—made solar very appealing. People began installing rooftop systems and selling excess power to the grid.”
Pakistan now imports over $2 billion in solar panels annually, mostly from China. Though the country has imported panels with a total capacity of 48,000 MW, actual power generation stands closer to 6,000 MW due to panel efficiency limitations (typically around 21%).
The government is now looking to cap distributed solar generation at 8,500 MW and apply a consistent buyback rate for all distributed producers—similar to what is paid to utility-scale solar plants. Even K-Electric, the country’s largest private utility, has agreed to sell solar power to the government at Rs10 per kWh.
In June, K-Electric signed an MoU with Huawei Digital Power Pakistan to collaborate on battery energy storage and EV charging infrastructure—part of Pakistan’s broader smart energy transformation.
The shift to solar has already impacted national consumption. According to the government’s latest economic survey, total electricity usage fell 4% to 80,111 gigawatt hours from July 2024 to March 2025, partly due to increased off-grid solar adoption.
However, as Talreja noted, the financial burden of high net-metering rates has become unsustainable:
“The government now wants people to stay connected to the national grid. It’s proposing to slash the buyback tariff and tie it to the base rate, around 33%.”
While Pakistan aims to increase the share of renewables in its energy mix, implementation is proving difficult due to underutilized but costly thermal generation capacity.
“The direction is right,” said Talreja, “but managing the transition while maintaining grid stability and financial sustainability is the real challenge.”