NEPRA Ends Free Solar Facility Imposes New Fees

In a notable regulatory development, the National Electric Power Regulatory Authority (NEPRA) has revised the framework governing solar installations by eliminating the previously available exemption for small-scale systems and introducing a mandatory licensing/concurrence requirement applicable to all distributed generation (DG) installations, irrespective of capacity. The revised regime also imposes a standardized processing fee of PKR 1,000 per kilowatt (kW), thereby increasing the compliance cost for consumers nationwide.

NEPRA has justified this policy shift on the basis of amendments incorporated within the NEPRA Act and the updated regulatory framework applicable to distributed generation systems. In response to stakeholder concerns, the Authority has clarified that all new consumers and prosumers are now required to obtain formal concurrence prior to installation, without any capacity-based exemption.

Under the revised procedure, applicants must submit a processing fee calculated at PKR 1,000 per kW at the time of filing, ensuring uniform applicability across all categories of solar users. This represents a departure from the earlier framework, under which only installations exceeding 25 kW required prior licensing or concurrence from NEPRA, while smaller systems were subject solely to approvals from respective distribution companies (DISCOs).

The Authority has emphasized that this uniform regulatory requirement is necessitated by statutory provisions, effectively removing the earlier distinction between small and large-scale installations. However, it is pertinent to note that the Power Division has indicated that it did not initiate the proposal, suggesting an institutional divergence on the policy approach.

In parallel, recent policy changes have significantly altered the financial viability of rooftop solar investments. Under the earlier net-metering regime, consumers were permitted to export surplus electricity to the grid at rates approximating PKR 25–27 per unit, often with the benefit of unit-to-unit adjustments against consumption.

Under the revised framework, which reflects a transition toward a net billing mechanism, the buyback rate for newly installed systems has been substantially reduced to approximately PKR 8.13 to PKR 10–11 per unit—representing a decline of nearly 60–70%. In contrast, electricity imported from the grid continues to be billed at prevailing slab-based tariffs, generally ranging between PKR 37 and PKR 55 per unit or higher, depending on consumption levels and consumer category.

This widening differential between export compensation and import tariffs has materially reduced the economic returns associated with surplus energy sales, thereby incentivizing self-consumption over grid export.

Overall, the revised policy framework centralizes regulatory oversight for all solar installations while simultaneously increasing compliance obligations and cost burdens on consumers, marking a significant shift in the governance and economic dynamics of Pakistan’s distributed energy sector.