ISLAMABAD - It is anticipated that national grid demand will decline by more than 10 percent as more people are poised to switch to solar owing to its enormous import, which will jack up the base tariff by 17 percent and will burden non-solar consumers with an additional Rs261 billion during the ongoing fiscal year (2024-25).
In FY2023-24, non-solar consumers have borne a staggering burden of Rs200 billion due to the rapid expansion of solar energy adoption, revealed a report titled “The distributed divide – how solar expansion affects non-adopting consumers and utility economics” which was released by Arzachel here Friday.
This transition to solar has caused an estimated tariff increase of Rs 2 per unit for grid-dependent consumers, underscoring the financial burden and inequities stemming from the insufficiently managed expansion of solar adoption through behind-the-meter systems and net metering. Without immediate regulatory intervention, the financial burden on non-solar consumers is projected to escalate further. For the current fiscal year, a 5% reduction in grid demand driven by solar integration is expected to shift additional Rs131 billion in costs annually to non-solar consumers, doubling to additional Rs 261 billion if grid demand reduces by 10%, the study revealed. With substantial solar imports this year, it is anticipated that grid demand will decline by more than 10%, with estimates suggesting a 15% reduction; however, the exact numbers for behind-the-meter installations remain unclear. This shift is expected to result in a 17% increase in the base tariff, the report added.
To address these pressing challenges brought by the rapid and underregulated solar adoption, the report called for immediate regulatory reforms and targeted policies to ensure equitable cost distribution and grid stability. The report recommended transitioning from net metering to net billing or Feed-in Tariff (FiT) systems on lower rates and system marginal costs, introducing fixed grid access fees to reflect actual service costs, and establishing an ancillary services market to enhance grid stability. It also advocated revising the Distribution Code to manage bi-directional power flow and ensure energy equity through fair cost allocation, balancing renewable energy benefits with grid sustainability.
The report highlighted that the growing adoption of rooftop and behind-the-meter solar installations has significantly reshaped Pakistan’s energy demand profile. As per the study estimates, an average 10 kW net-metering system enables a consumer to avoid grid costs of Rs20 per unit, while behind-the-meter installations allow consumers to bypass an average of Rs7 per unit in fixed costs. While solar adopters benefit from substantial savings, the resulting drop in grid demand has caused energy sales to plummet by 8-10% during daylight hours, shifting the burden of fixed costs of grid maintenance to non-solar consumers.
The research also underscores the technical challenges faced by DISCOs (distribution companies), including voltage instability, reverse power flows, and increased demand for ancillary services such as frequency regulation and reactive power support. These issues require significant infrastructure investment, further exacerbating the financial strain on the energy sector. The report predicted that Pakistan’s grid will soon face the “duck curve” phenomenon, marked by sharply reduced demand during midday—when solar generation peaks—followed by a steep rise in demand in the evening, complicating grid management and operational planning. Without reforms, this dynamic could trigger a “death spiral,” a cycle of rising tariffs, declining grid revenues, and further consumer defection to solar, threatening the long-term sustainability of the energy sector.