Government Considers Cutting Solar Power Payment Rates with New Law in 2023

The government might order a new ordinance to impact the masses who have solar panels on their roofs because according to them these people have had a significant impact on payments to power companies.

Government Aims to Regulate Solar Panels Due to Impact on Power Payments

The government is looking to control solar panels and their use because those that have installed them have affected the payments to power companies.
This is because, by using solar panels, people have unintentionally made the payments to power companies go up.

The government officials say that they have no other option because it has unintentionally made power payments to companies go up, according to a report issued recently. Increased power generated by the people through solar panels has resulted in higher capacity payments.

New Law Criminalizes Unpaid Bills Amid Power Sector Woes

According to a report from a private TV channel, the new law will make not paying electricity bills a criminal offense. A senior official confirmed that they are currently discussing a proposal related to net metering.

Pakistan is surrounded by a list of growing financial challenges in the power sector, the main cause is the increase in payments to independent power producers (IPPs).

These payments, which are known as capacity payments or capacity charges, have Significantly increased the costs of generating power, and as a result, people are receiving higher-than-expected electricity bills.

Protests Over Rising Bills and Government’s Budget Challenge

This is also the reason we are seeing people going on strikes, and protesting against these increased bills.

During an urgent cabinet meeting held on Sunday, Caretaker Prime Minister Anwaarul Haq Kakar was informed that the nation will need to allocate a substantial sum of Rs 2,000 billion for capacity payments in the upcoming year.

In the contracts signed by past governments with independent power producers (IPPs), capacity charges were set based on interest rates and exchange rates. This has resulted in rupee devaluation and interest rate hikes with the passage of time.

There is growing concern that solar power generated from solar panels on rooftops is contributing to the increase in capacity charges, as called attention to in a report from a local news source.

Surplus Sparks Capacity Charge Concern

According to the report published, individuals with solar panels are producing about 1,000 megawatts of electricity.

This surplus electricity is then sold back to the national grid, leading to an unintended consequence: the rise in capacity charges. These charges are Induced by the government to secure the power production capacity required, and the increased contribution from rooftop solar panels has added to this financial burden.

In essence, while rooftop solar power offers environmental benefits and energy independence to consumers, its unexpected impact on capacity charges has become a subject of concern in the power sector.

Net metering allows consumers to send the excess electricity generated by solar panels back to the national grid during the daytime when the sun is shining brightly.
In return, they can draw electricity from the national grid during the nighttime or when their solar panels aren’t producing enough power.

Masses Anxious About Pricing Disparity

However many consumers who have put their money into solar energy systems are starting to feel anxious and concerned.

They are dissatisfied with the current arrangement because they perceive a significant disparity in the pricing. According to their perspective, the government tends to purchase the surplus electricity generated from their rooftop solar systems at a lower rate. In contrast, when they need electricity from the national grid, they are charged a notably higher price for the same power.

This constant imbalance in pricing between the government and the masses has left many solar system owners feeling that they are not fairly compensated for their contributions to the national grid and the masses with solar panels feel that they are paying more than expected for the electricity they consume from the government.

Challenges in Pricing and Government Efforts

Due to these problems, concerned individuals are urging the government to thoroughly review the net metering system.
The goal change the prices such that are just and transparent, benefiting both consumers and the government alike.

The former government tried to lower electricity prices in February 2023, but it didn’t work out.

The government thinks that the extra electricity from rooftop solar panels costs more than what they pay people for because they also have to pay a lot to other power companies.

Sardar Moazzam, who works for the National Energy Efficiency Authority, says it’s just an idea for now, but he thinks green and alternative energy is the future.

At the same time, people all across the country are protesting because they got really high electricity bills in August. They’re even saying they won’t pay until the government makes the bills cheaper.

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One response to “Government Considers Cutting Solar Power Payment Rates with New Law in 2023”

  1. […] state officials, the total investment would be $25 billion, which will be the biggest investment in Pakistan by the […]

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