Net Metering and Solar PV Prosumage

in Pakistan: Growth and Challenges

Naila S aleh *and S a ra "

Abstract

In the wake of an on-going energy crisis in Pakistan, National Electric Power

Regulatory Authority (NEPRA) issued net m etering regulations in 2015 in order to
encourage consum ers to contribute in power generation. Contrary to the
anticipation of attracting large-scale prosum ers after the launch of these
regulations, the overall capacity installed so far rem ains insignificant. Moreover,
an uneven distribution in term s of issued licenses as well as installed capacity
across the power distribution com panies (DISCOs), wherein the growth is
concentrated in three major cities of Pakistan— Islam abad, Lahore and Karachi—
is another challenge. Based on this insight, the study aim s to probe the challenges
to distributed generation (DG) in Pakistan. Primary data for this paper was
collected from three prim ary stakeholders: the prosumers; the non-prosumers;
and the DISCOs or the primary intermediaries. The findings indicate a num ber of
challenges hindering DG growth in Pakistan including cum bersom e application
process; serious financial barriers; inaction of DISCOs; low trust in technology;
absence of aw areness program s and absence of fee-for-service (FFS) models.
Finally, the paper gives a roadmap to overcom e the aforem entioned challenges,
and catalyzing the prosum age drive.

Keywords: Net Metering, Prosumage, Solar PV, DISCOs, Distributed

Generation.

Introduction

Prosumerism has instilled new hope for addressing challenges to a

reliable, affordable, and climate-friendly energy supply.1 Pakistan, a
country with naturally high potential for solar prosumage, had issued net
metering regulations in 2015 to boost power generation. These
regulations allowed for on-site solar and wind generation for capacities
ranging between 1 KV and 1 MW for consumers of all categories such as
from residential, commercial, industrial and agricultural sectors.2

To avail the facility, the consumers initially register their

connections with NEPRA through relevant DISCO, while bearing the

* PhD scholar, Technische Universitat Berlin [Technical University of Berlin] Berlin,

Germany; Research Officer, Institute of Policy Studies (IPS), Islamabad, Pakistan. This
paper is extracted from an IPS study on "Barriers and Drivers of Solar Prosumage: A
Case Study of Pakistan."
** PhD scholar, Pakistan Institute of Development Economics (PIDE), Islamabad,
Pakistan; Junior Research Officer, Institute of Policy Studies (IPS).

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 Policy Perspectives Volume 17 Issue 2

expenses of interconnection themselves. Once the application is

processed and the end users are connected to the grid, they
automatically enter into a 7-year purchasing agreement with the relevant
electricity distribution company (DISCO).3 The remuneration scheme
under net metering in Pakistan hence adjusts for net balance i.e.
subtracting amount of electricity consumed from the grid against the
units added. In the case of positive net balance, the prosumer receives
a quarterly payment, whereas in alternate scenario he/she is charged for
the net amount consumed via monthly billing cycle. In this way, the
scheme incentivizes the prosumers through self-consumption vis-a-vis
monetizing the surplus fed into the grid.

However, despite the launch of the net metering facility in

Pakistan in 2015, its growth has remained low overtime. Figure 1
demonstrates the year-wise and DISCO-wise prosumage growth in
Pakistan over the past five years, i.e. from 2016 to 2020, whereas Table
1 shows the overall year-wise distribution of licenses across the 11
DISCOs.4 As could be observed, compared to the total 29.5 million
connections to the grid, 8,006 net metering licenses were issued from
2016 to 2020. Further, the data given in Table 1 showcases the
geographic uneven uptake across the DISCOs. The growth is largely
dominated by three key DISCOs, namely K-Electric (KE), Islamabad
Electric Supply Company (IESCO) and Lahore Electric Supply Company
(LESCO). Other large DISCOs such as Multan Electric Power Company
(MEPCO), Faisalabad Electric Supply Company (FESCO), Peshawar
Electric Supply Company (PESCO), Gujranwala Electric Power Company
(GEPCO) are behind in terms of prosumage distribution. Few others like
Sukkur Electric Power Company (SEPCO), Hyderabad Electric Supply
Company (HESCO), and Quetta Electric Supply Company (QESCO) have
issued less than ten licenses each in past five years, whereas Tribal Areas
Electric Supply Company (TESCO) has yet not engaged in the distributed
generation.

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 Net Metering and Solar PV Prosumage in Pakistan: Growth and Challenges

Figure 1: N e t m e t e r in g G e n e r a t io n G r o w t h (M W )

Year-Wise Installed Capcity DISCO-Wise Installed Capacity

(MW) (MW)

160.00
141 LESCO 46.9
140.00 IESCO 29.4
120.00 KE
^ _ 24.2
93.28 MEPCO 1...
100.00
FESCO 11.3
80.00
GEPCO 9.7
60.00 PESCO 5.3
40.00 32.41 SEPCO 1.4
20.00 10.3' HESCO 0.6
3.18-
1.71 3.1 |
QESCO 0.3
0.00
2016 2017 2018 2019 2020 Total 0.0 20.0 40.0 60.0

Source: Compiled by Authors.5

Table 1: Distribution of Year-Wise Licenses Issued

DISCOs Connections Total

2016 2019 2020
LESCO 4598784 2 95 204 704 1487 2492
IECSO 2837238 18 86 189 682 1261 2236
KE 2583435 0 0 124 511 826 1461
GEPCO 3326274 0 6 44 96 235 381
M EPCO 6072783 0 0 26 84 505 615
FESCO 3953132 0 0 20 82 357 459
PESCO 3330907 0 0 4 37 301 342
SEPCO 745308 0 0 0 2 4 6
HESCO 1080714 0 0 0 3 5 8
QESCO 609004 0 0 0 1 5 6
TESCO 442401 0 0 0 0 0 0
Total 29579980 20 187 611 2202 4986 8006

Source: Compiled by Authors.6

With this in context, this study takes a holistic view of the factors behind
the slow prosumage growth and aims to probe the factors (if any)
responsible for the geographic uneven uptake of distributed generation
in the country. While summarizing the findings, the paper also presents

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 Policy Perspectives Volume 17 Issue 2

recommendations to address the challenges in view of their nature and

categories.

Methodology

This study examined the distributed Solar PV growth over the past five
years (2016-2020) and identified barriers impeding DG. For analysis, the
data on installed capacity and its DISCO-wise spread was extracted from
individual licenses and compiled as presented above in Figure 1.7 Further,
for an inclusive picture of the drivers, barriers and enablers of
prosumage, the study specifically focused on three principal
stakeholders: i) Prosumers, the end users who have engaged in
distributed generation; ii) Non-Prosumers, those who have yet not
engaged; iii) the distribution companies, which are the key
intermediaries responsible for connecting end users to the grid. Table 2
shows the detailed analysis of sample size and mode of data collection
for each stakeholder category.

Table 2: Stakeholders and Sample Size

Stakeholders Sample Size Mode of Data

Collection

Prosumers 333 Survey

Non-Prosumers 578 Survey

Distribution 06 Interviews
Companies

Source: Compiled by Authors.

Barriers to Solar Net Metering

There are several assumptions regarding factors that might be

responsible for slow growth of solar prosumage but no in-depth study or
empirical evidence exists on this subject. In an attempt to holistically
understand the barriers and challenges, this section showcases key
findings from surveys and interviews conducted for this study.

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 Net Metering and Solar PV Prosumage in Pakistan: Growth and Challenges

Cumbersome Application Process

Connecting to the electricity grid brings several difficulties to the

applicants, and which is a dominant barrier found by this study. To avail
the net metering facility, a consumer has to file the application with the
relevant DISCO. After review, the latter forwards it to NEPRA for the
issuance of license. The standard process of availing net metering licence
as described by Alternative Energy Development Board (AEDB) in Net-
M etering Reference Guide for Electricity Consumer: H ow to g et yo ur Solar
System Connected to National Grid in Pakistan8 has been presented in
Figure 2. It suggests that an applicant should obtain license within 45
days.

Figure 2: Net Metering Application Process

Submission of Application

Acknowledgement of Application by DISCO

(within 5 days)

Initial review by DISCO (within 20 days)

Technical Feasibility review by DISCO

(within 3 days)

Agreement between DISCO and Applicant

(within 10 days)

Generation license by NEPRA

(within 7 days)

Source: Compiled by Authors.

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 Policy Perspectives Volume 17 Issue 2

Overall, challenges at interconnection phase were identified as key

barriers to PV deployment. This included time lapse in acquisition of
three-phase metering equipment at the initial stage; absence of online
application facility; unavailability of bidirectional meters in some cases;
and unnecessary delay in application processing at nearly every stage.
Therefore, the inexpedient application procedure and unnecessary
hiccups at different stages substantially increases the transaction cost for
applicants. Regarding interconnection problems, one out of two
prosumers indicated facing difficulties in accessing net metering;
however, this varied significantly DISCO-wise. The percentage of
prosumers who did not face any challenges while availing licenses was
relatively lower in the case of LESCO (46 percent); GEPCO (56.3
percent); KE (52.4 percent) and IESCO (58.5 percent). On the other
hand, the distribution of challenges faced while availing licenses was
greater in the case of MEPCO, PESCO, SEPCO, FESCO and HESCO (Figure
3).

Figure 3: Challenges Faced by Prosumers in Availing Licenses: DISCO-

Wise Distribution

120.0%

100.0%

80.0%

60.0%

lllii
40.0%

20.0%

0.0% I
FESCO GEPCO HESCO IESCO KE LESCO M EPCO PESCO SEPCO
■No ■Yes

Source: Compiled by Authors.

The adminstrative glitches at interconnection phase contribute to overall

delays in issuance of licences. As shown in Figure 4, the tentative
timeframe for interconnection as laid in regulation is not strictly followed
by almost all DISCOs. In parallel, a comparison of various DISCOs
revealed that IESCO was the most efficient in the context where 75
percent of applicants were issued licenses within 90 days; followed by KE
(62.3 percent); PESCO (57.1 percent); GEPCO (50 percent); LESCO
(43.4 percent); FESCO (40 percent); and MEPCO (35.3 percent). In

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 Net Metering and Solar PV Prosumage in Pakistan: Growth and Challenges

contrast, the incidence of delay in providing net metering facility was

more frequently observed in the case of LESCO; MEPCO; FESCO and
PESCO. SEPCO and HESCO, which have so far issued very few licenses,
were also found very slow in terms of time taken for issuing licenses.

Figure 4: Days Taken on Average for Issuing Net Metering Licenses

(Across DISCOs)

Source: Authors' Own.

Skewed Concentration

A major finding of this study was skewed installation of solar PV systems

among resourceful sections (75 percent) vis-a-vis those prosumers who
owned the accommodation/property (96 percent) where the system was
installed. Additionally, Figure 5 presents the finding that most prosumers
(83.5 percent) in Pakistan have self-financed their PV systems upfront.
Among the total 13.8 percent participants who accessed loans for
installing their systems, 10.8 percent borrowed the money from personal
connections and an insignificant number (i.e., only 3 percent) took loan
from bank. The cumbersome approval process and high eligibility criteria
put in place by banks for qualifying applicants for granting loans were
cited as key barriers restricting diffusion of solar PV finance in the
country. Further, as small scale renewable installations remain a new
business in the country, most commercial banks are reluctant to invest
in small renewable energy (RE) applications because of high perceived
investment risk and prolonged pay-back period. Finally, 2.4 percent of
installations were carried out under a subsidy program.

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 Policy Perspectives Volume 17 Issue 2

Figure 5: Mode of Finance

90.0% 83.5%

Self-Finance Borrowed from Borrowed from Subsidary Donation for

personal a bank program mosque
connection

Source: Authors' Own.

This skewed concentration could be rooted in 'high cost of solar PV

installation' in parallel with the dilemma of difficulty in access to
borrowing for financing the solar PV system—and most importantly
absence of FFS models such as third party investors—in the country.9
Although "SBP Financing Scheme for Renewable Energy" (2019) of the
State Bank of Pakistan (SBP) is an active scheme, introduced to grant
loans to potential solar system installers on easy terms which include low
interest rate and long pay-back periods.10 However, as per the findings
of this study, two broader problems were identified in relation to the
scheme:

(i) The scheme has so far been launched by very few commercial
banks. Factors responsible for this limited adoption include:
voluntary adoption of the scheme; limited awareness of this
scheme by the most banks; transaction cost for the scheme,
which includes designing SOPs for its implementation vis-a-vis
the human resource and time investment in refinancing the loans
advanced from SBP (since the entire process is manual); and
finally, the high investment risk, created by absence of secondary
markets for solar system resale where loan defaults.

(ii) Even those banks which have introduced the scheme have
designed their standard operating procedures (SOPs) in such a

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 Net Metering and Solar PV Prosumage in Pakistan: Growth and Challenges

way that makes the access to loans very difficult for the common
man. This includes low payback period and requirement of
additional certifications (annual revenues, credit scores etc.),
making the eligibility to acquire solar PV financing from banks
more difficult for average citizen.

In parallel, the survey on the non-prosumers indicated that the

interrupted power supply—as was the case in many DISCOs—had already
unleashed a momentum towards alternate energy systems. 68.7 percent
of the respondents indicated that they were already relying on backup
energy systems where the choice for a backup system was mostly
dominated by uninterruptible power supply (UPS) followed by
generators. Although more than 50 percent of the non-prosumers
indicated strong motivation for adopting solar PV, high cost of the
technology; difficulty to access finance; lack of supportive policies; low
trust in technology and lack of necessary information etc. were indicated
as the key barriers (Figure 6) restricting the technology installation.

Figure 6: Factors Hindering Solar PV Adoption (Among Non-Prosumers)

ussm
120.0%
100.0%
80.0%
60.0%
40.0%
20.0%
0.0%

/ / / / / / /
(V c<y Ko ->P aT

J* * £ # ^ ^
/O ^ Xr .A? ^

No opinion _ Not Important k. Slightly Important

Important Very Important

Source: Compiled by Authors.

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 Policy Perspectives Volume 17 Issue 2

Weak Regulatory Monitoring System

Solar suppliers and vendors are growing in the country but the weak
regulatory monitoring mechanism of the suppliers and the lack of
standardization or quality tests has resulted in imports and supply of low-
quality solar PV systems. Although Alternative Energy Development
Board (AEDB) has established a quality standards protocol restricting
low-quality solar equipment imports into the country, however, it has not
been aligned with appropriate 'regulatory and accountability mechanism'
where the solar vendors could be penalized in case of providing subpar
technology or for the misleading/false claims regarding their products.
For the same reason, majority of prosumers also indicated low
satisfaction with their installed technology. The prosumers who were
unsatisfied indicated the factors due to which they were dissatisfied with
the technology such as substandard technology in the market (including
low quality modules and inverters); high cost of technology; frequent
breakdown of control panel; poor after sale service by vendors; and low
power output against stated quotations. Figure 7 illustrates the overall
satisfaction level of prosumers with net metering technology provision.

Figure 7: Satisfaction with Technology

Very Unsatisfied

Unsatisfied

Satisfied

Very Satisfied

Neutral

0% 5% 10% 15% 20% 25% 30% 35%

Source: Authors' Own.

Inertia of DISCOs

The electricity supply companies have an important role to play in

facilitating and promoting DG, as they are the primary intermediaries
responsible for connecting end users to the grid. Among the 11 major
DISCOs, 10 have so far embraced DG and six were interviewed for this

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 Net Metering and Solar PV Prosumage in Pakistan: Growth and Challenges

study. The objective was to qualitatively assess the opinions of these

companies on the problems highlighted by prosumers vis-a-vis specific
challenges that the DISCOs themselves had experienced (if any) in
relation to net metering regulations. For this purpose, this study sought
information from the DISCOs on two key areas:

(i) Reflection on the challenges as highlighted by the prosumers;

(ii) Nature and extent of the challenges faced by DISCOs in relation to

DG.

In response to questions on the aforementioned areas, the

prosumers mentioned that the typical interconnection barriers
encountered by them included absence of online portal to applicants;
inadequately trained sub-divisional officers (SDOs); non-availability of
bidirectional meters; delays in meter testing; overall delay in issuance of
licenses; and delay in accounting the net metered units into prosumers
bill.

To overcome these challenges, online portals are being

introduced gradually by the companies. Although most DISCOs have not
introduced any such facility yet, some companies have designed online
portals for solar vendors, who may apply on behalf of the applicants.11
On bidirectional meters, three DISCOs indicated that they had
encountered instances of shortage due to poorly planned stocks.
However, they also maintained that they had now started keeping stock
of these meters in advance. The DISCOs also admitted the standard
timeframe for interconnection could not always be followed and issuance
of licenses were delayed. Such delays cannot, however, always be
attributed to the limitations faced by DISCOs; in certain cases, missing
or incomplete paperwork by the applicants also delayed the processing
time. Moreover, manual application system, which tends to be slow, was
identified as another major obstacle behind delay.

Further, since the DG is also associated with integration of the

energy exported into grid, it requires forecast on supply, system-wide
load changes, frequency and voltage regulations etc. Although in
Pakistan the DG uptake remained negligible, it was important to assess
if the DISCOs were encountering or anticipating to encounter any
challenges in this regard. Except for two, DISCOs claimed that they had
not yet encountered any technical issues. However, most of them said
that with its growth, grid integration challenges could later emerge as
key problems.

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 Policy Perspectives Volume 17 Issue 2

Furthermore, the lack of specialized and technically trained staff

was identified as a common limitation by the majority of electricity
supplying companies. Almost all companies emphasized the need for
hosting capacity for safe and reliable operations of DG. Three among
them also highlighted the risks of unreliable technology being installed
by the end users, which if unaddressed could have a consequential
impact on these companies' operations. KE specifically maintained that
installation of the PV equipment should follow international standards of
grid integration, which solar vendors hardly ensure in Pakistan. Ensuring
these standards on their own would result in additional transaction cost
and contribute to further delay in the processing of application.

Finally, except KE, all DISCOs expressed concerns on potential

revenue losses overtime. They were apprehensive of losing large number
of customers in the long-run; losing bulk customers in 'compliant
region';12 and unaccounted expense in accommodating DG uptake.

In short, most electricity suppliers opined that due to associated

administrative burden of processing net metering application when they
already had 'surplus energy', they did not feel compelled to promote or
encourage DG uptake. Therefore, increased transaction cost of
processing applications and the 'no-aligned incentives' dilemma for
implementing the net metering regulations continue to be major factors
responsible for reluctance in promoting net metering installations across
the country.

Roadmap for Overcoming Challenges to DG Growth

For prosumage to play a pivotal role in the power sector of Pakistan,

there is a strong need to address and overcome several interconnections,
administrative, regulatory, and financing challenges. Based on the
gained insights of the study findings, the following roadmap is outlined:

User-Friendly Registration Process

A major impediment to becoming distributed generator is getting the

connection and the generation license. The potential prosumer or the
vendor applying on behalf of the prosumer has to go through a
cumbersome and lengthy application process in many DISCOs, which
overall increases the transaction cost for the applicant. Moreover, the
issues regarding the absence of an online portal (in most DISCOs); long
and tedious process; and delays in site visits and overall delays in
issuance of licences are key factors which dissuade prosumers from
opting for solar PV installations.

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 Net Metering and Solar PV Prosumage in Pakistan: Growth and Challenges

The registration process, therefore, needs an urgent overhaul. It

should be simplified and made more user-friendly. As a first step online
application portal should be introduced at all DISCOs on an urgent basis.
The applicants should be able to track the progress of their application
on the portal. The portal should also have a complaint window which
should be overseen by a third party for unbiased handling and resolution.
This supervising authority should also be responsible for ensuring timely
issuance of licenses to the applicants as well as managing any
miscellaneous issues arising during the entire process.

Overcoming the Inaction of DISCOs

The DISCOs have a key role in driving the solar prosumage growth in the
country. They are the primary intermediaries in this entire process,
responsible for implementing net metering regulations within their
respective jurisdictions. However, as explored by this study, power
supplying companies have been passive in adopting these regulations or
facilitating solar net metering. Consequently, the share of installed
capacity under net metering remains miniscule. As per the findings of the
study, this inertia is likely to become more intense with the growth of
prosumage.

The electricity supplier companies are mostly reluctant to

promote net metering due to the following reasons: i) additional
administrative burden of processing applications; ii) perceived threats of
revenue losses; and iii) technical concerns. In addition, there are 'no­
aligned incentives' dilemma since these companies already have surplus
energy and they do not feel compelled to promote or encourage DG
uptake.

Because of this inertia, many DISCOs have entirely overlooked

DG; those who have, are not interested in promoting it and lack the will
to resolve challenges hindering the solar prosumage drive. In the wake
of this inertia, the prospect of potential net metering drive could be
daunting. In this context, overcoming the passive opposition from power
suppliers through introducing appropriate regulations and incentives for
DG growth is crucial. In this regard, consultative sessions by authorities
such as NEPRA and AEDB should be organized with these companies and
their genuine concerns should be taken into account. Finally, some
regulations should be put in place which prioritize net metering growth
and accordingly ensure compliance by all power supplying companies.

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 Policy Perspectives Volume 17 Issue 2

Capacity Building and Training Programs

One key barrier identified in this survey was 'inadequately trained SDOs'
contributing to interconnection challenges. The lack of appropriate
training and capacity building at DISCOs is a major factor behind this
barrier. Although AEDB has organized some trainings in the past for
power supplier companies, many have indicated that they still required
adequate human resource and capacity building for efficiently dealing
with net metering. In this regard, regular training programs which are
organized after defined intervals could help in resolving the capacity
building constraints to a greater extent in respective companies.

Easy Access to Finance

In a country like Pakistan, strong synergies would likely reinforce

prosumage. The unreliable energy supply as well as recent hike in energy
prices has already mobilized a large scale momentum toward alternate
energy systems. As per an estimate, $2.3 billion per annum alone is
spent on alternative lighting products by the households in the country.13
However, diffusion of solar PV in Pakistan is mostly held back by absence
of supportive financial policies, people continue to rely on alternative
backup energy systems which comparatively have a low upfront cost and
is affordable for a larger section of society. According to our non­
prosumer survey, 68.7 percent of the respondents indicated that they
were relying on backup energy systems. Although "SBP Financing
Scheme for Renewable Energy" (2019) has been introduced for
facilitating solar technology uptake, the limited adoption of this scheme
by commercial banks and difficulties in accessing it, remain the key
impediments restricting PV distribution among large circles of society. To
overcome these barriers, this study advocates devising regulations that
leverage diffusion of SBP scheme across the commercial banks; and
resolves the difficulties in accessing the finance by designing user-
friendly procedures.

Fee-for-Service Models (FFS)

One major finding of this study was that the prosumage drive in the
country is entirely driven by the dealer models where the prosumers
install and maintain the systems at their personal expense. The FFS
models, such as third party investors, are entirely non-existent in the
case of Pakistan. These models could overcome the difficulties of
accessing finance, maintenance and preventing other risks associated
with PV systems, to a greater extent. Consequently, DG drive is mostly
concentrated among: (i) end users who own their properties/
accommodation; and (ii) resourceful sections of society. Therefore, this

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 Net Metering and Solar PV Prosumage in Pakistan: Growth and Challenges

study recommends introducing regulatory frameworks and focused

interventions for encouraging private sector engagement in driving the
rooftop solar prosumage growth.

Regulatory Monitoring System

The AEDB has made remarkable progress in accrediting solar vendors

and their number has now grown to 125.14 However, this survey shows
that people still have strong reservations on the malpractices by solar
vendors; quality of technology; poor enforceability of guarantees; as well
as absence of an appropriate platform where technology related
complaints could be lodged and the vendors could be held accountable.

In conjunction with these findings, a robust monitoring system

should be designed that enables users to easily lodge complaints against
vendors as well as penalize any fraudulent malpractices found in the
market.

Technical Integration

Although currently the solar prosumage growth in Pakistan is in its

embryonic stage, any significant growth overtime in absence of properly
planned regulations for stable grid operations might create integration
challenges in future. In this context, streamlined growth by building
proper regional registries at DISCOs level and its meaningful use as well
as binding regulations on using new technologies—such as smart
inverters which have some distinctive features including grid reliability,
voltage management, and interactive communications—would on its own
help in promoting stabilized growth of solar prosumage and grid-friendly
power generation. Pakistan would, therefore, need to adopt regulations
on managing distributed generation effectively as well as designing grid
codes that assure that only the smartest types of inverters are used for
rooftop solar PV systems.

Strong Political Will

Finally, a strong political will and state-level enthusiasm favoring

distributed generation could help in tapping the enormous potential that
solar prosumage offers for advancing RE in the country. To overcome
challenges to achieving an affordable, reliable and sustainable energy
supply, following measures would likely increase the uptake:

(i) setting clear targets for DG in the overall RE goals;

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 Policy Perspectives Volume 17 Issue 2

(ii) running public awareness campaigns on net metering

regulations and related financial schemes; and

(iii) producing annual growth reports on DISCO-wise DG growth.

Conclusion

To promote and advance the decentralized solar PV uptake, creating an

enabling environment and strong state-level enthusiasm through
aforementioned measures are necessary steps. In this regard, the
existing administrative, contractual, and financial constraints need to be
addressed by the relevant stakeholders on a priority basis. In parallel,
explicit targets should be set for rooftop solar and overall DG. A
combination of approaches encompassing—but not restricted to—
facilitation of the DISCOs; business model innovation; supportive
policies; awareness programs should be introduced for achieving those
objectives. If distributed generation is to become widely adopted, then
the government should pull together and undertake a more proactive
approach towards its diffusion.

Notes

1 Umar Mustafa, Tobias Marz and Gerwin Dreesmann, Roadmap for the Rollout o f Net
Metering Regulations in Pakistan (Bonn: Deutsche Gesellschaft fur Internationale
Zusammenarbeit (GIZ) GmbH, 2016), http://www.aedb.org/images/
RoadmapRolloutNetMetering2016.pdf; and Naila Saleh, "Mainstreaming Residential
Prosumers in Energy Sector," Policy Perspectives 15, no. 3 (2018): 99-117,
https://doi.org/10.13169/polipers.15.3.0099. Prosumerism is an arrangement where a
person consumes as well as produces a product. In the context of this discussion,
energy prosumer is a customer who self-generates energy for meeting her/his own
energy needs, partially or wholly, and has an option of selling the excess energy to the
grid.
2 National Electric Power Regulatory Authority, Government of Pakistan, "National
Electric Power Regulatory Authority (Alternative & Renewable Energy) Distributed
Generation and Net Metering Regulations, 2015," notification S.R.O. 892(1),
September 1, 2015, https://www.nepra.org.pk/Legislation/Regulations/
NOTIFICATION%20SRO%208920/o 20-2015.PDF.
3 Ibid. Initially the Power Purchase Agreement (PPA) period was three years, extended
to seven years after amendment in the act.
4 This data does not cover net metering installations under two small private utilities,
namely Bahria Town and Defense Housing Authority-XII.
5 The data has been compiled from NEPRA's official website and covers installations
made till December 2020.
6 Ibid.
7 The licenses issued for DG in Pakistan are regularly uploaded by NEPRA on its official
website.
8 AEDB, Net-Metering Reference Guide for Electricity Consumer: How to Get Your Solar
System Connected to National Grid in Pakistan (Islamabad: Alternative Energy
Development Board, 2017).

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 Net Metering and Solar PV Prosumage in Pakistan: Growth and Challenges

http://www.aedb.org/images/NetmeteringGuidlinesforConsumers.pdf.
9 Fee-for-Service (FFS) is a payment model where services are unbundled and paid for
separately. In fee-for-energy model, an energy company invests in PV hardware and
is responsible for installation, maintenance, repair, and replacement of the PV system
and, in some cases, its components (controllers, batteries) at the end of their lifetime.
The end user pays a connection fee and a regular fee, usually monthly, though a fee
per kWh is also possible. This study, however, explored that FFS models such as third
part investors are entirely non-existent in Pakistan and that the prosumage drive in
Pakistan is dominated by the dealer models, wherein the prosumer bears the entire
expense of installation and operation.
10 State Bank of Pakistan, "SBP Refinancing Scheme for Renewable Energy," circular
10, July 26, 2019, https://www.sbp.org.pk/smefd/circulars/2019/C10.htm; and State
Bank of Pakistan, "SBP Financing Scheme for Renewable Energy," circular 10, annex
1, July 26, 2019, https://www.sbp.org.pk/smefd/circulars/2019/C10-Annex-I.pdf.
11 Currently Islamabad Electric Supply Company (IESCO) is the only distribution
company (DISCO) which has introduced the online portal for both applicants and solar
vendors. Lahore Electric Supply Company (LESCO) and K-Electric have given the
access of online portal only to solar vendors.
12 Compliant regions denote those areas where both technical and non-technical losses
are low.
13 International Finance Corporation, WBG, "Pakistan Off-Grid Lighting Consumer
Perceptions: Study Overview" (paper, World Bank Group, Washington, DC, 2015),
http://documents1.worldbank.org/curated/en/865301486382674587/pdf/112020-
WP-Pakistan-Solar-Consumer-Study-Overview-26thMay2015-LQ-PUBLIC.pdf.
14 Consultative interaction of the authors with AEDB members on December 8, 2020.

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