Key findings from the report indicate:
● Pakistan’s current Distributed Generation and Net Metering Regulations offer incentives such as high buyback rates, fixed long-term generation licenses, and generous allowances for installed capacity. These have resulted in ideal payback periods, leading to a surge in net-metered rooftop solar photovoltaic (PV) capacity across the country.
● The current policy offers 2-4 year payback periods for 5-25 kilowatt (kW) net-metered solar PV systems. Power utilities are concerned that higher penetration of distributed solar could place the distribution infrastructure at risk of failure and increase capacity payments on non-net-metered consumers.
● The government is considering reducing buyback rates and a shift to net billing from net metering, which could increase payback periods for consumers with a higher self consumption ratio but may incentivize oversized systems. A net billing scheme would therefore need to limit system size. Despite all policy shifts, the payback periods remain under 5 years.
● For the government, while maintaining or improving buy back rates can encourage more renewable energy adoption, this must be combined with grid optimization and digitization. For consumers, choosing the right system size for their consumption profile can significantly impact their return on investment.
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