From Net Metering to Net Billing: Tariff Design and Distribution-Sector Stress in Pakistan

Rubina Ilyas and Bilal Aftab
Additional contact information
Rubina Ilyas: Pakistan Institute of Development Economics
Bilal Aftab: Pakistan Institute of Development Economics

No 2026:149, PIDE Knowledge Brief from Pakistan Institute of Development Economics

Abstract: While net metering is largely celebrated as a clean-energy success story, the cost implications of this system on Pakistan's struggling distribution sector are ignored. Drawing on regulatory data from the National Electric Power Regulatory Authority (NEPRA) and the existing literature, this Knowledge Brief summarizes evidence on the relationship between net metering/net billing, distribution losses and revenue recovery. The estimates show that even a small net-metering penetration (2 to 3% of sales) may exacerbate the financial distress of already loss-ridden and weakly recovering utilities. A Composite DISCO Stress Index calculated as a weighted average of losses, net-metering penetration and recovery performance reveals very strong heterogeneity: the stress is concentrated in the weakest base-line distribution utilities rather than in those with highest solar uptake. The evidence demonstrates that net metering is not to be examined separately from distribution-sector and fixed-cost recovery mechanisms. 1.From Net Metering to Net Billing The power sector in Pakistan has suffered from poor cost recovery, high transmission and distribution (T&D) losses, and the accumulation of circular debt. Rooftop solar has witnessed a boom in Pakistan, primarily due to the ever-increasing electricity prices. The net-metered capacity has already crossed 5 GW, and the total distributed solar would be many times the number when off-grid and behind-the-meter systems are accounted for. It was expected to reach 6 GW by FY2024-25 (NEPRA, 2024). Since retail tariffs in many urban slabs touched the level of PKR 35-40 per unit and generation cost from solar was falling, rooftop solar turned out to be a rational hedge against rising electricity tariffs. Net metering was initially introduced in September 2015 by the National Electric Power Regulatory Authority (NEPRA) through theDistributed Generation and Net Metering Regulations 2015to incentivize renewable energy uptake, support distribu...

Pages: 8
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://file.pide.org.pk/pdfpideresearch/kb-149-fr ... ress-in-pakistan.pdf First Version, 2026 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pid:kbrief:2026:149

Access Statistics for this paper

More papers in PIDE Knowledge Brief from Pakistan Institute of Development Economics Contact information at EDIRC.
Bibliographic data for series maintained by Khurram Iqbal ().