ISLAMABAD (Kashmir English): The price of solar energy in Pakistan is likely to rise, even though the government has recently reduced the net metering rates.
This is due to a proposed 18 per cent sales tax on imported solar equipment, which is currently under discussion.
In recent years, more and more households and businesses across the country have turned to solar power.
With rising electricity prices and frequent power cuts, solar energy has become an attractive and increasingly popular solution. But fresh government decisions could now slow down that momentum.
This comes as the authorities plan to cut the rates at which solar users sell their surplus energy back to the national grid, a move that could further discourage people from going solar. Sources within the tax department say the proposed 18 per cent tax is part of a broader fiscal strategy.
In order to help the country meet IMF requirements, the government seeks to acquire Rs200 billion in extra revenue by broadening the range of taxes.
Yet, the plan is causing concern among those in the renewable energy industry, as they worry it could make solar installation more expensive and influence unfinished projects.
At the same time, net metering buyback rates are being slashed. The rate, which used to be around Rs27 per unit, is expected to fall to just Rs10 per unit.
That’s a huge setback for many homeowners who invested in solar with hopes of cutting their monthly electricity costs or breaking even over time.
On top of this, changes in the billing structure are being introduced. Rather than receiving credits towards future bills, solar users will now be paid in cash each month.
This shift will apply to all categories of consumers. Meanwhile, the license period for net-metered systems is being shortened from seven years to five.
As a result of these developments, there is growing interest in hybrid solar systems paired with lithium batteries. But industry experts warn that this could increase Pakistan’s import bill by as much as $1 billion every year.
There is also concern that tax exemptions under the current Sales Tax Act may be withdrawn. If some products are taxed, solar energy could grow out of reach for the usual buyer.
Pakistan achieving 5.3 gigawatts in net-metered capacity by April 2025 is a major success for the country’s move toward clean energy, but recent events have raised concerns.
