Development of Alternative and Renewable Energy (ARE) based distributed generation on net-metering/wheeling/banking modes is being considered as a very favorable and feasible method of providing relief in current energy deficit scenario. The concept of net-metering has been successfully implemented in many countries around the globe and has been recognized as one of the most promising application of solar energy in particular and renewable energies in general. To facilitate prompt promotion of captive and net metering concepts, governments of different countries have announced various policy targets, market mechanisms and incentives for the consumers.
International experience indicate that promotion of these options have resulted in making large proportion of the domestic, commercial and industrial sector electricity consumers self-reliant in meeting their electricity needs. The Global Solar PV Market Outlook 2013 indicates that share of solar PV based net metering installations is the major contributor in the total solar PV capacity installed in most of the countries. This share in different countries is as; Germany 73%, Italy 78%, China 70%, USA 78%, Japan 63%, Spain 15%, Austria 90%, India 23% etc. Various market mechanisms and incentives are being announced by these governments to promote net metering at consumers’ level.
Net metering based solar applications not only lessen the burden over the national grid but also support in increasing overall generation capacity, reducing fuel import bill, decreasing emissions of greenhouse gases and strengthening the national grid by minimizing line losses as well as increasing major deployment of solar applications. Added economic benefits like creation of job opportunities, establishing manufacturing base and development of allied industries have also been experienced globally. The Government of Pakistan (GoP) needs to take measures to promote these solar energy applications in the country to conserve energy and to generate environment friendly electricity. These applications can help in adding around 2,000 – 3,000 MW in country’s generation capacity and mitigating millions of tonnes of carbon dioxide within next three to four years with minimal Government expenditure in the form of initial subsidies.
AEDB has been actively pursuing to promote the net-metering concept in Pakistan. In due course, it was noted that legal framework comprising of rules/regulations, technical standards, obligation on grid operators for mandatory interconnection to distributed generation facilities and simple contractual arrangements to regulate such applications did not exist. In the absence of such regulatory framework these options could not be propagated. AEDB has been advocating among the key policy makers and the power regulator to develop such regulatory framework. Actions under taken so far in this regard are outlined below:
- AEDB with the support of Asian Development Bank (ADB) developed draft NEPRA ARE Distributed Generation (Net Metering etc.) Rules / Regulations and shared with NEPRA on 17th August 2012 for consideration and further necessary action at their end.
- AEDB carried out series of meetings with the technical team of NEPRA to clarify their queries in the matter and through various correspondences, indicated importance of the subject and actions required to be undertaken by NEPRA.
- NEPRA conducted a consultative workshop in March 2013 where a draft of NEPRA Net Metering Rules was shared with the participants. AEDB was not invited.
- On 28th August 2013, AEDB received draft NEPRA ARE Distributed Generation (Net Metering) Rules for comments. It was noted that the draft rules forwarded by NEPRA were just a procedural format and lacked various important parameters. In order to assist NEPRA in the matter, detailed comments were prepared and sent to NEPRA on 16th September 2013.
- NEPRA, on 2nd October 2013 sent a letter through which they appreciated AEDB’s efforts and agreed to consider AEDB’s comments while finalizing the NEPRA ARE Distributed Generation (Net Metering etc.) Rules.
- A couple of meetings were held afterwards to bring clarity to various issues and concerns raised by NEPRA. AEDB shared policy guidelines and implementation mechanisms for metering of India and America with technical team of NEPRA in January 2014 for their better understanding.
- AEDB prepared a document containing technical recommendations for implementing Net Metering concept and shared with NEPRA on 24th January 2014 for their consideration and further necessary action.
- Several meetings and discussions done with the NEPRA team to push them to finalize the matter.
Once propagated, the distributed generation options will allow large proportion of the domestic, commercial and industrial sector electricity consumers to meet large share of their electricity needs at their own and feed electricity to the grid at times when it is not needed by them. This will not only lessen the burden over the national grid but will also support in increasing overall generation capacity, reducing fuel import bill, decreasing emissions of greenhouse gases and strengthening the national grid by minimizing line losses as well as increasing the major deployment.
While NEPRA announces the net metering rules/regulations, AEDB recommends that the GoP may adopt the following options to promote captive and distributed generation options of renewable energy applications:
- The GoP may allow net metering and announce required rules / regulations enabling installation of net-metering systems.
- The GoP may establish a soft financing scheme to provide loans to the end consumers for installing solar PV systems at their premises.
- The GoP may issue carbon offsetting certificates to the consumers who would install solar PV systems to meet their electricity demands and may give them financial incentive by reducing their electricity tariff rates / giving them tax relief.
- The GoP may announce that the domestic consumers who would install the solar systems at their premises will be given rebate (i.e. 50%) in property tax.
- It may be made obligatory for each of the Distribution Companies (DISCOs) to connect certain capacity of solar PV systems to their grid system on net metering in next three years.
- The GoP may allow duty and taxes free import of solar PV modules, batteries, charge controllers, inverters, solar appliances including solar air conditioning systems, solar DC fans, solar based lights, LED lights etc. Federal Board of Revenue may be asked to issue SRO to this effect.
- The GoP may announce special tax rebate package for the manufacturers to install industrial set-ups for manufacturing solar energy appliances / equipment. The local solar PV and products manufacturing industry may be exempted from whole of GST.
In case if the required regulatory framework is not placed in time and the distributed generation options are not propagated, then this can have various repercussions like (i) serious opportunity lost (ii) wastage of available resource (iii) social cost (iv) financial burden on the economy to bridge demand supply gap (v) loss to economy due to non-availability of electricity etc.
Foregoing in view, it is requested that requisite legislation (rules/regulations) may be announced by NEPRA for enabling net-metering in the country and GoP may take measures as mentioned above to support nurturing the sector.