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January 3, 2021

Study identifies hurdles to net-metering regulations

Lahore

January 3, 2021

Islamabad : A study conducted by the Institute of Policy Studies (IPS) has identified hurdles to the implementation of net-metering regulations and recommended incentives and checks for power distribution companies (DISCOs).

According to the study titled ‘Barriers and Drivers of Solar Prosumage: A Case-Study of Pakistan’, as of November 2020, net-metering installations in Pakistan have reached a cumulative capacity of 148MW, which contrasts very poorly in comparison with other peer regional countries such as India where distributed generation has exceeded 5GW of installed capacity.

“Strong geographic uneven growth exists across the DISCOs in terms of distributed generation uptake where around 70 per cent of growth is concentrated in three major utilities namely IESCO, LESCO and KE.”

The study report said the challenges at inter-connection phase identified as the dominant challenge to PV (photo-voltaic system) development included time lapse in acquiring of three-phase metering equipment at the initial stage, absence of online facility for applications, unavailability of bi-directional meters, and unnecessary delay in processing of the applications at every stage.

It added that the cumbersome procedure makes it quite challenging to get the generation license, while since DISCOs were playing the primary intermediary in this entire process -- playing, the role of coordinator between distributed resources -- they continued to be reluctant towards distributed generation growth owing to administrative burden of processing applications, perceived fears of revenue losses and integration challenges, etc.

“Although DISCOS are obliged by law to implement the net-metering regulations, no accountability mechanism exists which could bind them to do the same.”

The report also observes skewed concentration of distributed generation in resourceful sections of society. This skewed concentration is indicated to be rooted in ‘high cost of solar PV installation’ and the interlinked challenge of ‘difficulty in access to borrowing’ for financing the solar PV system. And while the State Bank of Pakistan has introduced a scheme for supporting rooftop solar yet its limited adoption by commercial banks continue to restrict borrowing for these installations. In parallel, the absence of Fee of Service Models -- such as third-party investors -- again contribute to slow diffusion of solar PV among larger sections of society.

According to it, the registration process should be urgently overhauled to make it simplified and more user-friendly.

The study laid strong emphasis on overcoming the passive opposition from DISCOs and replace it with appropriate regulations vis-à-vis incentives alongside orientation and trainings skewed in favour of distributed generation growth.