The National Electric Power Regulatory Authority (NEPRA) has raised a significant concern regarding the cost of renewable energy in Pakistan. Its latest State of the Industry Report for 2025 highlights that several large-scale solar, wind, and hydropower independent power producers (IPPs) are supplying electricity to the national grid at rates far higher than those offered by consumers with rooftop solar systems under net-metering arrangements.
Staggering Tariffs from Utility-Scale Renewable Plants
According to the NEPRA report for the fiscal year 2024-25, the authority observed that multiple solar IPPs are charging the Central Power Purchasing Agency-Guarantee (CPPA-G) over Rs40 per unit. These rates are substantially higher than the effective cost of electricity fed into the grid by net-metering consumers. The report explicitly asks policymakers to consider this disparity when formulating or revising net-metering policies.
The data reveals a detailed breakdown of high-cost renewable energy supplies:
- Solar Power: Three solar power plants, with a combined capacity of 300 MW, supplied electricity at rates exceeding Rs40 per unit. Another three plants, totalling 130 MW, charged around Rs30 per unit.
- Wind Power: The situation is similar for wind energy. Seven wind power plants (402 MW combined) supplied power at over Rs40/unit, while ten more plants (500 MW) charged above Rs30/unit.
- Hydropower: Even some hydropower plants contributed to high costs. Two plants (964 MW combined) supplied electricity at over Rs30/unit, and two others (860 MW) at above Rs20/unit.
The report notes that during their debt service periods, the supply rates from these renewable plants were at times significantly higher than those of many base-load power plants, directly impacting end-consumer tariffs.
The Challenge of Variability and Low Utilization
NEPRA's report further delves into the operational challenges of Pakistan's renewable sector, which contribute to these high costs and unreliable supply.
Hydropower, while peaking at 5,410 GWh (38.79% of total generation) in June 2025, saw a sharp decline to 866 GWh (10.52%) in January 2025 due to reduced river flows. This variability forces the system to maintain expensive backup capacity. The overall utilization factor for hydro plants in FY2024-25 was only 39.68% of installed capacity.
Wind power generation is highly weather-dependent. With an installed capacity of 1,838 MW as of June 2025, its highest monthly generation was 522 GWh in June, plummeting to just 98 GWh in November 2024. The sector's utilization factor stood at a mere 23.87%.
Solar power, with 780 MW of installed capacity, contributed only 0.1% to the nation's total electricity generation in FY2024-25. Its generation swung from 140 GWh in March 2025 to 84 GWh in November 2024, with a peak contribution of just 1.39% to the CPPA-G portfolio.
Net-Metering: A Cheaper Alternative for Grid Integration
In contrast to the high tariffs from utility-scale renewable IPPs, NEPRA acknowledges the benefits of distributed solar generation through net-metering. The regulator stated that net-metering empowers consumers, reduces their bills, and supports national goals like energy security and decarbonization. It also reduces pressure on grid infrastructure during peak hours.
Proponents of net-metering argue that it provides electricity to the grid at significantly lower rates than the Rs45-50/unit often charged by large-scale renewable plants. They maintain it reduces transmission and distribution losses, supports grid stability, promotes environmental sustainability, and delays costly grid expansion projects.
In light of these findings, NEPRA has directed all Distribution Companies (DISCOs) to conduct a comprehensive study assessing the technical, financial, and regulatory impacts of increasing solar PV penetration through net-metering and other distributed generation models.
