Roadmap Rollout Net Metering

Roadmap for the Rollout of
Net Metering Regulations in Pakistan

9th September, 2016
Implemented by:
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Dr. Frank Fechner
Renewable Energy and Energy Efficiency Project, Pakistan
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Umar Mustafa RE / Dipl.-Ing. Tobias März / Dr. Gerwin Dreesmann
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Place and date of publication

Lahore, Pakistan, September 2016
Roadmap for the Rollout of Net Metering Regulations in Pakistan Page 2 of 41
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Table of Contents
Imprint ..................................................................................................................................... 2
Table of Contents ................................................................................................................... 3
List of Abbreviations .............................................................................................................. 4
List of Figures......................................................................................................................... 5
A. Introduction.................................................................................................................. 6
1. Purpose of this Roadmap .............................................................................................. 6
2. Structure of this document ............................................................................................. 6
3. Net metering and the energy context in Pakistan ........................................................... 7
B. Context of net metering in Pakistan ........................................................................... 9
1. Background on net metering .......................................................................................... 9
2. Net metering in Pakistan .............................................................................................. 10
3. Status quo of net metering in Pakistan ......................................................................... 10
C. Vision for deployment of net metering in Pakistan ................................................. 12
1. Status of solar PV in Pakistan ...................................................................................... 12
2. Successful net metering deployment in other countries ............................................... 14
3. Net metering deployment in Pakistan – A scenario ...................................................... 15
D. Market Barriers and Action Roadmap ...................................................................... 20
1. Key Success Factors ................................................................................................... 20
2. Business Case ............................................................................................................. 22
3. Technical Standards, Capabilities and Processes........................................................ 27
4. Awareness on net metering ......................................................................................... 32
5. Overall roadmap and action plan ................................................................................. 38
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List of Abbreviations
AEDB Alternative Energy Development Board

DG Distributed Generation
DISCO Distribution Company (mostly identical with what is internationally called a
utility)
etc. et cetera
FiT Feed-in Tariff
i.e. id est
IRR Internal Rate of Return
kW Kilowatt
kWh Kilowatt hour
kWp Kilowatt-peak (nominal installed power)
MoWP Ministry of Water and Power
NEPRA National Electric Power Regulatory Authority
NPV Net Present Value
O&M Operations and Maintenance
PKR Pakistani Rupee
PV Photovoltaic
RE Renewable Energy
UPS Uninterruptible Power Supply
USD United States Dollar
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List of Figures
Figure 1: Inauguration of the solar power plant at the Parliament House in Islamabad 8
Figure 2: Solar plant at PEC site, Bidirectional energy meter at PEC site 8
Figure 3: Solar PV power plant on the National Assembly Building 10
Figure 4: Policy Drivers for solar PV in 2015 14
Figure 5: Distribution Companies and connections in Pakistan 17
Figure 6: Number of electricity consumers in Pakistan by branch 17
Figure 7: Share of electricity consumption in Pakistan by branch 18
Figure 8: Scenario of new installations under net metering scheme 19
Figure 9: Key Success Factors for Distributed Generation deployment 20
Figure 10: Influencing factors for net metering Business case 22
Figure 11: Financial Results of Commercial Case 23
Figure 12: Annual Cash Flow – Commercial System 23
Figure 13: Third-party finance model 26
Figure 14: Application process according to net metering regulations 31
Figure 15: Promotion picture on small-scale solar via net metering. Source: Meralco 33
Figure 16: Roadmap of action items according to the timeline 38
© Copyright GIZ
A. Introduction
1. Purpose of this Roadmap
The NEPRA Regulations on Net-Metering for Distributed Generation in Pakistan are in force
since September 1, 2015. For the first time, this milestone in energy market legislation allows
all electricity customers to avail net metering for their own photovoltaic and wind power plants
from 1 kW up to 1 MW capacity. While the legal framework is defined, the actual
implementation of the policy has only just begun. So far, only few net metering agreements
have been signed between customers and distribution companies as there are still a number
of hurdles to be removed until net metering can become a success story in Pakistan. These
include the lack of knowledge and technical capability at different organizational levels of the
distribution companies, unawareness of customers as well as limited access to tailored finance
and reliable local suppliers.
The purpose of this Roadmap is to:
1. Give an overview on the different kinds of hurdles which net metering faces.
2. Develop a vision for the role of distributed generation in the future energy mix of Pakistan.
3. Recommend solutions, action items and time frames to overcome market barriers.
This Roadmap is addressed to national policymakers, specifically at the Ministry of Water and
Power (MoWP), but also to the distribution companies, NEPRA as the relevant authority, and
other stakeholders in the energy market. This document shall shed light on how to overcome
the mentioned hurdles. The fostering of net metering in Pakistan has further benefits beyond
purely technical and economic aspects: Net metering has the potential to bring renewable
energy technology to the public and thereby make it a national cause in Pakistan.
2. Structure of this document
This document is structured into sections: Chapter A gives an introduction to the topic of net
metering and to this document. Chapter B explains about the background of net metering on
the international and the national level. Chapter C develops a vision for the mid-term potential
of net metering in Pakistan. Chapter D presents necessary actions, milestones and time
frames to facilitate the rollout of net metering deployment in Pakistan.
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3. Net metering and the energy context in Pakistan
In today’s world, reliable and cost-efficient energy supply is considered the key determinant of
economic development and prosperity of any country. Pakistan has been facing an
unprecedented energy crisis for the past few years as the demand and supply gap has
widened. The country’s current energy demand far exceeds its indigenous generation
resources, fostering dependency on imported oil that puts substantial burdens on the
economy. The dire implications include a burgeoning oil import bill and increasing costs of
power production, leading to a severe domestic shortage of electricity and gas.
The country faces a significant challenge in revamping the transmission network for stable
supply of electricity. Load-shedding and power blackouts have become severe issues for the
country in recent years. Pakistan’s energy constraints have become more pronounced over
the past seven years, as energy supplies have failed to meet the demand. The demand-supply
mismatch has affected millions of domestic consumers, industries, and the overall economy.
According to the Annual Plan 2014-15 of the Ministry of Planning, Development and Reform,
the average supply of electricity remained at 14,400 MW against the demand of 18,400 MW,
implying a power shortfall of 4,000 MW. The electricity load pattern in the country varies from
season to season with highest demand during summer season, mostly due to air conditioning
of buildings. As per the National Power Policy 2013, such demand-supply gap leads to load-
shedding of 12 to 16 hours per day especially in rural areas. The negative effects can be
observed in many villages across Pakistan. The acute power shortage forces the industrial
sector to work at underutilization levels, a development that severely threatens the trade
balance of the country.
The Government of Pakistan has understood these challenges and has defined the end of
load-shedding as its top priority 1. A combination of measures has been already taken, these
include a diversification of electricity and gas imports as well as an amount of 8,000 MW 2
additional new generation capacities to come online until 2018. A part of these new power
plants is foreseen to come from renewable sources, including hydropower, solar and wind.
Net metering, as a driver for distributed solar power plants, can play an important role in this
context.
1
http://thewire.in/44311/pakistan-could-end-energy-rationing-in-two-years-says-asian-development-bank/
2
State of the Industry Report 2015, NEPRA, 2016
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Net metering solar power plants:
National Assembly and Pakistan Engineering Council (Islamabad)
To date, the number of distributed power plants

based on net metering in Pakistan is very limited.
The most prominent installation is a 1,000 kWp
Solar PV plant located on the National Assembly
Building in Islamabad.
The system, which employs multi-crystalline solar
panels by Yingli, is expected to generate some 1.6
million kilowatt-hours of solar electricity annually.
The system was commissioned and approved for
net metering scheme in June 2016. The installation
will reduce the building's electricity costs by an
estimated PKR 28 million annually. Figure 1: Pakistan’s Prime Minister Muhammad
Nawaz Sharif and Chinese President Xi Jinping
inaugurate the solar power plant at the Parliament
st 3
House in Islamabad on April 21 , 2016
A solar power plant with a capacity of 356 kWp has The solar power plant is functioning regular, the
been built at the premises of the Pakistan production rate is currently 1,160 kWh per kWp
Engineering Council (PEC) and the Planning as per information provided by PEC. This
Commission (PC) in 2011/12. The plant was suggests that the plant is in good condition.
funded by the Japanese International Cooperation The plant is equipped with a bidirectional energy
Agency (JICA). The panels are mono-crystalline meter (PEL Pvt. Ltd., Pakistan made). The
Sanyo modules and the 10 kW string inverters are license for net metering is in place and the
installed centrally in a dust protected and air application for the net metering agreement with
conditioned container unit. The plant is divided into IESCO is yet pending as of August 2016.
two parts, while the 178 kWp plant at the PEC site Therefore, no electricity was fed into the grid yet.
is connected to the grid on low voltage level
(400 V), the 178 kWp plant at PC site is connected
to the 11 kV grid.
4
Figure 2: Solar plant at PEC site, Bidirectional energy meter at PEC site
3
Source: Government of Pakistan, 2016
4
Source: http://blog.paktron.net (first picture), 8.2 (second & third picture), 2016
© Copyright GIZ
B. Context of net metering in Pakistan
1. Background on net metering
Net metering is an incentive scheme for distributed generation, typically through renewable
energy sources. Under a net metering scheme, a consumer may install an on-site renewable
energy power plant, primarily for reducing his own grid consumption. At the same time the
consumer is granted interconnection to the grid and is allowed to supply any surplus energy
units from his installation to the electricity grid. These units are recorded and are later on
“netted-off” (i.e. subtracted) against the units consumed from the grid. In this way, a net
metering scheme provides an incentive to consumers to install decentralized renewable
energy systems.
Net metering gives consumers the certainty that they will benefit from any electricity produced
through the system, either through own consumption or through feeding it into the grid. Net
metering is different from a feed-in tariff where all generated renewable energy is remunerated
at a special rate by the utility company (mostly called DISCO in Pakistan). Feed-in tariff
schemes usually offer additional incentives such as long term purchase agreements with
guaranteed grid access, the net metering regulations in Pakistan at the moment only foresee a
three-year agreement between consumer and DISCO and no guaranteed grid access.
The world's first physical net metered connections occurred in 1979, in the U.S. state of
Massachusetts, when the architect and solar pioneer Steven Strong installed solar panels in
two of his two building projects. Strong initially ‘forgot’ to inform the local utility about the
interconnection of the PV systems to the electricity grid, and later successfully negotiated
official interconnection 5.
Given the obvious advantages of on-site electricity production based on net metering such as
vicinity between electric load and supply, the idea spread gradually in the 1980s. Net metering
was introduced by certain utilities in Arizona and Massachusetts by 1982, and in 1983,
Minnesota became the first U.S. state to enact a net metering law. Today, net metering
regulations are in place in 43 US states. Net metering was adopted in Japan from 1990
onwards, and was implemented around the globe thereafter 6.
5
Switching to Solar, Bob Johnstone, 2011
6
Crossing Over: The Energy Transition to Renewable Electricity, Roberto Verzal, 2015
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2. Net metering in Pakistan
The Government of Pakistan promotes and facilitates the exploitation of renewable energy
(RE) sources in Pakistan through AEDB. Distributed generation and net metering are a part of
the overall RE policy. The National Electric Regulatory Authority (NEPRA) announced the
official Distributed Generation and Net Metering Regulations on September 1st, 2015 7. As per
these regulations, any customer of the electric grid (three-phase connections) can avail grid
connection and can enter into a net metering agreement for on-site small-scale renewable
energy installations.
The net metering regulations allow the consumer to receive quarterly remuneration for any
excess electricity supplied to the grid during this period. The rate for the excess electricity units
supplied to the grid is equal to the off-peak electricity rate of the connection.
3. Status quo of net metering in Pakistan
To date, the number of distributed power plants based on net metering in Pakistan is very
limited. The first and most prominent installation is the 1,000 kWp solar PV plant located on
the National Assembly Building in Islamabad.
Figure 3: Solar PV power plant on the National Assembly Building 8
7
SRO 892 -2015
8
Source: AEDB
© Copyright GIZ
Furthermore, a 2 x 178 kWp solar power plant has been built at the site of the Pakistan
Engineering Council in 2011/12, financed through JICA funds.
Other small-scale PV systems on buildings have been installed on a very limited scale so far.
Before net metering was introduced in September 2015, small-scale solar power plants were
mostly used for own consumption and not officially connected to the grid. According to reports
by the DISCOs, the number of systems officially connected to the grid under the net metering
regulations has been negligible so far. However, this situation is now changing. The DISCOs
report more and more net metering applications. NEPRA has granted three application
licenses for net metering customers (as per end of August 2016).
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C. Vision for deployment of net metering in Pakistan
1. Status of solar PV in Pakistan
Apart from some smaller installations, the development of solar power plants started in
Pakistan with the introduction of the Upfront Feed-in tariff in 2014. Currently, the largest PV
installation is the Quaid-e-Azam Solar Park in Bahawalpur. The site area and the first project
phase have been developed by Quaid-e-Azam Solar Power (Pvt.) Limited, a public sector
company set up by the Government of Punjab. The initial project phase with an installed
capacity of 100 MWp has been commissioned in July 2015.
The second stage with a capacity of additional 100 MWp has been completed in 2016 and a
plant with further 150 MWp is currently under construction. The total park is planned to have
an installed capacity of 1 GWp power in total at the final stage. The park is so far the only
utility-scale solar power project in Pakistan to reach its commercial operation.
A number of large-scale solar plant projects are in various stages of planning and permitting
within the Upfront Feed-in tariff scheme since 2014/2015. AEDB has reported that at present,
28 projects of 956.80 MW capacity are under development within the framework of AEDB
policies and procedures, whereas, around 3,000 MWp solar power projects are being initiated
under the regime of provincial governments. These projects are at various stages of
development. So far, 400 MWp solar PV power is installed and comissioned in QA Solar Park,
Bahawalpur, Punjab; 1x100 MWp is undertaken by M/s QA Solar (Pvt.) Ltd., Government of
Punjab and three projects of cumulative 300 MWp are installed by M/s Zonergy Pakistan Ltd.
through its three separate subsidies. Seven projects of cumulative 72.48 MWp are in process
of achieving financial close after obtaining Letter of Support (LOS) and 21 projects of 484.32
MWp capacity are at various stages of development.
Since April 20, 2015, the issuing of new Letters of Intent through AEDB has stalled, in result a
number of projects have come to a halt. So far, new proposals of more than 4,500 MW solar
PV power projects from 87 companies are received in AEDB, but due to halt, the requests of
these companies have not been reviewed.
In terms of small-scale grid-tied solar power plants, the Punjab government has been actively
working to reduce the dependence of public buildings on the national grid. One of the most
prominent projects in implementation is the “Solarization” of approximately 4,000 9 schools
across Punjab. With power capacities ranging from 1 kWp to 5 kWp, the solar power plants to
be installed under this project will have a cumulative installed capacity of 6.15 MWp.
9
http://eproc.punjab.gov.pk/Tenders/45177_DoPP_EOI_SCHOOLOFFGRID_AD_13012016.pdf
© Copyright GIZ
Another project initiated by the Government of Punjab, will accomplish the installation of
3 kWp solar power plants in 100 10 Basic Health Units (BHUs) during its pilot phase. The
program aims to equip a total of 1,000 BHUs with similar PV systems for uninterrupted power
supply in the second phase. All these PV systems have been designed with the provision of
net metering functionality, reducing burden on the national grid and decreasing the monthly
electricity cost for the BHUs significantly.
10
http://eproc.punjab.gov.pk/Tenders/46742_CEP_EOI_SOLARSOLUTIONBHUS_AD_18022016.pdf
© Copyright GIZ
2. Successful net metering deployment in other countries
Net metering is among the most important policy schemes driving solar PV deployment around
the globe. New PV installations which work under net metering accounted for about 15% of the
total newly installed PV capacity worldwide of 50 GWp in the year 2015 11.
PPAs
8%
Feed-in tarif f s Net-Metering

63% 15%
Direct
subsidies /
Tax breaks
12%
Green
certif icates /
RPS schemes
2%
Figure 4: Policy Drivers for solar PV in 2015
Net metering has been very successful in the USA. In California, mandatory net metering is in
place for utilities that allows customers to zero-out their bills and credits customer accounts at
full retail rates. Customers that generate a net surplus of energy at the end of a twelve-month
period can receive a payment for this energy under special utility tariffs. The program is
accompanied by public and utility funding for cash rebates and promotion of DG through the
programs ‘Go Solar California’ and ‘California Solar Initiative’. An investment of 3.3 bn. USD
by state and utilities has enabled the installation of over 3,000 MW distributed solar power
plants from 2007 until 2016 12.
Under these programs, in addition, to cash rebates, owners of installed systems are eligible to
receive tax credits of up to 30% of the investment cost. Over 60% of systems under the
program have been financed by third-party investors in 2014. Under this concept, investors
aggregate many systems and lease these back to homeowners or businesses thus reducing
cost of finance and enabling users to use solar without own equity investment.
11
Source: Solar Power Europe, Global Market Outlook 2016-2020
12
See: http://www.gosolarcalifornia.org/, specific prices ranged between 4-8 USD/kWp during the programs funding
period
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3. Net metering deployment in Pakistan – A scenario
The following section outlines a scenario for future deployment of net metering generation in
Pakistan. The analysis is based on the assumption that the dissemination of new technologies
in general follows an adoption curve over time. The underlying theory for this assumption was
published by Everett Rogers in 1962, in the seminal publication „Diffusion of Innovations“. In it,
Rogers describes how the adoption of new technologies follows a S-curve – a theory that has
been proven to be correct for numerous innovations over the past century.
Figure 5: Diffusion model for new technologies
Data for the development of the German solar PV market shows a very similar pattern: The
market developed rather slowly during 2000-2008 as only relatively few Innovators and Early
adopters invested in solar power plants. By 2008, in line with the introduction of more
favourable feed-in tariffs and cost reductions along the solar production chain, the technology
adoption reached its tipping point and market growth took off.
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Figure 6: PV market development in Germany 13
In the following, the model for the diffusion of innovations is applied to the sector of distributed
electricity generation and net metering in Pakistan.
The electricity distribution grid of Pakistan is serviced by a total of twelve distribution

companies (DISCOs) according to NEPRA 14 (plus a number of Small Power Producers
holding a Distribution Licence who serve a very minor number of connections).
13
German Solar Association, 2016
14
State of Industry Report 2015, NEPRA
© Copyright GIZ
Public Distribution Companies Number of customers
1 Peshawar Electric Supply Company Limited 2,956,567
2 Tribal Areas Electricity Supply Company
Limited 441,562
3 Islamabad Electric Supply Company Limited 2,462,167
4 Gujranwala Electric Power Company Limited 2,923,493
5 Lahore Electric Supply Company Limited 3,909,862
6 Faisalabad Electric Supply Company Limited 3,445,357
7 Multan Electric Power Company Limited 5,116,072
8 Hyderabad Electric Supply Company Limited 976,888
9 Sukkur Electric Supply Company Limited 722,392
10 Quetta Electric Supply Company Limited 564,887
Private Distribution Companies
11 K-Electric Limited 2,158,290
12 Bahria Town (Pvt.) Limited 16,879
Total: 25,694,416
Figure 5: Distribution Companies and connections in Pakistan (source: State of Industry

Report 2015, NEPRA)
All in all, the DISCOs serve a total of 25.7m consumers in Pakistan. These are divided into the
following consumer types 15:
Nr. of consumers 2015:

25,660,333
1% 1%
13%
Domestic
Commercial
Industrial
Agricultural
Bulk supply / others
85%
Figure 6: Number of electricity consumers in Pakistan by branch (source: State of Industry

Report 2015, NEPRA) 16
15
State of Industry Report 2015, NEPRA
16
Note: The total number varies slightly to number in the table; this deviation is also present in the source
document.
© Copyright GIZ
Domestic consumption accounts for almost half of the annual electricity consumption in
Pakistan.
Total consumption 2015: 84,935 GWh
6%
9%
Domestic
Commercial
Industrial
48%
Agricultural
29% Bulk supply / others
8%
Figure 7: Share of electricity consumption in Pakistan by branch
In order to develop a future scenario for net metering adoption in Pakistan, the total number is
needed of residential, commercial, industrial and agricultural sites which are suited for PV
installation on roofs or ground in direct neighborhood. We assume 5% of total connections to
have sufficient space availability for the residential customers, 10% for each of commercial
and industrial customers and 50% for the agricultural customers who are typically located in
rural areas with more space available. These assumptions result in a total number of 1.6m
connections suitable solar net metering installations for all categories combined. For the same
groups, we assume average solar plant installation sizes of 5, 20, 250 and 50 kWp
respectively. A total cumulative potential exceeding 28 GWp of solar net metering installations
can be derived from these parameters.
Now based on the above described presented adoption model, we conservatively only
consider the first two groups, i.e. the innovators (2.5% of total suitable sites) and early
adopters (13.5% of total suitable sites), and assume that these 16% of the mentioned 1.6m
connections will adopt net metering over the next years; the innovators over the next 5 years
and the early adopters over the next 8 years. This leads to the scenario shown in Figure 8.
It can be seen that installation numbers increase very slowly at the beginning, but then start to
rise quickly once the tipping point is reached. After 5 years, a cumulated number of 1,000
MWp of installed capacity is reached, and after another 3 years, 4,500 MWp are reached. This
© Copyright GIZ
compares to a total installed electric generation capacity in Pakistan of currently about 23 GW
in 2015 17.
These numbers are only the beginning 16%; later on, the remaining 84% may come until all
suitable connections in Pakistan have adopted net metering.
2,000
1,800
1,600
MW newly installed / a
1,400
1,200
1,000
800
600
400
200
0
2017 2018 2019 2020 2021 2022 2023 2024
Domestic Commercial Industrial Agricultural
Figure 8: Scenario of new installations under net metering scheme
This adoption scenario would result in a total generation of solar electricity through net
metering of about 6,900 GWh per year in 2024. This amount equals about 8% of the total
electricity consumption in Pakistan in 2015.
This scenario can be seen as a realistic case if the measures laid out in this Roadmap are
implemented. The faster the recommendations given in following sections are being put in
practice, the faster the uptake of installation rates will be.
17
State of Industry Report 2015, chapter 2.2 “Source-wise installed capacity”.
© Copyright GIZ
D. Market Barriers and Action Roadmap
1. Key Success Factors
The development and deployment of commercially viable distributed generation based on net
metering, or in fact any other incentive scheme, depends on the following key success factors:
awareness among the potential customers, technical standards and processes, and a viable
business case.
Figure 9: Key Success Factors for Distributed Generation deployment
A. Attractive business case for investors
The first and foremost requirement for the installation uptake of Distributed Generation (DG)
power plants is the attractiveness of the underlying business case. By their nature, DG power
plants based on renewable energy require an upfront investment for planning, procurement of
components and turnkey installation and commissioning. Potential plant owners might be
interested in purchasing their own solar power plant for various reasons. In order to achieve a
high penetration of small-scale solar power plants, the financial returns of the required
investment need to reach certain profitability so that private persons and companies will be
motivated to bring up the necessary investment.
© Copyright GIZ
B. Technical capabilities and efficiency of processes
The technical capabilities of market participants and processes applicable for DG power plant
grid interconnection, operation and integration are vital to enable DG market development. As
an example, although the profitability for investors of PV plants in Italy was higher than in
Germany from the beginning, the deployment has been much slower due to a very difficult
administrational process. So installation rates will only increase substantially if standards and
processes are clearly defined and implemented.
Among others, this requires the definition of clear standards and certification requirements for
DG power plant equipment. Standardized requirements for power quality delivered by DG
power plants, ideally in line with capabilities of state-of-the art equipment, help to reduce grid
integration complexity. A transparent billing procedure is required as well as a fast and
straightforward license application process.
C. Awareness
Any new technological solution takes time for their deployment, and follow a technology
adaptation curve, even if they have obvious benefits for the customer. Potential end-users
need to understand the functionality of renewable power plant technologies to a certain extent
until they will have sufficient confidence to invest into such a system. DG power plants based
on net metering applications are a novel possibility for electricity consumers in Pakistan,
allowing them to participate in the energy market and become electricity producers. The active
promotion of DG systems under net metering regulations is therefore critical to achieve
awareness among the public and generate substantial deployment rates.
© Copyright GIZ
2. Business Case
A. Status
In a separate document titled “Business Case for Implementation of Net Metering Regulations
2015” which was developed by GIZ/8.2, the profitability of small-scale solar plants under the
net metering scheme in Pakistan has been analyzed in detail. From the overview given on the
following page, it becomes clear that payback periods for small-scale solar under net metering
in Pakistan may be acceptable in industrialized countries. However, this is less so the case for
a typical investor’s perspective in Pakistan, here shorter payback periods are often expected.
B. Influencing Factors
The business case for solar power plants based on the net metering is attractive for the larger-
scale commercial and industrial scenarios. The attractiveness for residential systems, is lower
as the specific installation cost is higher and savings are lower compared to the other cases,
where diesel is saved during load-shedding hours.
The following main influencing factors for the profitability of the business case of small-scale
solar power plants under net metering are identified:
Figure 10: Influencing factors for net metering Business case
© Copyright GIZ
Business Case for Implementation of Net Metering Regulations 2015
The business case for net metering systems has The payback periods of the modeled cases
been analyzed by GIZ/8.2 under different range from 6 to 15 years, depending on the
conditions and assumptions. Regular hours of plant size, kind of backup system used and
load-shedding and different kinds of backup location. The likely case for most systems is a
systems lead to the fact that the simulation and payback between 7 to 9 years for larger-scale
analysis is slightly more complex as in other commercial and 9 to 12 years for smaller-scale
countries. residential cases. The corresponding IRRs can
The document analyzes three cases: residential range around 18% / 25% (without / with leverage
(5 kWp, incl. battery), commercial (50 kWp) and through loans) for the larger-scale cases, while
industrial (500 kWp). the IRR for the residential system is of around
10% (independent of leverage).
The following table highlights the financial results
of the case 50 kWp / commercial sector as an Profitability of distributed solar generation in
example: Pakistan therefore remains a challenge where
investment decisions are typically taken on a
Investment 6,700,000 PKR
perspective of less than five years – which might
Payback (years) 6.9 change, however, in the future when fuel prices
18 increase and solar equipment prices drop
IRR (unleveraged ) 19%
further.
IRR (leveraged) 26%
19
Figure 11: Financial Results of Commercial Case
The following chart illustrates the cash flow of the case 50 kWp / commercial sector.
4,000,000
2,000,000
0
0 2 4 6 8 10 12 14 16 18 20 22 24
PKR
-2,000,000 Debt scenario

Invest Scenario
-4,000,000
-6,000,000
-8,000,000
Year
Figure 12: Annual Cash Flow – Commercial System
18
“Unleveraged” means full equity IRR. “Leveraged” means the IRR when assuming a debt ratio of 75% with 10
years debt tenor at an interest rate of 10%. 10% is the current KIBOR rate plus 3% margin. KIBOR is 6.95
according to latest available information. See e.g. http://www.pakistaneconomist.com/c-database/kibor.php - “3
years, Offer”.
19
Assumptions: Annual consumption of the consumer: 100MWh, hours of load shedding: 4 per day, diesel
generator backup system, electricity price including surcharges: 12.5/18 PKR per kWh (normal/peak rate), diesel
price: 80 PKR per liter, solar system: 50 kWp, no battery, specific cost of solar system: 134 PKR per kWp all
included. Financial assumptions: 75% debt, interest rate 10%, tenor 10 years; inflation of all energy-related prices:
5% per year.
© Copyright GIZ
The influence factors which can be modified through targeted actions are:
1. The profitability of net metering strongly depends on the load-shedding situation: If no

backup system is used, every hour of grid disconnection per day decreases the
profitability of solar power plants as available solar power is lost. On the other hand, if a
generator is used as backup, fuel is saved during load-shedding and the profitability is
thereby increased.
2. The general price of electricity which is replaced by solar production is a key determent for
the financial viability. The electricity rates are comparatively low in Pakistan compared
with other countries in the region and also in relation to the actual generation cost of fossil
fuel based power plants. This situation reduces the attractiveness of solar power
generation.
3. On the financial side, important influence factors are the conditions for debt finance and
the availability of equity which is needed to cover the upfront capital expenditure of the
solar power plant installation.
C. Attractiveness of the business case

The attractiveness of the business case for distributed solar power plants will make or break a
successful development of the net metering sector. The following actions are recommended to
improve the cost-benefit ratio for net metering customers and thereby stimulate investment.
The profitability of solar power plants under net metering is directly affected by the electricity
rates. For example, an assumed increase of the base tariff by only 2.5 PKR (15 instead of 12.5
PKR per kWh) leads to the standard payback period for the commercial case dropping from 7
to 6 years. Now electricity prices in Pakistan are mostly not subsidized, so currently the
financial urgency to the authority to increase them is low. However, international fuel prices
are very low at the moment, so there is the likelihood that they will go up again. Assuming
steady, even if limited, energy price increases for the years to come, an according increase in
electricity rates in Pakistan would be the natural consequence. This would positively affect the
net metering business case as the electricity produced receives a higher value.
On the supply side, if load shedding can be considerably reduced during the next years (as the
current energy planning by the government foresees) this will give better planning reliability to
customers of net metering. Every additional hour of grid-connection during the day means an
additional hour of grid feed-in for the customer.
Another very relevant point is related to the regulations of net metering currently in place: For
the agreement between net metering customer and the DISCO, a term of 3 years is defined.
As 3 years is a very short time period compared to the payback periods and lifetime of solar
© Copyright GIZ
power plants, this should be corrected to at least 10 years as soon as possible. This correction
should entail an additional clause stipulating that the DISCO will issue a new agreement after
the end of a term, if no relevant objections are observed.
Recommendation:
1. Implement measures to increase value of electricity production from distributed

generation, such as a mid-term increase of base electricity retail tariffs and a significant
and reliable reduction of load-shedding.
2. Increase the agreement term in the net metering regulations from 3 to 10 years,
including clause of automatic renewal in absence of relevant objections.
D. Financing of small-scale solar plants

The financing of privately owned renewable power plants is a new business segment for
commercial banks in Pakistan. Until the banks understand the associated risks and benefits,
they will be reluctant to fund such projects, and if they do they will charge relatively high
interest rates in the beginning. To overcome this situation, soft loan programs by state banks
are a very helpful institution. The State Bank of Pakistan provides refinance to banks in
Pakistan who offer loans to net metering customers with installations of 4-1,000kW as per
IH&SMEFD Circular No. 03 of 2016 from June 20th, 2016. The end-user interest rate is 6% for
up to 12 years.
The availability of such low cost financing facilities has proven a successful facilitator for DG
power plant investment in many countries. E.g. in Germany the state-owned bank Kreditanstalt
für Wiederaufbau (KfW) is among the largest financing entities of renewable power plant
projects.
Even with this facility being there, awareness and confidence of banks into these new
technologies needs to be developed so that soft loans actually reach the end consumers.
Recommendation:
Promote the availability of lower cost debt finance from State Bank of Pakistan and other
state-owned or development banks among commercial banks and help them gain
confidence into the new technologies.
© Copyright GIZ
Third-party finance models and Net Metering
Net metering has been a most successful tool to The third-party finance model has proven high
spark market development in the USA when PV deployment rates due to the following
companies like SunEdison, Solarcity and others reasons:
started to bundle equity in investment funds that
- The building owner avoids the large upfront
finance, own and operate large portfolios of DG
investment for the solar equipment and,
net metering plants. This third-party owned model
depending on the legal setup, may also
is a popular model frequently applied in the
avoid assuming the technology or
residential home sector in the USA, where
performance risk of solar systems.
turnkey installers lease rooftop solar power plants
to individual households who in turn pay them a - The developer generates revenues by way
monthly lease rental. The owner of the house of lease rental or electricity sale from the
provides the rooftop space and the third party building owner under a commercial
owner/investor typically offers an integrated agreement between the parties. As he
service of leasing, commissioning and continues to be owner of the equipment, he
maintaining the systems to homeowners and also qualifies for claiming depreciation on
guaranteeing standards of performance. The the capital cost of the PV systems, with
electricity generated from such DG system is associated direct tax benefits. Being a
used to meet the on-site captive load while the large-scale investor and operator, he can
excess generation is fed into the grid on net achieve much better equipment prices than
metering basis. Over 60% of net metering individual private customers.
systems installed in California have been Similar models could be enabled in Pakistan in a
financed by third-party investors in 2014. second phase of net metering roll-out. To enable
this, parts of the regulations would need to be
changed to allow for third-party ownership of
systems and the entering into net metering
The third-party financing model is illustrated in the agreements between the DISCOs and third-
following figure. party owners.
Export of excess Developer builds, owns

energy to grid and operates the on site
PV system
DISCO
Captive consumption Bank

of solar power
Building Owner Solar Developer
Developer leases PV system to Building Owner

or sells solar electricity to under long-term PPA Equity Investors
Net Metering contract is closed between Developer and DISCO
Figure 13: Third-party finance model
© Copyright GIZ
3. Technical Standards, Capabilities and Processes
The prevalent technical standards, the capabilities of net metering stakeholders and efficient
implementation processes are critical foundations for a successful distributed generation
rollout. In the following sections, the status of technical standards, capabilities and processes
is described and recommendations for actions to improve the current situation are given.
A. Technical standards
Clear standards and certification requirements need to be established in the first place for DG
power plant equipment. For the import of material, custom regulations are already in place in
Pakistan, and the Ministry of Trade and Industry is planning to establish industry standards for
solar equipment which shall apply both for imported and locally manufactured equipment.
With regards to standardized requirements for power quality delivered by DG power plants that
limit negative effects on grid stability, an amendment to the distribution grid code will soon be
decided on by the Distribution Code Review Panel (DCRP). This body consists of the DISCOs
together with the authority, NEPRA. GIZ/8.2 has made a suggestion for this amendment,
based on international equipment standards, to facilitate the process.
A clear license application process has been defined in the net metering regulations.
Regarding the billing structure, the principles have also been laid out. The DISCOs now need
to introduce the necessary changes to their billing software and come up with any pending
questions regarding billing so that NEPRA can clarify those.
Recommendation:
Finalize relevant technical standards and support the DISCOs in development of suitable
net metering SOPs and billing procedures.
B. Bidirectional meters
Bidirectional meters are the only additional component of a solar plant connected via net
metering compared to a solar plant connected under the feed-in tariff scheme or similar. At the
same time, bidirectional meters have not been in use in Pakistan so far. The availability of
bidirectional meters on the market is therefore crucial for the deployment of net metering,
where electricity needs to be accounted into both directions. The same task can principally
© Copyright GIZ
also be done by two one-directional meters, but this increases cost and comes with a higher
probability of accounting errors.
There is at least one company in Pakistan that already assembles meters which are suitable
for bidirectional use, and bidirectional meters are in place in some installations. However,
many distribution companies and government officials are so far unaware of the availability,
although limited, of bidirectional meters in the Pakistani market.
The ready availability and awareness of meters needs to be ensured. In order to furthermore
reap the benefits of producing locally, it should be actively pursued and incentivized that more
meter suppliers in Pakistan manufacture and market bidirectional meters.
Recommendation:
Incentivize wider spread of nationally manufactured bidirectional meters to help to ensure
availability and contribute to local economy at the same time.
C. Technical capability of the distribution companies

Some distribution companies so far have been interested and active in introducing and
implementing net metering. But even if senior staff members from the different distribution
companies want to support net metering, they still struggle with the lack of capability on
different levels:
1. Field level: Many employees on the field level are not aware of the net metering
regulations and do not know how to process applications for interconnection.
2. Central level: The lack of a central unit dedicated to the promotion and implementation of
net metering means that the whole topic is left to itself. There is no responsible entity for
applicants or field level staff to reach out to, and which can give directives to
technical/analytic, administrational and field staff.
3. Technical level: As per regulations, a detailed grid impact study needs to be performed for
all net metering systems 20. However, as net metering systems are connected in multiple
numbers and at the distribution level, which is a novelty for Pakistan, the responsible units
at the distribution companies need support to accomplish this new kind of grid studies in a
safe, but time-efficient manner.
20
According to a recent decision of the DCRP, net metering systems of less than 10 kW peak are exempted, but for
all larger systems, such a study is mandatory.
© Copyright GIZ
In order to tackle the three mentioned hurdles, the following approach is suggested:
A train-the-trainers program is held for senior staff from the distribution companies, preferably
staff who was already active as internal trainers.
In these trainings, two topics will be addressed:
1. The net metering application process is discussed in detail and broken down to small
action items and responsible persons. Thereby it becomes clear what and when needs to
be done by the distribution company staff, especially in the field level, during the
application process.
2. A technical training is given regarding the accomplishment of grid studies, based on

specific software which the distribution companies are already using 21. Between trainers
and participants, an efficient way of replicating the grid study process for different sites
shall be identified and practiced.
Recommendation:
Conduct a train-the-trainer program which defines training materials and enables senior
DISCO staff to train field and technical staff.
Additionally, to these trainings, a central net metering task force shall be designated by every
distribution company. To ensure this, the NEPRA, under the umbrella of Ministry of Water and
Power, may give a directive to all distribution companies and support the process with
additional funding. Every net metering task force should consist of at least one full-time senior
staff and one full-time support staff as well as further employees from other units who would
assist on a demand-based basis.
21
Ideally, there should be one software standard for all distribution companies such as the GIS-based software
which was recently donated by USAID.
© Copyright GIZ
The responsibilities of the net metering task force shall be as follows:
• Act as the internal support for all field staff on any questions regarding net metering.
• Function as representative to the customers regarding all questions around net

metering.
• Coordinate all activities regarding net metering with other distribution companies as
well as the authority (NEPRA).
• Ensure that information on net metering on the distribution company’s website and
other information channels is available and up-to-date.
• Ensure that internal processes around net metering are in place and defined according
to the regulations, which means especially that the grid impact assessment is done in a
proper and timely manner by the distribution company’s grid assessment department.
The establishment of a central task force within every DISCO has the great advantage that
these staff members can be trained thoroughly on net metering and all its aspects. Meanwhile,
this staff will work full-time to ensure that all customers of net metering receive necessary
information in time. The task force would also take care that tasks of the DISCOs, such as
application processing and grid studies, are accomplished within time. Field level and technical
staff can receive all training and information they need about net metering – including updates
and changes in the regulation or in the DISCOs internal SOPs which might happen from time
to time.
As the DISCOs are already struggling to deal with the implications of net metering and are
worried that net metering might decrease their profit, these task force teams would probably
need to be funded by additional funds from the Government of Pakistan. For this topic, being
new and innovative and related to renewable energies, the Ministry of Water and Power
should have good chances to avail donor funds and international environmental funds if
needed.
Recommendation:
Establish dedicated net metering units within the distribution companies to help bundling
net metering knowledge and centrally addressing all capability bottlenecks at the
distribution company level.
© Copyright GIZ
D. Application process
The application process for net metering in Pakistan is comparable to the process in other
countries, like the Philippines. Some DISCOs and other stakeholders have asked for changes
in the time frames defined by NEPRA, so these might be updated in the future. The process as
such will probably remain the same.
Distributed Generator DISCO
Review and provide inf ormation &

Request of registration
Send application incl. Request f or

NEPRA approved documents in
Interconnection to DISCO
response
5 days
Acknowledge that application is

Submit requested inf ormation
complete
20 working days
Initial review of technical

f easibility f or qualif ication of
interconnection
Application
evaluation
No
Inf orm DG about reason why

application is not f easible
Yes 10 days
Within 7 days
DG and DISCO sign Send copy of agreement to
interconnection agreement NEPRA
Interconnection agreement and
7 days
Send written interconnection
Energization
Payment of connection charge

approval and issue connection
estimate Within 20 days
charge estimate
Install and commission

Within 30 days of demand notice interconnection f acility
Review of design of DG f acility

and interconnection prior to
operation
Figure 14: Application process according to net metering regulations
The process has a certain complexity which is however necessary as it reflects the technical,
administrational and financial implications of the agreement which is closed between the
DISCO and the consumer. It needs to be ensured that the relevant DISCO staff is trained so
that they can handle the applications adequately.
© Copyright GIZ
4. Awareness on net metering
An important bottleneck for large deployment of net metering is the lack of awareness of
electricity customers. Even in industrialized countries where on average the public information
level on renewable energies is higher, and where a larger share of electricity consumers avail
sufficient resources to install rooftop solar installations at their premises, awareness
campaigns are often used by the governments to facilitate a widespread acceptance of
renewable energy incentive schemes such as net metering or feed-in tariffs.
To actively promote net metering in Pakistan, the following marketing activities are
recommended.
A. Marketing material and distribution plan

If net metering is to be a success in Pakistan, it needs to be actively promoted to potential
customers. Especially as targeted customers in this case are especially small-scale
enterprises and private households, it cannot be assumed that information about the
attractiveness and potential of net metering is circulated at substantial levels by the customers
themselves (as it might be the case for public support schemes to very specific sectors). Other
countries who have introduced net metering also have accompanied this introduction with
awareness material.
The necessity to actively inform target customers is even more important as the business case
of net metering in Pakistan is less attractive than in other countries because of load shedding
and low electricity prices. Only if the customers know that the option of net metering exists,
where they can buy equipment and what the additional benefits of small scale solar
installations are, substantial deployment can be reached.
Regarding marketing material, two important points have to be considered:
1. The type of material, e.g. brochure, guidebook, leaflet, websites, further online material.
2. The form of distribution, e.g. governmental organizations, multipliers, on specific events.
© Copyright GIZ
Net Metering in the Philippines
The Philippines has adopted a “Renewable Assuming the numbers quoted by Meralco
Energy Act” in 2008 which established the (totaling about 1.6 MWp in May 2016) and
National Renewable Energy Board (NREB, similar understanding that Meralco so far has been the
to AEDB in Pakistan) and foresaw net metering as utility which had by far the highest number of net
one support mechanism for renewable energies in metering customers, the total amount of installed
the Philippines. The net metering regulation was net metering systems in the Philippines in mid-
officially launched on July 24, 2013. 2016 must be somewhere around 500
A specialty in the Philippines’ regulations is that installations with a total capacity of 2 to 3 MWp.
the tariff which consumers receive for feeding It is however important to notice that the upper
electricity into the grid is not actually the purchase limit of 100 kWp for installations on net metering
price of electricity (about USD 0.20 per kWh in in the Philippines significantly limits the total
2015), but instead a lower rate which equals the numbers; for example, in Pakistan, the solar plant
average generation costs of electricity to the installed at the Parliament Building in Islamabad
utilities (about USD 0.12 per kWh in 2015). As a alone has a size of 1 MWp and will operate under
consequence, feeding electricity into the grid is the net metering scheme.
less attractive than using it for own consumption.
GIZ has supported the introduction of net
22
In “More Meralco customers shift to net metering in the Philippines through several
metering”, June 25, 2016, The Philippine Star documents, such as a manual on interconnection
quotes Meralco officials, saying that the number of of rooftop PV systems, a guideline for distribution
net metering customers of Meralco have grown grid impact studies and a reference guide on net
from 0 to over 200 between 2013 and 2015. As of metering in the Philippines.
May 16, Meralco reports 392 net metering
customers with an average capacity of 4 kWp with
a recent month-to-month growth of 7% in the
23
number of installations .
Figure 15: Promotion picture on small-scale solar via net metering. Source: Meralco
22
Meralco is Philippines biggest utility, responsible for Manila and its surroundings.
23
http://www.philstar.com/business/2016/06/25/1596294/more-meralco-customers-shift-net-metering
© Copyright GIZ
Type of material:
GIZ has developed a valuable guide for net metering and photovoltaic plants in the
Philippines 24. The document contains all necessary background information on net metering
regulations in the Philippines, the application process, what to take care of when purchasing
and financing PV plants, and an extensive list of addresses of suppliers. To facilitate the
process in Pakistan, similar information material needs to be developed. In order to create
material which is even more targeted to different groups and topics, it is recommended to
create different, short brochures on the following topics:
• “How to apply”: Description of how net metering works, what conditions a customer needs
to fulfill and how an interested customer can apply for it.
• “How to buy”: Description of important points to take care of when purchasing a system,
different options and technologies and their advantages and disadvantages, and including
a list of addresses of suppliers and related non-commercial associations and government
bodies.
• “How it has been done (References)”: Successful case studies from Pakistan, including
numbers on grid consumption and diesel savings and payback periods.
Such information shall be made available on both hardcopies (brochures, leaflets) as well in
online media hosted, promoted and frequently updated by public authorities.
Form of distribution:
The form of distribution of the material is crucial for a successful awareness campaign. A
random or least effort distribution of printed material does not at all cause the desired
outcome. It needs to be assessed carefully how the target group can be reached in the best
way. In order to be able to reach the target group most likely to become the early adopters of
net metering, this target group needs to be defined first.
A suitable target group for the first net metering customers could be: “Private households, as
well as commercial and industrial enterprises with access to capital and awareness for the
environment and sustainability”. Another target group could be: “Professional technical
companies who supply electricity and energy services to households and enterprises”.
Once these target groups are defined, suitable multipliers can be identified who can then be
integrated into the distribution plan. Such multipliers could be: the Pakistan Engineering
Council, the Green Building Association as well as similar institutions. Governmental
24
GIZ: Net Metering Reference Guide (Philippines), November, 2013, Manila, Philippines.
© Copyright GIZ
institutions such as the Ministry of Water and Power and its subsidiaries should also be
integrated. The AEDB should be in the lead to identify these institutions and manage the
process.
Secondly, once the marketing material as well as the distribution plan are defined and
developed, an official launch event chaired by the Ministry of Water and Power, and AEDB,
together with the DISCOs and other stakeholders as well as the mentioned multipliers would
be an effective way to start the awareness campaign and give it the necessary initial
momentum via press releases and public discussion.
© Copyright GIZ
Recommendation:
1. The marketing material to be developed needs to be defined. Suggestion: Separate

brochures on the application process, on how to purchase quality equipment and on
reference cases.
2. The target group for the marketing needs to be defined, e.g. affluent and
environmentally aware households and enterprises.
3. The multipliers for the marketing campaign need to be defined, e.g. associations were
already active in environmental and renewable energy topics.
4. An official launch of the awareness campaign including stakeholders and the press
helps to gain momentum.
B. Establishment of a national helpdesk

A big hurdle to successful implementation of net metering is the lack of awareness of the
DISCOs’ field staff. These are the ones who need to process the applications and actually
connect the systems to the grid. Training of field staff is proposed in the respective chapter
and is the most important measure to tackle this issue. However, even if the DISCOs work at
full effort, it will take some time until all field level staff all over the country will be trained and
capable to efficiently and successfully deal with all net metering affairs. Therefore, an
additional and very helpful measure would be the establishment of a nationwide central
helpdesk. The purpose would be to help interested customers to answer all their questions
regarding net metering and assist them whenever their interaction with the local DISCO office
becomes difficult.
The great advantage of a central dedicated helpdesk is that staff can be trained specifically for
the purpose of assisting customers in net metering affairs. Moreover, the communication can
be set up in a way that it supposes the minimum effort by the customer, e.g. via email or
through a toll free telephone hotline. Another advantage of a central helpdesk is that any
issues, questions and doubts of interested customers of net metering can be registered in a
centralized and structured way. The helpdesk thus functions like a stethoscope which can
directly measure the “pulse of net metering implementation”, i.e. identify any difficulties and
issues around net metering among potential customers.
Crucial for the setup of the central helpdesk for net metering is that it receives sufficient
resources right from the beginning. It needs to be ensured that staff can be trained properly, all
communication facilities can be set up, and operation is secured at least for 2 to 3 years.
Equally important is that interested customers get to know about the helpdesk. The helpdesk
© Copyright GIZ
should have an own website and telephone line. The contact details of the helpdesk shall be
highlighted in all marketing materials and should be posted in all customer offices of the
DISCOs throughout Pakistan.
The most suitable institution where the helpdesk could be established is NEPRA as the
authority who is in charge of the net metering regulations themselves. However, AEDB or
others could also be used to establish this helpdesk.
Recommendation:
Establish a nationwide helpdesk (preferably at NEPRA) including toll-free hotline for
potential customers of net metering that helps to address issues on the customer level
effectively and allows identifying of remaining hurdles for net metering on the ground.
© Copyright GIZ
5. Overall roadmap and action plan
A total installed capacity exceeding 4,500 MWp of solar power plants through net metering is
assumed to be a realistic scenario for Pakistan until 2025. The more immediate goal should be
the first 1,000 MWp through net metering by 2021. In order to meet or exceed these numbers,
the measures laid out in this roadmap are crucial. They are summarized in the following.
A. Overall roadmap
The following chart summarizes the measures and their timeline.
Figure 16: Roadmap of action items according to the timeline
© Copyright GIZ
B. Action plan
The main tasks to make net metering a success in Pakistan and achieve substantial
deployment of distributed solar power plants within the next 10 to 20 years are:
• Improvement of the commercial profitability of net metering via end of load-shedding,

supportive finance and electricity prices which reflect the international energy costs;
through the government
• Increase of the technical capability of DISCO staff and finalization of pending technical
standards through the DISCOs and NEPRA, supported by the government.
• Creation of awareness via a concerted high-level promotion campaign through AEDB.
The measures recommended in this Roadmap are as follows.
The Government of Pakistan (i.e. the Ministry of Water and Power, together with other
concerned ministries) should:
• Increase the value of electricity production from distributed generation through a mid-
term increase of base electricity tariffs which reflects international energy prices which
are bound to rise during years to come and a significant and reliable reduction of load-
shedding.
• Incentivize wider spread of nationally manufactured bidirectional meters to help to
ensure availability and contribute to local economy at the same time.
The State Bank, together with other financial institutions should:

• Promote the availability of lower cost debt finance from state-owned or development
banks so that it is available and within the awareness of the end-customer.
NEPRA as the regulating authority should:
• Increase the agreement term in the net metering regulations from 3 to 10 years,
including clause of renewal in absence of relevant objections.
• Consider removing legal barriers for third-party finance model and actively promoting
this financing approach for commercial and industrial customers as a second phase of
net-metering.
• Finalize pending technical standards and support the DISCOs to come up with suitable
net metering billing procedures.
© Copyright GIZ
AEDB should:
• Conduct a train-the-trainer program which defines training materials and enables
senior DISCO staff to train field and technical staff.
• Define the marketing material, target group and multipliers for the awareness campaign
on net metering, than conduct the campaign through an official launch and further
implementation.
NEPRA or AEDB should:
• Establish a nationwide helpdesk including toll-free hotline for potential customers of net
metering that helps to address issues on the customer level effectively and allows
identifying of remaining hurdles for net metering on the ground.
The DISCOs should:
• Establish dedicated net metering units within the distribution companies to help
bundling net metering knowledge and centrally addressing all capability bottlenecks at
the distribution company level.
The faster these measures are implemented and actually put in practice, the faster will be the
uptake of solar power plant installation under the net metering scheme. Sustainable success
will only be achieved of all stakeholders work together and closely coordinate their respective
actions.
© Copyright GIZ
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
House 11-B, Street 50, F-8/3
44000 Islamabad – Pakistan
Phone: +92 51 285 1175

Fax: +92 51 285 1175
Internet: www.giz.de/pakistan
© Copyright GIZ

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Roadmap for the Rollout of

Net Metering Regulations in Pakistan

Place and date of publication

Roadmap for the Rollout of Net Metering Regulations in Pakistan Page 2 of 41

Table of Contents ................................................................................................................... 3

List of Abbreviations .............................................................................................................. 4

1. Purpose of this Roadmap .............................................................................................. 6

2. Structure of this document ............................................................................................. 6

3. Net metering and the energy context in Pakistan ........................................................... 7

B. Context of net metering in Pakistan ........................................................................... 9

1. Background on net metering .......................................................................................... 9

2. Net metering in Pakistan .............................................................................................. 10

3. Status quo of net metering in Pakistan ......................................................................... 10

C. Vision for deployment of net metering in Pakistan ................................................. 12

1. Status of solar PV in Pakistan ...................................................................................... 12

2. Successful net metering deployment in other countries ............................................... 14

3. Net metering deployment in Pakistan – A scenario ...................................................... 15

D. Market Barriers and Action Roadmap ...................................................................... 20

1. Key Success Factors ................................................................................................... 20

2. Business Case ............................................................................................................. 22

3. Technical Standards, Capabilities and Processes........................................................ 27

4. Awareness on net metering ......................................................................................... 32

5. Overall roadmap and action plan ................................................................................. 38

Roadmap for the Rollout of Net Metering Regulations in Pakistan Page 3 of 41

AEDB Alternative Energy Development Board

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Roadmap for the Rollout of Net Metering Regulations in Pakistan Page 5 of 41

1. Purpose of this Roadmap

The purpose of this Roadmap is to:

2. Structure of this document

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Roadmap for the Rollout of Net Metering Regulations in Pakistan Page 7 of 41

To date, the number of distributed power plants

Roadmap for the Rollout of Net Metering Regulations in Pakistan Page 8 of 41

1. Background on net metering

Roadmap for the Rollout of Net Metering Regulations in Pakistan Page 9 of 41

3. Status quo of net metering in Pakistan

Figure 3: Solar PV power plant on the National Assembly Building 8

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1. Status of solar PV in Pakistan

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Feed-in tarif f s Net-Metering

Figure 4: Policy Drivers for solar PV in 2015

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Figure 5: Diffusion model for new technologies

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The electricity distribution grid of Pakistan is serviced by a total of twelve distribution

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Figure 5: Distribution Companies and connections in Pakistan (source: State of Industry

Nr. of consumers 2015:

Figure 6: Number of electricity consumers in Pakistan by branch (source: State of Industry

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Total consumption 2015: 84,935 GWh

Figure 7: Share of electricity consumption in Pakistan by branch

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Domestic Commercial Industrial Agricultural

Figure 8: Scenario of new installations under net metering scheme