They Did It Again: How Pakistan’s Government Sacrificed Your Solar Investment to Protect IPP Profits

From Relief to Robbery: Turning Your Solar Investment into an IPP Bailout

The government has pulled off another quietly devastating policy shift, this time targeting the very households that tried to escape Pakistan’s electricity crisis by investing in rooftop solar. On Monday, February 3rd, 2026, the National Electric Power Regulatory Authority notified new regulations that effectively gut the net metering system millions of Pakistanis relied on to make solar panels financially viable. This is not policy reform. This is a calculated move to protect the profits of Independent Power Producers while shifting their losses onto ordinary citizens who dared to find a solution the state could not provide.

The numbers tell a ridiculous story. Under the old net metering framework, when you generated more solar power than you used, your distribution company credited those excess units at roughly the same rate you paid for grid electricity. If you paid Rs25.9 per unit to buy electricity, you received approximately Rs25.9 per unit when you sold it back. This one-to-one exchange made rooftop solar economically attractive despite the high upfront cost. Households could recover their investment in three to four years, then enjoy decades of cheaper power while reducing their carbon footprint and easing pressure on an overburdened grid.

NEPRA’s new Prosumer Regulations 2026 destroy that equation. Now you will sell your surplus solar electricity at the national average energy purchase price, discussed at around Rs11 per unit, while continuing to pay consumer tariffs that can reach Rs50 per unit when you draw from the grid. The financial impact is immediate and severe. A typical middle-class household with a five-kilowatt solar system might export 200 units in a good month. Under the old system, those 200 units offset 200 imported units almost perfectly, keeping bills manageable. Under the new regime, you receive Rs2,200 for those exports but pay Rs10,000 for the same number of imports. That is a net monthly loss of Rs7,800 before you even factor in fixed charges and distribution costs. Payback periods have more than doubled overnight, jumping from three years to eight or more.

The official justification is predictable and dishonest. Regulators claim that solar prosumers were unfairly burdening non-solar users by avoiding their share of grid maintenance costs while still relying on the distribution network for backup power. They argue that the rapid adoption of rooftop solar has reduced revenue for distribution companies at a time when those companies must continue paying capacity charges to IPPs regardless of how much electricity is actually consumed. The government frames this as protecting the poor from cross-subsidies, suggesting that wealthier solar-owning households were gaming the system at the expense of those who cannot afford panels.

This argument collapses under the slightest scrutiny. The real burden crushing Pakistani electricity consumers is not rooftop solar. It is the bloated, rigged contracts with IPPs that guarantee them payment whether their plants run or sit idle. In 2024, capacity payments to IPPs reached a staggering Rs2.1 trillion. For calendar year 2026, NEPRA projects total power sector costs of Rs3.186 trillion, with Rs1.923 billion of that figure going to capacity payments alone. These are payments for installed capacity, not for electricity actually generated or used. When industrial output falls, when grid demand shrinks, when solar panels reduce daytime consumption, the IPPs still get paid. Someone has to cover that gap, and the government has decided that someone is you.

The structure of these IPP contracts has been an open wound in Pakistan’s energy sector for decades. Many agreements were signed during periods of acute power shortages, often with minimal competitive bidding and opaque terms that favored plant owners. Over the years, investigations and audits have repeatedly found evidence of over-invoicing, under-reporting of efficiency gains, and inflated capital costs that artificially boosted the returns guaranteed to IPPs. The Institute for Energy Economics and Financial Analysis documented in 2025 how IPPs have profited excessively while the government struggled to meet foreign exchange obligations and service mounting circular debt, which stood at Rs1.661 trillion as of July 2025. In September 2025, the government was forced to secure a Rs1.225 trillion bank loan just to settle outstanding dues to IPPs, a debt that is now being serviced through a Rs3.23 per unit surcharge on every consumer bill for the next six years.

Rather than confront these contracts, renegotiate them transparently, or terminate agreements with IPPs that have already recovered their capital and earned reasonable returns, the government has chosen to squeeze rooftop solar users. This is not about grid stability or protecting the poor. It is about protecting powerful industrial conglomerates with political connections who own these plants. When solar adoption surged in response to blackouts and tariff hikes that made grid electricity unaffordable for millions of Pakistanis, it began cutting into IPP revenues. Thermal plants that once ran constantly now sit idle during sunny hours as households and businesses meet their daytime needs with solar power. IPPs watched their dispatch fall while their guaranteed payments remained locked in by contract. They needed someone to absorb those losses, and the government delivered.

The scale of Pakistan’s solar boom over the past few years underscores just how desperate citizens were for an alternative. Solar power grew from four percent of the energy mix in 2021 to between fourteen and twenty-five percent in 2024 and 2025. Driven by skyrocketing grid tariffs and frequent load shedding, Pakistan became one of the world’s top solar markets almost overnight, importing roughly 22 gigawatts of solar panels in 2024 alone. Tens of thousands of households and small businesses scraped together savings or took loans to install rooftop systems, betting on NEPRA’s published net metering regulations to make the investment pay off. Those regulations promised stability, with seven-year contracts and predictable credit rates. Now the rug has been pulled out.

The new rules cut contract terms from seven years to five, and NEPRA has explicitly reserved the right to revise purchase rates during that period. This means even the reduced Rs11 per unit rate is not guaranteed. Distribution companies can lobby for further cuts whenever solar generation threatens their bottom line. New prosumers must also bear all interconnection costs, pay for meters and any necessary grid upgrades themselves, and cough up a non-refundable concurrence fee of Rs1,000 per kilowatt installed. For a modest five-kilowatt system, that is an immediate Rs5,000 hit on top of panels, inverters, installation, and now uncertain payback timelines.

Existing net metering customers are temporarily shielded, but only until their current agreements expire. Once that happens, distribution companies have the authority to migrate them to the new net billing framework, erasing the financial protections they relied on when they made their investment decisions. Thousands of households now face the prospect of losing their solar savings midway through their payback period, with no legal recourse and no compensation for the policy reversal.

The political implications are hard to overstate. The middle class, small business owners, and even segments of the industrial sector that invested heavily in solar did so because the government failed to provide reliable, affordable electricity. They solved their own problem at their own expense, reducing carbon emissions and easing grid congestion in the process. Now they are being told that their solution threatens the profits of a handful of well-connected IPPs, so the rules must change to protect those profits regardless of the cost to ordinary Pakistanis. Business chambers across the country have already begun calling the new regulations a de facto solar tax, and public anger is building.

This is corruption in plain sight. It is regulatory capture, where the institutions meant to serve the public interest instead serve the interests of powerful private actors. It is a government prioritizing IPP cash flows over citizen welfare, grid sustainability, and the energy transition Pakistan desperately needs. The stated concern for cross-subsidies and grid costs is a smokescreen. If NEPRA and the Ministry of Energy were genuinely concerned about fairness and efficiency, they would publish full audits of every IPP contract, renegotiate or terminate deals with plants that have already recovered their capital, eliminate capacity payments for idle generation, and introduce genuinely competitive wholesale markets where solar can compete on merit. Instead, they have chosen the path of least political resistance within the corridors of power, the path that protects entrenched interests and punishes citizens for trying to help themselves.

Pakistanis deserve transparency. They deserve energy policy that prioritizes efficiency, affordability, and sustainability over protecting the profits of a few dozen power plants. They deserve regulators who work for the public, not for IPP shareholders. Until that changes, every tariff hike, every capacity payment, every policy reversal like this net metering rollback will be exactly what it looks like: another transfer of wealth from your pocket to theirs, with the government acting as willing accomplice. The question now is whether Pakistan’s citizens will accept this quietly or demand the accountability and reform the energy sector has avoided for far too long.