The shift toward renewable energy is gaining momentum, and more homeowners and businesses in Pakistan are embracing solar power as a sustainable energy source. You can receive compensation or save money if your solar panels produce more electricity than you need. That’s where solar energy billing models like net metering and feed-in tariffs (FITs) come into play. Understanding these systems can help you maximize your energy savings and make an informed decision when investing in solar panels.
What is Net Metering?
Net metering is a billing arrangement that allows solar panel owners to send excess electricity back to the grid and receive credits against their electricity bill. Think of it as a two-way energy exchange between you and the utility company.
How It Works:
- Your solar panels generate electricity during daylight hours.
- The excess energy goes to the grid if your system generates more electricity than you use.
- Your electricity meter records both the power you draw from the grid and the power you send back.
- At the end of the billing cycle, you pay only for the “net” electricity consumed (total used minus excess generated).
Benefits of Net Metering:
✔ Lower electricity bills: You use solar-generated power first, reducing reliance on expensive grid electricity. ✔ Efficient energy use: Instead of wasting excess power, you offset your electricity costs. ✔ Encourages self-consumption: The more you use your solar energy, the higher your savings.
Example:
Let’s say your home’s solar panels generate 600 kWh of electricity in a month, but you only use 500 kWh. The extra 100 kWh is sent back to the grid, and your bill is credited accordingly. If in the next month you consume 550 kWh but generate only 500 kWh, you’ll use the previously earned credits to cover the extra 50 kWh consumption.
What is Feed-in Tariff (FIT)?
A system known as a feed-in tariff (FIT) pays solar energy providers a set amount for the electricity they provide to the grid. Unlike net metering, FITs do not involve offsetting your electricity bill but instead offer direct payments for the energy you contribute.
How It Works:
- Your solar system generates electricity.
- Any surplus power is fed into the grid.
- You receive a payment from the utility company based on a predetermined rate per kWh.
Benefits of Feed-in Tariffs:
✔ Fixed income source: Get paid for every unit of electricity sent to the grid. ✔ Encourages investment in renewable energy: Homeowners and businesses can see solar energy as a profitable venture. ✔ Government-backed incentives: Many governments, including Pakistan’s, are promoting FITs to boost renewable energy adoption.
Example:
Imagine you have a solar system that produces 500 kWh of extra energy monthly. If the utility company pays PKR 10 per kWh, you’ll earn PKR 5,000 every month by feeding your surplus energy into the grid.
Net Metering vs. Feed-in Tariffs: Which One is Better?
| Feature | Net Metering | Feed-in Tariff (FIT) |
| Billing Method | Offsets electricity bill | Pays for extra energy sent to the grid |
| Best For | Reducing electricity costs | Earning money from solar power |
| Payment Method | Bill credits | Direct payment per kWh |
| Suitability | Homes and businesses with variable consumption | Large solar farms, independent power producers |
For Pakistani households, net metering is often the preferred choice as it helps cut down electricity costs. However, if you have a large solar system generating excess energy, feed-in tariffs might be a more profitable option.
Government Policies on Solar Energy in Pakistan
The Alternative Energy Development Board (AEDB) in Pakistan has introduced net metering regulations, allowing residential and commercial users to benefit from bill reductions. Also under investigation are ideas for feed-in tariffs to promote significant solar expansion. However, FIT rates and policies are still evolving, so staying updated on regulations is crucial.
Final Thoughts: Which One Should You Choose?
Both net metering and feed-in tariffs offer great benefits, but the best option depends on your energy goals. If you want to cut electricity bills, net metering is ideal. If you’re looking to generate income from solar energy, feed-in tariffs might be more appealing.
Are you considering switching to solar energy? Solar energy billing is explained to you. Now, check out our previous blog, How Photovoltaic Panels Convert Sunlight into Energy, to understand the basics of solar power generation. Investing in solar isn’t just good for your pocket—it’s a step toward a greener and more sustainable Pakistan!
