Govt considers imposing taxes on solar panel users: Details inside

ISLAMABAD: The Central Power Purchasing Agency (CPPA-G) has proposed to the government to impose a tax on residential and commercial consumers installing solar systems.

Pakistan, a country of more than 240 million people, has seen a growing solar energy trend amid rising electricity prices, frequent power outages, and declining solar panel prices, but solar panel users are now there is a huge tax burden.

According to the media reports, CPPAG has sent a summary in this regard to the Ministry of Energy (Power Division).

CPPA-G has proposed to levy a tax of Rs. 2,000 per kWh on residential and commercial solar panel users.

According to reports, a summary of the rationalization of net metering power buyback rates is also under consideration.

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Sources revealed that users using 12-kilowatt panels will have to pay tax to the tune of Rs. 24,000. The ministry has sent the summary to the prime minister of Pakistan for approval.

After approval of the summary, an application will be filed with the National Electric Power Regulatory Authority (NEPRA) to reduce the net metering electricity buyback rate.

Will solar net metering rates be reduced by Rs 10 per unit?

The government is facing challenges with the high increase in solar net metering installations across the country, affecting its ability to manage capacity charges.

While the authorities are planning to reduce the prices paid to solar power producers through net metering, a move that has been criticized.

At present, net metering consumers get Rs 21 per unit for putting additional power in the grid, but the government plans to reduce it to Rs 11 per unit, resulting in a loss of Rs 10 per unit to solar power generators.

This decision is influenced by the financial burden of capacity charges paid to independent power producers (IPPs), which are made regardless of the actual purchase of electricity.

Despite concerns, the government argues that the current rate allows consumers to recover solar panel installation costs within 18 months, while power companies are requesting an extension of the payment period to 10 years.