The debate surrounding solar net metering in Pakistan is often framed as a matter of citizen empowerment, energy autonomy, and climate responsibility. Rooftop solar, many argue, enables households and businesses to reduce bills, contribute to sustainability, and hedge against a grid which some consider unreliable.

Yet as adoption accelerates, a more complex question emerges: are net-metered consumers becoming, in effect, the new independent power producers (IPPs)? And if so, what are the implications for Pakistan’s energy economy?

When IPPs were introduced in the 1990s, they were hailed as a breakthrough, bringing private capital to bridge Pakistan’s energy shortfall. Although they succeeded in expanding generation capacity, rigid contracts and capacity payments led to the infamous circular debt crisis.

As of August 2025, Pakistan’s energy sector circular debt stands at over PKR 1.6 trillion. Furthermore, as per the latest news, the federal government has signed a PKR 1.225 trillion financing agreement with a consortium of 18 banks to reduce the power sector’s remaining circular debt. Of this, Rs659 billion will be used to repay loans taken by Power Holding Limited (PHL), with repayments routed through the existing Debt Service Surcharge (DSS) already included in electricity bills.

The arrangement will be serviced over four to six years without adding new tariffs or charges, ensuring no extra burden on........

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