Pakistan, home to over 240 million people, has witnessed a surge in solar energy adoption as a solution to high electricity costs and frequent power outages. However, recent developments reveal challenges facing solar panel users in the form of heavy taxation.

The Central Power Purchasing Agency (CPPA-G) has proposed imposing a tax on residential and commercial users of solar systems.

The suggested tax rate is Rs2,000 per kilowatt, affecting both residential and commercial installations. For instance, a 12-kilowatt panel would incur Rs. 24,000 in taxes.

This proposal awaits approval from the prime minister after being forwarded by the Ministry of Energy.

Moreover, concerns arise regarding potential cuts in solar net metering rates, from Rs21 to Rs11 per unit, affecting consumers generating surplus electricity.

This decision aims to address challenges in managing capacity charges due to the rapid increase in solar net metering installations.

While this move has drawn criticism, the government contends it’s necessary to balance financial burdens, especially concerning payments to Independent Power Producers (IPPs).

Despite the government’s argument that current rates allow consumers to recover installation costs within 18 months, power companies advocate for a longer payback period of 10 years.

This debate reflects the complex interplay between incentivizing renewable energy adoption and managing financial sustainability in Pakistan’s energy landscape.

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