Solar Net Metering

Call Us

IPPs in Pakistan 2026: Capacity Payments, Your Electricity Bill and Independent Solar

In short: IPPs are Independent Power Producers, private power plants that sell electricity to the national system. Most of them are paid a capacity payment whether or not their electricity is used. For 2026, NEPRA put capacity and use-of-system charges at Rs 2,163 billion out of a Rs 3,186 billion power purchase bill, which works out to Rs 17.19 per unit, and lifted capacity’s share of the power purchase price from 63% to 68%.

That is why bills stay high even when you use less. The one thing a household or business can control is how many units it has to buy from the grid. That is what an independent solar system is for: sized for your own daytime use, with batteries for the evening, so your bill follows your own generation instead of someone else’s fixed costs.

Last updated: 16 September 2026. Figures are from NEPRA determinations and reporting by Business Recorder, Dawn, The Nation and The News. Sources are listed at the end.

What is an IPP, and what is a capacity payment?

An Independent Power Producer is a privately owned power plant. It signs a long-term agreement with the state buyer and is paid in two parts:

Capacity payments are mostly in dollars-linked terms and were designed to attract investment when Pakistan had shortages. The problem today is the opposite one: the country has more plant capacity than it uses, and the fixed bill for that capacity is spread over the units that consumers actually buy.

The 2026 numbers

What Figure Source
Capacity charge in the 2026 power purchase price Rs 17.19 per unit, up 5.33% on the Rs 16.32 projected for the second half of FY2025-26 NEPRA, reported 10 Jan 2026
Total power purchase price, calendar year 2026 Rs 3,185.97 billion: fuel Rs 973.58bn, variable O&M Rs 49.08bn, capacity and use of system Rs 2,163.32bn NEPRA
Capacity share of the power purchase price Rose from 63% to 68% NEPRA
National average power purchase price Rs 25.32 per unit, of which the energy purchase price is Rs 8.13 per unit NEPRA
Paid to IPPs, July 2025 to May 2026 Rs 2.935 trillion, of which Rs 1.565 trillion was capacity payment and Rs 1.168 trillion energy payment Reported August 2026
Capacity charges to 33 IPPs in FY24 Rs 979.3 billion Business Recorder
Circular debt at 30 June 2026 Rs 1.675 trillion, up Rs 61 billion in FY2025-26 The News, The Nation
Installed generation capacity, March 2026 49,651 MW, up 8.5% year on year, including 7,319 MW added through net metering Economic Survey reporting

Why your bill stays high even when you use less

Fuel cost moves with the units generated. Capacity cost does not. When national demand falls, the capacity bill stays roughly the same and is recovered from fewer units, so the cost per unit goes up. NEPRA’s own 2026 numbers show this: capacity charges now make up about two thirds of what the system pays for electricity before it even reaches your meter.

On top of that sits your distribution company’s cost, losses and taxes. That is how a household ends up paying roughly Rs 37 to Rs 55 per unit before taxes, as Dawn reported when the 2026 rules were announced, while the system buys energy at an average of Rs 8.13 per unit.

What the government has done so far

There has been real movement, and it is worth knowing about:

These are large numbers, but they are spread over many years, and the 2026 determination still shows capacity charges rising. For a household deciding what to do this year, the reforms are not something to wait for.

What this means for you: the case for an independent solar system

You cannot change the capacity payment structure. You can change how many units you buy at Rs 37 to Rs 55. Under the net billing rules in force since 9 February 2026, the value of solar sits in self-consumption:

So the aim is not to build the biggest system that fills your roof. It is to build a system whose output your home or business actually uses, and to store the surplus rather than sell it cheaply.

What “independent” should mean in practice

Setup Independence from the grid Best for
On-grid, sized for daytime use Cuts daytime imports; nothing at night; stops during outages Offices, shops, factories, daytime homes
Hybrid with batteries Covers daytime and evening use, and keeps working in load shedding Most homes, where evening use is heavy
Fully off-grid Total, but needs a much larger battery and generator backup for bad weather Places with no usable connection

For most people in Pakistan the sensible answer is the middle row: a hybrid system that makes you independent of the grid for most of the day, while keeping the connection for backup. Read our guide to hybrid solar systems for how batteries change the maths under net billing.

A simple illustration

These figures are for illustration only. A 10 kW system in Lahore produces about 1,300 units a month on average. If a home uses 900 of those units directly at a tariff of Rs 50, that is about Rs 45,000 a month avoided. The remaining 400 units exported at Rs 8.13 earn about Rs 3,250. The lesson is in the gap between the two numbers: a unit kept is worth roughly six times a unit sold.

In our experience, a correctly sized system used mainly during the day typically pays back in 2 to 3 years, not counting a battery bought for load shedding.

The rules in 2026, in one place

Frequently asked questions

What are IPPs in Pakistan?

Independent Power Producers: privately owned power plants that sell electricity to the national system under long-term agreements, and are paid both for energy generated and for capacity made available.

What are capacity payments?

Fixed payments for keeping a plant available, due whether or not its electricity is used. NEPRA put capacity and use-of-system charges at Rs 2,163 billion for 2026, about 68% of the projected power purchase price.

Why is electricity so expensive in Pakistan?

The largest single component is capacity cost, Rs 17.19 per unit in NEPRA’s 2026 determination, before distribution costs, losses and taxes are added. Fuel is a smaller share than most people expect.

Will my bill fall if I use less electricity?

Your own bill falls with your own units, but the system’s capacity bill does not, which is why per-unit tariffs keep rising nationally. Generating your own units is the more reliable way to cut what you pay.

Should I go completely off-grid?

Usually not. Full independence needs a much larger battery and backup for cloudy days, and you lose the credit for any surplus. A hybrid system covers most of your use and keeps the connection as backup.

Is solar still worth it after net billing?

Yes, when it is sized for your own use. Self-used units save Rs 37 to Rs 55 while exported units earn Rs 8.13, so the return comes from what you consume yourself, not what you sell.

اردو خلاصہ

آئی پی پیز نجی پاور پلانٹس ہیں جنہیں بجلی پیدا نہ ہونے کی صورت میں بھی کپیسٹی پیمنٹ دی جاتی ہے۔ نیپرا کے 2026 کے تخمینے کے مطابق کپیسٹی اور یوز آف سسٹم چارجز 2,163 ارب روپے ہیں، یعنی 17.19 روپے فی یونٹ، اور پاور پرچیز پرائس میں ان کا حصہ 63 فیصد سے بڑھ کر 68 فیصد ہو گیا ہے۔ اسی لیے بجلی کم استعمال کرنے کے باوجود فی یونٹ قیمت بڑھتی رہتی ہے۔

صارف کے ہاتھ میں صرف ایک چیز ہے: گرڈ سے کم یونٹ خریدنا۔ نیٹ بلنگ میں اپنی استعمال کی گئی بجلی پورے ٹیرف (تقریباً 37 سے 55 روپے فی یونٹ) کی بچت دیتی ہے جبکہ گرڈ کو دی گئی بجلی کا کریڈٹ صرف 8.13 روپے فی یونٹ ہے۔ اس لیے سسٹم اپنی ضرورت کے مطابق لگوائیں اور شام کے استعمال کے لیے بیٹری رکھیں۔ 25 کلو واٹ تک کے سسٹم کے لیے اب نیپرا کی منظوری اور لائسنس فیس ضروری نہیں، درخواست براہ راست آپ کی بجلی کمپنی کو جاتی ہے۔

Build your own generation, not someone else’s capacity bill

Solar Net Metering designs and installs solar systems and handles net billing applications across Pakistan. Net billing for a 10 kW system costs Rs 160,000 with LESCO and K-Electric, and Rs 200,000 with the other distribution companies. Head office: 222 Main Boulevard, DHA Phase 6, Lahore.

Call 0313 8783630 WhatsApp us

Sources

Figures are as reported on the dates shown and can change with each NEPRA determination. The savings illustration is an example, not a guarantee.