PAKISTAN is not usually an early mover on global climate concerns. But at least from one perspective, that is exactly what is happening as rich Pakistanis defect from a fossil-fuel and hydro-dominated power grid to rooftop solar self-generation.
Much has been made of net-metering policies in recent months and the implications of grid defection have been hotly debated, but the basic reality underlying this controversy has somehow evaded comment, which is that a low-carbon energy transition is underway. And it is happening despite the state, not because of it. This unplanned and uncoordinated transition has urgent implications for social equity and the political and institutional arrangements needed to support it.
At the heart of the net-metering kerfuffle is public distribution companies’ fear of what is called the ‘utility death spiral’. This rather unfortunate name emerges from European and the United States’ experiences in which utility companies increase their tariffs, thereby prompting high-income customers to invest in self-generation for some or all of their electricity supply. Utilities thus lose their best customers, forcing them to increase tariffs even further, and the problem is compounded.
Usually utilities tend to overstate the risks posed by customers going off-grid, but curiously, the opposite may be true in Pakistan. The understating is evident in the numbers quoted. Cash-strapped distribution companies and the public exchequer have been sweating about net-metering solar installations whose combined capacity in different accounts varies from approximately 1,000MW to 2,000MW. But if media........