The Rs 2.1 Trillion Reason Your Bill Keeps Rising Even When You Use Less

• By Best Solar Company PK
• 22 Jul, 2026
• Solar Policy
• 8 min read

If you have cut your electricity use this year — switched to LED bulbs, run the AC less, added an inverter fan — and your bill still went up, you are not imagining it. You are colliding with the single biggest structural problem in Pakistan's power sector: **capacity payments**.

These are fixed charges the government owes to Independent Power Producers (IPPs) simply for existing and being available to generate — whether or not the grid actually buys their electricity. In fiscal year 2024, these payments hit a staggering **Rs 2.1 trillion**, and analysts projected roughly a **33% increase** for FY2025. Because capacity payments make up around **65% of the national average power purchase price**, they flow straight into your tariff.

That is the trap in one sentence: a huge slice of your bill has nothing to do with how many units you consume.

What capacity payments actually are

When Pakistan faced crippling load-shedding in the 1990s and 2000s, it signed long-term "take-or-pay" contracts to attract private and Chinese investment in power plants. Under these Power Purchase Agreements (PPAs), the state-owned buyer guarantees the plant a return on its capacity — in US-dollar-indexed terms — even if the plant sits idle.

The result is a cruel arithmetic. As the economy slowed, the rupee weakened, and households and industry cut consumption, the country ended up with far more contracted capacity than it uses. The fixed bill for that idle capacity did not shrink. It got spread across fewer units sold — which means the **per-unit cost of every remaining unit rises**.

This is why "just conserve more" is no longer a winning strategy against the grid.

Why the renegotiations have not rescued you

The government knows this is unsustainable. Under IMF pressure, it moved in 2024 to renegotiate. As a first step, PPAs with **five IPPs were terminated**, two of those accepted "haircut" discounts of up to around Rs 20 billion, and roughly **18 more IPPs** face possible conversion to "take-and-pay" contracts — where the off-taker only pays for energy actually delivered, eliminating the capacity charge.

Sounds promising. But note the history: Pakistan attempted PPA renegotiations in **1998, 2012, 2020, and again in 2024**. Each round delivers headlines and partial savings, then stalls against legal protections, sovereign guarantees, dollar-indexation clauses, and the sensitivities of Chinese CPEC-linked plants whose contracts are hardest to touch.

Even the optimistic scenarios shave a fraction off a Rs 2-trillion-plus obligation. The savings, where real, tend to be one-off adjustments — not a structural end to capacity payments. For a homeowner deciding what to do this year, the honest read is: **do not build your household budget around a rescue that has failed three times before.**

What this means on your actual bill

Look at your tariff slabs. Residential rates in 2025–26 run from roughly **Rs 22–24 per unit** for low-to-moderate use, climbing to an effective **Rs 40–45 per unit or more** once you cross into the higher slabs (above 700 units), before you even add fixed charges, fuel cost adjustments, quarterly tariff adjustments, and taxes.

Those "adjustment" line items are where capacity costs and currency swings get passed through to you. They are why two identical months of usage can produce two very different bills. And they are almost entirely outside your control as a grid-only consumer.

Why rooftop solar is the durable hedge

Here is the key insight: **the only part of your electricity cost you can actually control is the part you stop buying from the grid.** Every unit you generate on your own roof is a unit that no longer has to absorb a share of the Rs 2.1 trillion capacity burden.

A typical **10kW rooftop system** in Pakistan in 2025–26 costs roughly **PKR 14–18.5 lakh** for a quality on-grid or hybrid installation (battery-less on-grid setups can be found nearer PKR 10–15 lakh), and produces about **1,000–1,300 units per month** in good conditions. For a household or small business currently paying top-slab rates, that output can offset the most expensive units on your bill — the ones priced at Rs 40+ — which is where the payback maths becomes compelling, often in the **3–5 year** range.

Crucially, solar hedges the *right* risk. It does not depend on NEPRA fixing the IPP problem, on the rupee holding, or on the next renegotiation succeeding. It simply removes you from the pool that pays for all of it.

The net-billing change — act with your eyes open

There is an important policy shift you must factor in. NEPRA's draft **Prosumer Regulations 2025** are set to replace the 2015 net-metering framework, moving new solar owners from **net metering to net billing**. Under the old scheme, exported units were credited at roughly the full retail rate (around Rs 27/unit). Under the new arrangement, surplus exported to the grid is bought back at a much lower, nationally-determined rate — reported around **Rs 10–11 per unit** — and the standard agreement term is being trimmed from 7 years to 5.

Two practical takeaways for Pakistani homeowners:

• **The economics now favour self-consumption over export.** With buyback down to ~Rs 10–11 while you still buy grid units at Rs 22–45, every unit you use *yourself* the moment it is generated is worth far more than one you sell back. This tilts new system design toward hybrid setups with batteries and toward sizing to match your daytime load.
• **Existing net-metered consumers are protected.** The revised framework is not meant to apply retroactively to those with a valid agreement under the 2015 regulations — those remain effective until the license or agreement expires. If your paperwork is already in, you are largely grandfathered.

For anyone still on the fence, this is the argument for acting sooner rather than later: the terms for new connections are tightening, not loosening.

The bottom line for Pakistani homeowners and businesses

The grid's problem is structural and slow to fix. Capacity payments are contractual, dollar-linked, and politically stubborn; renegotiations help at the margins but have repeatedly stalled. Meanwhile, falling national demand mathematically pushes per-unit tariffs up, not down.

Rooftop solar does not ask you to bet on any of that being solved. It converts an uncontrollable, rising, policy-driven cost into a fixed, upfront asset you own. In a market where using less no longer reliably lowers your bill, generating your own power is the one lever that still works.

Frequently Asked Questions

**Why does my bill go up even though I used fewer units?** Because a large share of your tariff — roughly 65% of the power purchase price — comes from fixed capacity payments to power plants, not from your consumption. When national demand falls, those fixed costs get spread over fewer units, raising the per-unit rate. Fuel cost and quarterly tariff adjustments then pass these costs onto your bill regardless of how much you save.

**Will the IPP renegotiations lower my electricity bill soon?** Do not count on it for your own planning. Pakistan has attempted renegotiations in 1998, 2012, 2020 and 2024. The 2024 round terminated a few contracts and won some discounts, but the bulk of the Rs 2.1 trillion obligation is protected by dollar-indexed, sovereign-guaranteed agreements — including sensitive CPEC plants — that are slow and hard to change.

**Is solar still worth it after the switch to net billing?** Yes, but the design changes. With buyback falling to around Rs 10–11 per unit while you still buy grid power at Rs 22–45 per unit, the value now lies in *self-consumption* rather than selling surplus back. Sizing your system to your daytime load, and adding battery storage, protects the economics.

**Are existing net-metering customers affected by the new rules?** Generally no. The revised Prosumer Regulations are not intended to apply to consumers who already hold a valid agreement under the 2015 net-metering framework; those remain in force until the license or agreement expires. This is a strong reason to complete your net-metering application before the transition finalises.

**How much does a rooftop system cost and how fast does it pay back?** A quality 10kW on-grid or hybrid system runs roughly PKR 14–18.5 lakh and generates about 1,000–1,300 units a month. For households paying top-slab rates of Rs 40+ per unit, payback typically falls in the 3–5 year range — after which the power is effectively free for the life of the panels.

Best Solar Company PK designs and installs reliable solar systems in Rawalpindi, Islamabad, Lahore, Multan, Taunsa Sharif and Karachi. Contact us for a free survey and the best advice for your home or business.