A solar quotation ends with a number of years. That number is built from three inputs the quotation rarely shows: how much the array will generate, how much of that you will use while it is being generated, and what the DISCO will credit for the rest. Get those three right and the payback is a calculation you can check; take the seller's figure and it is a guess dressed as a promise. This guide is about the three inputs, the mechanism of net metering that turns them into rupees, and the questions to ask before you sign.
Three numbers decide the payback: yield, self-use and the export rate
Every rupee a grid-tied solar system earns comes from one of two streams. A unit generated while the house or office is drawing power never reaches the meter: it displaces a unit that would have been bought at the import tariff, the all-in figure on the bill. A unit generated when the load is smaller than the array's output goes out through the bidirectional meter and earns whatever the net-metering rules credit for an exported unit, which has been well below the import tariff and has moved more than once. The first stream is worth more, and the split between them is the self-consumption share.
So the year-1 saving is generation × (share used on site × import tariff + share exported × export credit), less the cost of keeping the system running. The generation is the array size times the site's specific yield; the two prices are on the bill and in the regulations; the share is the number nobody states. Everything else in a payback calculation, degradation, tariff escalation, discount rate, is a second-order adjustment to those three. A quotation that quotes a payback without stating its yield, its self-use share and its export rate has not calculated anything.
Yield: kWh per kWp and where to get it
Specific yield is the annual energy per kilowatt-peak of array, in kWh per kWp per year, after every loss between the sun and the meter. It is the one figure that captures the site. PVGIS, the European Commission's free tool, gives it from satellite irradiance data for any coordinates, tilt and azimuth; with its default 14 % system loss it returns roughly 1 350–1 500 kWh per kWp for Lahore and Islamabad, 1 500–1 600 for Karachi and 1 650–1 750 for Quetta, for an unshaded array facing south at a sensible tilt. Those are the numbers to compare a quotation against. A seller who promises 1 800 in Lahore is quoting the panel's rating times the hours of daylight, not a yield.
The losses that make up the 14 % are real and separable: soiling (2–5 % with regular cleaning, more through the dust and the winter smog in Punjab), module temperature (a hot roof takes 8–12 % off the STC rating), cable and inverter losses (3–5 %), mismatch and clipping. Orientation is on top: the orientation guide and its calculator show how much a flat roof or a west-facing pitch gives up against the optimum, and that loss comes off the PVGIS figure if PVGIS was run for the optimum. Shade is worse than its area suggests, because one shaded module in a string drags the whole string down. And the yield falls with age: module warranties allow about 0.4–0.55 % a year, and field studies of crystalline silicon find a median near 0.5 %, so year 25 is about 88 % of year 1.
Self-consumption: the number the quotation never states
The self-consumption share depends on when the load runs, not how big it is. A house whose family is out from eight to five draws a few hundred watts through the day (fridge, router, a fan) while a 10 kWp array is making 6–7 kW at noon; nearly everything is exported, and the share is 25–35 %. The same house with someone home running the air conditioning through the afternoon uses 50–70 % of the generation. An office or a factory working days uses 70–90 %, because its load and the sun keep the same hours. At an import tariff of 45 and a credit of 27, moving the share from 30 % to 70 % raises the value of the same generation by about a fifth, and takes the payback of the example below from 3.7 years to 3.1.
Two things follow. First, size to the daytime load, not to the roof or the bill: the kilowatt-peak that covers the load at noon earns the tariff, and every kilowatt-peak beyond it earns only the credit. The solar sizing guide works through the load side. Second, shift load into the sun. A water pump on a timer at eleven instead of seven, a washing machine and a water heater by day, air conditioning that pre-cools the house at three rather than starting at six: each moves units from the export stream to the self-use stream at no cost. A battery does the same thing at considerable cost, and the grid-tied, hybrid or off-grid guide weighs it. If you want to know the share rather than guess it, a week of interval data from a smart meter, an energy logger or the inverter's app is the only reliable source.
Net metering in practice
The mechanism is simple. The DISCO replaces the consumer's meter with a bidirectional one that records imported and exported units separately. The inverter synchronises to the grid and pushes whatever the load does not take out through the service connection; the meter counts it; at billing time the exported units are set against the imported ones under the rules NEPRA has laid down in its distributed generation and net metering regulations, first issued in 2015 and amended since. What an exported unit is worth, whether the netting is unit for unit or at a money credit, how often the account is settled and what happens to a surplus are all set by those rules and by the DISCO's application of them. They have changed, the direction of change has been to reduce what an exported unit earns relative to an imported one, and further changes have been proposed. Enter the figure that applies to you today, and treat the export stream as the part of the return most exposed to policy.
The process runs through the DISCO: an application with the system design, a three-phase connection (single-phase premises are generally not eligible), a site inspection, a generation licence issued through NEPRA's process, the meter change, and a connection agreement. The inverter must be an approved grid-tied model with anti-islanding protection and the installer must be certified; the DISCO checks both against the lists it works from. The application, the meter and the paperwork have a cost and a lead time of weeks to months, during which the system runs without export credit, and the quotation should say who carries that work and what it costs. Fixed charges on the bill do not fall with solar, and neither does a minimum bill where one applies; the saving is on the units.
What the quotation should show and what to ask for
- Array size in kWp DC and inverter size in kW AC, separately. A 10 kWp array on an 8 kW inverter is a normal design (a DC/AC ratio of 1.1–1.3 clips a little at noon and gains through the rest of the day); a 10 kWp array on a 5 kW inverter is not. The net-metering licence is for the inverter's AC rating.
- Panel make, model, wattage bin and datasheet, with the product warranty (typically 12–15 years) and the performance warranty (25–30 years, and the percentage guaranteed at the end of it, which sets the degradation the seller is prepared to stand behind).
- Inverter make, model and datasheet, on the approved list, with its warranty (5–10 years), the number of MPPT inputs and how the strings are divided between them, and the monitoring it provides.
- The yield estimate and its source. Ask for the PVGIS report or the simulation output for your coordinates and orientation, not a rule of thumb. If the quotation gives units per month, divide by the kWp and compare with the figures above.
- The self-use share the payback assumes. If the seller cannot say, the payback was not calculated.
- The balance of system, itemised: structure and its wind-load basis, solar-rated DC cable, DC isolators, surge protection, earthing, the AC breaker and the point of connection, and who does the net-metering application, the meter and the licence.
- Operation and maintenance: cleaning frequency, what the monitoring app shows, the response time on a fault, and the price of an inverter replacement in year 10–12, which is the one large cost in the system's life.
- A commissioning report: string open-circuit voltages, insulation resistance and the first day's generation, so the installed array can be checked against the design.
Financing and the true cost
Banks in Pakistan offer solar financing to households and businesses, at times under a State Bank refinance scheme for renewable energy with concessional rates and at times at commercial rates; the terms change and are worth asking about. A loan changes the question from "when do I get my money back" to "does the system pay its own instalment". For a loan of L at an annual rate r over n years, the level annual instalment is A = L × r ÷ (1 − (1 + r)−n). Compare A with each year's saving from the calculator: if the year-1 saving exceeds the instalment the system is cash-positive from the start, and the payback on your own money is the down payment divided into the yearly surplus.
For the example below, borrowing PKR 1 200 000 of the 1 800 000 at 15 % over five years gives an instalment of 1 200 000 × 0.15 ÷ (1 − 1.15−5) = PKR 357 979 a year. The year-1 saving of 504 000 leaves a surplus of 146 021; year 2 leaves 169 381 and year 3 leaves 193 785, so the 600 000 down payment is back in about 3.4 years and from year 6 the whole saving is yours. The interest over the five years is about PKR 590 000, which is the true cost of not paying cash; whether that is worth it depends on what the 1 200 000 would otherwise earn, which is what the discount rate in the calculator stands for.
The example in numbers
A 10 kWp system on a house in Lahore, quoted at PKR 1 800 000 installed with the net-metering work included. Yield 1 450 kWh per kWp per year from PVGIS, half of the generation used on site, an import tariff of PKR 45 per unit and an export credit of PKR 27, 0.5 % degradation, 5 % tariff escalation applied to both prices, 1 % of the cost a year for cleaning and an inverter fund, 12 % discount rate, 25-year horizon.
- Year 1: 14 500 kWh. Self-used 7 250 kWh × 45 = PKR 326 250; exported 7 250 kWh × 27 = PKR 195 750; O&M PKR 18 000; net saving PKR 504 000. The average value of a unit is PKR 36.00.
- Year 2 earns PKR 527 360 and year 3 PKR 551 764 (cumulative 1 583 124); year 4 earns 577 261 and carries the cumulative past the cost. Simple payback = 3 + (1 800 000 − 1 583 124) ÷ 577 261 = 3.4 years.
- Discounted at 12 %, the savings are worth 450 000, 420 408, 392 731, 366 862 and 342 670 in years 1 to 5, and the discounted payback is 4.5 years.
- Over 25 years: 341 561 kWh generated, savings of PKR 22 733 926, a net benefit of PKR 20 933 926 and an NPV at 12 % of PKR 3 776 647. LCOE = 2 250 000 ÷ 341 561 = PKR 6.59 per kWh.
The solar payback calculator reproduces these figures and tabulates the cash flow. Move the self-use share to 30 % and watch the payback stretch to 3.7 years; move the export credit down and watch the export half of the saving shrink while the self-use half is untouched.
When solar does not pay
Solar in Pakistan pays back in three to five years for most premises with a daytime load, and that is the honest reason it has spread. The cases where it does not are specific, and a good quotation refuses them:
- Heavy shade. A neighbouring building, a water tank or a parapet that shades the array for part of the day costs far more than the shaded fraction, because a string drops to its weakest module. If the roof cannot give an unshaded run from ten to three, the yield assumption collapses.
- A tiny daytime load and a low credit. A house empty all day, sized to its evening bill, exports most of what it makes; at a low export credit the array is an investment in the DISCO's policy, not in your load. Size it to the daytime load or add a battery and recalculate.
- An export-only design. The same arithmetic in its purest form: a system built to sell units to the grid earns the credit and nothing else, and its payback is set entirely by a rate that has been cut before.
- A low import tariff. A consumer in a protected or lifeline slab pays far less per unit than the 45 in the example, so each self-used unit saves less; the payback stretches, and moving above the slab threshold can cost more than the solar saves.
- A roof that needs replacing, an asbestos sheet, a structure that cannot take the wind load, or a tenancy shorter than the payback. The array outlives all of these and must be taken down and refitted, which is not in the quotation.
Ahmedonics designs and builds monitoring and control for energy systems, including the metering and data acquisition that tell you what your self-use share actually is; we do not sell panels, and the calculator is built so that whoever does has to show the arithmetic.
References
- European Commission Joint Research Centre, PVGIS (Photovoltaic Geographical Information System) — specific yield for any site, orientation and system loss
- NEPRA, Alternative & Renewable Energy Distributed Generation and Net Metering Regulations, 2015 (as amended) — eligibility, licensing, metering and settlement; the rules in force govern
- NEPRA, consumer-end tariff schedules of the distribution companies — the import tariff by category and slab
- IEC 61724-1:2021, Photovoltaic system performance — Part 1: Monitoring — specific yield and performance ratio
- NREL, Best Practices for Operation and Maintenance of Photovoltaic and Energy Storage Systems, 3rd edition, 2018 — O&M scope and cost ranges
- Jordan, D. C. and Kurtz, S. R., "Photovoltaic Degradation Rates — An Analytical Review", Progress in Photovoltaics 21(1), 2013 — median degradation near 0.5 % a year