MNRE Calls for Innovative Business Models to Solarize Agriculture Under KUSUM Program

The annual budget has allocated $7 billion for KUSUM program aimed at solarizing India’s agriculture


The Ministry of New and Renewable energy (MNRE) has asked states to prepare innovative business models for implementing Pradhan Mantri-Kisan Urja Suraksha Evan Utthan Mahaabhiyan (PM-KUSUM) program.

Citing the example of business models for the solarization of pumps adopted in Haryana, Gujarat, and Maharashtra, the MNRE has asked other states to follow suit.

In Haryana, for instance, all 468 grid-connected agriculture electricity consumers of two feeders are proposed to be solarized through brushless direct current (BLDC)-solar water pumps. The state government will bear the entire cost of the replacement of pumps. Being a BLDC pump, there will be no power withdrawal from the grid and the pump will run only through solar power. Also, when the pump is not in operation, the solar power will be injected into the grid through the inverter, and the distribution company (DISCOM) will purchase the power at the rate of ₹1 (~$0.01)/kWh.

According to the MNRE, through this, the DISCOMs will be able to save on two accounts. Firstly, it will be able to save on subsidy to agriculture consumers, which at present is around ₹7.10 (~$0.10)/kWh in the state. Secondly, the DISCOM will get cheaper solar power at ₹1 (~$0.01)/kWh against the average power purchase cost’s (APPC) rate of ₹3.89 (~$0.05)/kWh.

Further, the model not only helps farmers benefit through the availability of daytime solar power, but it also helps them to make an additional income by selling solar power, which would be over ₹900 (~$12.57)/HP per annum.

The farmers are also incentivized to use irrigation techniques more efficiently, which will help them to use less solar power and make additional income. The payback period for the investment made by the state is 8.7 years.

Now, in Gujarat, the government started a program called Suryashakti Kisan Yojana (SKY) for the solarization of grid-connected agriculture pump-sets in 2018.

Under this program, a farmer who has grid-connected agriculture pumps is provided with solar panels of capacity equivalent to 1.25 times the capacity of the pump in horsepower (HP). For example, a 10 HP capacity pump will be provided with 12.5 kW solar capacity.

Here, the cost of solarization is divided into three components. The state government provides a capital subsidy of 30%, the National Bank for Agriculture and Rural Development (NABARD) provides a loan of 65%, and the farmer will meet the remaining 5%. The NABARD loan is available at a 6% interest rate to be repaid in seven years. The farmer can draw power from the grid and can also inject solar power into the grid. For the solar power injected into the grid, the DISCOM will pay ₹3.5 (~$0.05)/kWh to the farmer for a period of 25 years. In addition to this, the state government will pay ₹3.5 (~$0.05)/kWh as an evacuation-based incentive for the first seven years.

In case the payment for the net solar power injected into the grid is more than the loan from NABARD, the balance amount is credited into the farmer’s account. Meanwhile, the DISCOM will get solar power at APPC of ₹3.50 (~$0.05)/kWh for 25 years without any escalation and will also save on the reduced transmission and distribution (T&D) losses.

This way, the state government will save a subsidy of ₹5.4 (~$0.08)/kWh, says the ministry. The farmer will benefit from the availability of day-time power and will also be able to generate income from the sale of net solar power injected, which may go over ₹4,000 (~$55.85)/ HP/ annum after the payment of NABARD loan. The payback period is around 10 years in this case.

Under the Chief Minister Solar Feeder Program, the Maharashtra government has set up a centralized solar power project for the benefit of its farmers.

With APPC of ₹4 (~$0.06)/kWh and corresponding transmission charges and T&D losses, the cost of power at the feeder level will be approximately ₹4.85 (~$0.07)/kWh.

For agriculture feeders with a connected load of 2,500 HP, the annual energy requirement would be 2.47 million units (MUs), assuming 1,250 hours of pump operation during a year. With conventional grid power, the cost of this energy would be ₹12 million (~$167,563)/year, and there will be a yearly escalation. However, if the feeder is supplied through solar project installed at the feeder level, then the power would be available at a flat rate of ₹3 (~$0.04)/kWh for 25 years and the total cost of solar power for the feeder will be ₹7.4 million (~$103,748)/year. This implies savings to the tune of ₹4.6 million (~$64,492)/year.

According to the ministry, the implementation of the model will not only benefit the state farmers, but it will also help the state government to save due to the reduced burden of subsidies. Moreover, the DISCOMs will be saving on two accounts:

  • Reduced subsidy requirement, and
  • Availability of low-cost surplus solar power at the tail end, which can be supplied to the nearby rural load, thereby saving on the power cost and T&D losses.

In the recently announced Union Budget for the financial year (FY) 2020-21, ₹220 billion (~$3.08 billion) was allocated for the power and renewable sectors, as reported by Mercom. The government also plans to expand the KUSUM program to provide two million standalone solar agricultural pumps and 1.5 million farmers to set up grid-connected pumps. Initially, the KUSUM  program had aimed at providing 1.75 million standalone solar-powered agriculture pumps and one million grid-connected solar-powered agriculture pumps.

Only a few days back, it was reported that the Jodhpur Vidyut Vitran Nigam Limited (JVVNL) floated a tender for the solarization of 504 agricultural pumps to be distributed to 17 select 11 kV feeders of the Jodhpur distribution company.


Image credit: JREDA