COUNTRY | India
REGION | Asia
SECTOR | energy, social infrastructure, waste and water, other sector (rural development)
SUB-SECTORS | energy distribution, energy distribution, energy distribution, energy distribution, renewable energy, other transport, dams and irrigation, energy distribution, water supply, agri-business
QII Principles | Principle 1 Sustainable Growth & Development, Principle 2 Economic Efficiency, Principle 3 Environmental Considerations, Principle 4 Building Resilience, Principle 5 Social Considerations, Principle 6 Infrastructure Governance
QII Sub-Principles | 1: SDGs, 1: Paris Agreement, 1: Wider economic benefits, 2: Value for money analysis, 2: Life-cycle costing, 2: Technological innovation, 2: Risk management, 3: Disclosure of environmental aspects, 3: Ecosystems, 3: Climate, 3: Weather, 3: Emissions, 4: Resilience, 5: Job creation, 5: Capacity and institutional building, 5: Gender, 5: Occupational health and safety, 5: Social inclusiveness, 5: Low-income groups, 5: Marginalised groups, 6: Growth & development strategies, 6: Procurement transparency, 6: Access to information and data, 6: Transparency of infrastructure investment, 6: Enabling Environment
Overview
Cost Size: Total Cost of Scheme is INR 1,46,625 Crore and Union Government Support of INR 34,442 cores is to be provided. Additional State Government support is available which varies from State to State.
Parties involved (public and private): Ministry of New and Renewable Energy, State Renewable Energy Development Agencies, Power Distribution and Generation companies, State Agriculture Departments and other relevant agencies as designated by the state government, Solar Pump manufacturers & suppliers, Financial Institutions etc.
Relevant contractual details (type, length etc.): PM KUSUM scheme comprises of three distinct components:
- Component A targets installation of 10 GW of capacity as decentralized ground-mounted grid-connected renewable power plants of 500 kW to 2 MW by farmers for sale of power to DISCOMs.
- Component B targets installation of 17.50 lakh off-grid solar pumps of up to 7.5 HP capacity.
- Component C targets solarization of 10 lakh grid-connected electric pumps of up to 7.5 HP capacity. Solar PV capacity is allowed up to twice the pump capacity in kW terms to enable sale of excess power to DISCOMs.
Under Component A, DISCOM is eligible for a performance-based incentive of INR 0.40 per unit or INR 6.6 lakh per MW. While for Component B and C, the central and state governments each provide 30% subsidy on pump cost. A farmer is required to provide the remaining 40% and can assess bank loan for up to 30% of the cost. States can also top-up their contribution of 30% subsidy.
Components A and C implemented in pilot mode during FY 2019-20 and will be taken up for scale-up after evaluation and needed modifications, while Component B will continue to be implemented in full-fledged manner.
Context: Despite dependence of 60% of Indian population on agriculture, assured irrigation remains limited to only 37% of the cultivated land. Electric and diesel pumps have played a large role in expanding irrigation however these have also created issues of high diesel cost, carbon emissions and groundwater over-exploitation. With falling PV prices, solar has emerged as a credible alternative to address the Water-Energy-Food Nexus issues.
Aim(s) of the project: The key aims of the project are (1) to provide water security to farmers through reliable solar energy; (2) to promote farmers in becoming energy entrepreneurs thereby increasing their income; (3) sustainable use of natural resources for upliftment of farmers; and (4) efficient use of technology to solve socio-economic problems.
Timeline
Key dates including procurement, construction, operations
The scheme is to be implemented between 2019 and 2022
Relevance to QII
Principle 1: Sustainable development is at the core as the scheme supports growth in rural incomes (especially targeting small and marginal farmers) through clean energy intervention.
Principle 2: Life-cycle costs of solar pumps are significantly lower than diesel pumps as well as electricity pumps, taking subsidies into account.
Principle 3: Solar pumps reduce carbon emissions by substituting diesel use as well as reducing dependence on a largely coal-powered grid. PM KUSUM is further designed to discourage overexploitation of groundwater by enabling sale of power to the grid. The scheme also encourages use of degraded agricultural land for generation of solar energy.
Principle 4: The scheme supports community resilience by adding to farmer income and discouraging groundwater exploitation.
Principle 5: The scheme gives priority of small and marginal farmers in beneficiary selection.
Principle 6: Open tendering route has been adopted for procurement of pumps and PV capacities.
Benefits
The potential impact of the scheme across stakeholder groups is sizable:
- The scheme contributes to the national clean energy goal of installing 175 GW of renewable energy by 2022 by adding 25.75 GW of distributed solar.
- By making solar pumps affordable, it enables increased productivity of rainfed farmers, reduced operations cost of diesel dependent farmers, and improved access to reliable day-time power for electric pump farmers.
- Components A and C are explicitly designed to generate additional income for farmers through sale of power to DISCOMs.
- The incentive of selling additional power to the grid also helps check over- extraction of groundwater.
- The scheme will substantially reduce agricultural electricity subsidy burden, estimated currently to be INR 500 billion per annum.
Metrics
State nodal agencies regularly share scheme progress reports with MNRE. To streamline monitoring and reporting under the scheme, MNRE is developing a web-based portal to support tracking of beneficiaries, installation progress, asset performance, energy transactions, irrigation and live operation status. MNRE has also initiated a project to study in detail the results of pilot installations under the Component A and C.
Name of Institution
Ministry of New and Renewable Energy (MNRE) Government of India
Website URL