Pradhan Mantri Kisan Urja Suraksha Evam Utthaan Mahabhiyan (PM-KUSUM)

Ministry of New and Renewable Energy

Kusum Scheme Details

• Kusum Scheme implemented by: The Ministry responsible for this scheme is the New and Renewable Energy Ministry.
• Initially, the government will distribute 1.75 million off-grid agricultural solar pumps.
• 10000 Mega Watts Solar plants will be put up on lands that are barren.
• The state electricity distribution companies, also called, DISCOMS will buy the additional solar power produced by the farmers on barren lands. DISCOMS will get sops to buy this electricity.
• Tube wells and existing pumps of the government will be converted to run on solar power.
• Farmers will get a subsidy of 60% on solar pumps. It shall be deposited to their bank accounts directly. This subsidy is going to be shared by the central and the state governments. 30% of the cost will be obtained as a bank loan. Hence, only the rest 10% will have to be borne by the farmers themselves.

Scheme Components

The Scheme consists of three components:

1. Component A: 10,000 MW of Decentralized Ground Mounted Grid Connected Renewable Power Plants of individual plant size up to 2 MW.
2. Component B: Installation of 17.50 lakh standalone Solar Powered Agriculture Pumps of individual pump capacity up to 7.5 HP.
3. Component C: Solarisation of 10 Lakh Grid-connected Agriculture Pumps of individual pump capacity up to 7.5 HP.

Scheme implementation

State Nodal Agencies (SNAs) of MNRE will coordinate with States/UTs, Discoms and farmers for implementation of the scheme.

Components A and C of the Scheme will be implemented in Pilot mode till 31st December 2019. The Component B, which is a ongoing sub-programme, will be implemented in entirety without going through pilot mode. On successful implementation of pilot run of Components A and C of the Scheme, these components would be scaled-up, after getting necessary approval.

Component A:

• Renewable power projects of capacity 500 kW to 2 MW will be setup by individual farmers/ group of farmers/ cooperatives/ panchayats/ Farmer Producer Organisations (FPO). In the above specified entities are not able to arrange equity required for setting up the REPP, they can opt for developing the REPP through developer(s) or even through local DISCOM, which will be considered as RPG in this case.
• DISCOMs will notify sub-station wise surplus capacity which can be fed from such RE power plants to the Grid and shall invite applications from interested beneficiaries for setting up the renewable energy plants.
• The renewable power generated will be purchased by DISCOMs at a feed-in-tariff (FiT) determined by respective State Electricity Regulatory Commission (SERC).
• DISCOM would be eligible to get PBI @ Rs. 0.40 per unit purchased or Rs. 6.6 lakh per MW of capacity installed, whichever is less, for a period of five years from the COD.

Component B:

• Individual farmers will be supported to install standalone solar Agriculture pumps of capacity up to 7.5 HP.
• CFA of 30% of the benchmark cost or the tender cost, whichever is lower, of the stand-alone solar Agriculture pump will be provided. The State Government will give a subsidy of 30%; and the remaining 40% will be provided by the farmer. Bank finance may be made available for farmer’s contribution, so that farmer has to initially pay only 10% of the cost and remaining up to 30% of the cost as loan.
• In North Eastern States, Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttarakhand, Lakshadweep and A&N Islands, CFA of 50% of the benchmark cost or the tender cost, whichever is lower, of the stand-alone solar pump will be provided. The State Government will give a subsidy of 30%; and the remaining 20% will be provided by the farmer. Bank finance may be made available for farmer’s contribution, so that farmer has to initially pay only 10% of the cost and remaining up to 10% of the cost as loan.

Component C:

• Individual farmers having grid connected agriculture pump will be supported to solarise pumps. Solar PV capacity up to two times of pump capacity in kW is allowed under the scheme.
• The farmer will be able to use the generated solar power to meet the irrigation needs and the excess solar power will be sold to DISCOMs.
  CFA of 30% of the benchmark cost or the tender cost, whichever is lower, of the solar PV component will be provided. The State Government will give a subsidy of 30%; and the remaining 40% will be provided by the farmer. Bank finance may be made available for farmer’s contribution, so that farmer has to initially pay only 10% of the cost and remaining up to 30% of the cost as loan.
• In North Eastern States, Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttarakhand, Lakshadweep and A&N Islands, CFA of 50% of the benchmark cost or the tender cost, whichever is lower, of the solar PV component will be provided. The State Government will give a subsidy of 30%; and the remaining 20% will be provided by the farmer. Bank finance may be made available for farmer’s contribution, so that farmer has to initially pay only 10% of the cost and remaining up to 10% of the cost as loan.

Scheme benefits

The scheme will open a stable and continuous source of income to the rural land owners for a period of 25 years by utilisation of their dry/uncultivable land. Further, in case cultivated fields are chosen for setting up solar power project, the farmers could continue to grow crops as the solar panels are to be set up above a minimum height.

The scheme would ensure that sufficient local solar/ other renewable energy based power is available for feeding rural load centres and agriculture pump-set loads, which require power mostly during the day time. As these power plants will be located closer to the agriculture loads or to electrical substations in a decentralized manner, it will result in reduced Transmission losses for STUs and Discoms. Moreover, the scheme will also help the Discoms to achieve the RPO target

The solar pumps will save the expenditure incurred on diesel for running diesel pump and provide the farmers a reliable source of irrigation through solar pump apart from preventing harmful pollution from running diesel pump. In light of the long waiting list for electric grid connection, this scheme will benefit 17.5 lakh farmers over a period of four years, without adding to the grid load.

Associated Concerns

• Logistics Issue: There is a matter of domestic availability of equipment itself. While pumps are not a challenge for domestic suppliers, the availability of solar pumps is still an issue.
  • Further, due to the strict DCR (Domestic Content Requirements), the suppliers of solar equipment have to raise the domestic cell sourcing. However, there isn’t enough domestic cell manufacturing capacity.

• Omission of Small and Marginal Farmers: There has been the relative omission of small and marginal farmers, as the scheme focuses on pumps of 3 HP and higher capacities.
  • It is due to this, solar pumps are not reaching the majority of farmers, as nearly 85% of them are small & marginal.
  • Also, the reality of low water tables, especially in North India and parts of South India, which make small-sized pumps limiting for the farmer.

• Depleting Water Tables: Due to power subsidies, the recurring cost of electricity is so low that farmers keep on pumping water and the water table is going down.
  
  • In a solar installation, it becomes a more difficult job to upgrade to higher capacity pumps in case the water table falls because you will have to add new solar panels which are expensive.

Way Forward

• Bring States Together: Consensus between the Centre and States is the key to the success of this decentralised solar power scheme.
  • Any reform in India’s power space cannot take place unless there is consensus between the Centre, States and stakeholders. Till then, it will be like a half-baked cake.

• Sustainable Farming: Apart from switching to solar power, farmers should also switch over to drip irrigation mode which saves water and power with increased crop output.

• Lucrative Solar Energy Pricing: For effective implementation and serious participation by stakeholders, the scheme should be more attractive in terms of benchmark prices in view of the challenges on account of higher costs of implementation and comprehensive maintenance.

Conclusion

The PM-KUSUM scheme, like many government schemes, is certainly well-intentioned, but policy interventions like manufacturing in India for solar cells, or even phasing out power subsidies, might give it the legs to deliver on its promise.