Agricultural solar hobbling

13 September 2020 |

Latest MNRE data shows that less than 9,000 solar pumps were installed in FY 2020, the lowest in last five years. Progress on distributed solar projects for agricultural consumption is equally disappointing. Maharashtra, Haryana and Rajasthan are the only three states to have issued tenders for agricultural feeder based solar projects. Maharashtra’s 1,400 MW tender has been undersubscribed repeatedly despite four auctions till date. Haryana has not even announced bid submission date for its 279 MW tender issued back in January 2020. Rajasthan has allocated 725 MW on a preferential basis to more than 600 farmers at a tariff of INR 3.14/ kWh.

  • Actual progress against the scheme targets is abysmal;
  • Growth prospects of solar pumps seem bleak in view of the insurmountable financial barriers;
  • Distributed solar is a sound policy objective but needs focused policy support to overcome on-the-ground challenges;

MNRE had announced the ambitious KUSUM scheme in 2017 (cabinet approval was received in 2019). The target was to add 25,750 MW of solar capacity – 10,000 MW distributed solar projects up to 2 MW each in size plus 2.75 million solar powered pumps – by 2022 with total capital subsidy support of INR 344 billion (USD 4.6 billion).

Figure: Solar pump installed base

Source: MNRE

The problems with pumps are several and obvious. Most importantly, the central and state governments simply do not have funding capacity for required subsidies. Farmers are even less keen – why pay 10-40% of pump cost upfront when they can instead get free (albeit unreliable) power from the grid. Second, the government mandates use of domestically manufactured cells and modules but limited availability and high cost of such modules are major challenges. Moreover, overall techno-commercial efficiency of a pump is almost half of a larger ground-mounted solar installation.

Some analysts have therefore claimed that agriculture feeder based small solar projects of up to 2 MW each are the ideal solution to providing solar power to farmers. Such projects face less acute land and transmission challenges. They also create more widespread economic benefits of solar deployment with jobs, investment and land rental income opportunities accruing to farmers across the country rather than to larger developers in concentrated pockets in a few states.

Figure: Comparative assessment of different solar power sources for agricultural supply

Source: BRIDGE TO INDIA research

Andhra Pradesh has jumped on the bandwagon with its own ambitious scheme to develop 10 GW of distributed solar capacity to meet the entire agricultural demand in the state. But given the recent renegotiation, curtailment and payment problems faced by developers in the state, it will be a miracle if this scheme takes off.

Agricultural solar has been touted as a panacea for the power sector and even the wider economy – reliable supply to farmers boosting farm output and rural incomes, reduced transmission losses, improved DISCOM finances, lower diesel consumption and so on. However, the scheme suffers from poor conceptualisation and implementation. It is a sound policy objective but needs focused policy support to overcome on-the-ground challenges.

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