Progress under KUSUM

Launched in March 2019 by the Ministry of New and Renewable Energy (MNRE), the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) is primarily aimed at promoting the use of solar energy in the agricultural sector. This is expected to be carried out by installing new solar pumps, setting up grid-connected ground-mounted solar power plants and extensively solarising the existing pumps. Under the scheme, a total of 25,750 MW of solar power capacity is expected to be developed by 2022.

The scheme comprises three main components. Component A involves the installation of 10,000 MW of capacity through small renewable energy plants of capacity up to 2 MW each on the barren/fallow land of farmers. Component B consists of installing 1.75 million stand-alone off-grid solar water pumps and Component C pertains to the solarisation of 1 million existing grid-connected agricultural pumps having individual capacity up to 7.5 HP.

Implementation status

As per the guidelines issued for the implementation of the scheme in July 2019, the central public sector undertakings and state implementation agencies will carry out the tendering process. In November 2019, detailed guidelines were issued to include applicable standards and specifications with the aim to ease the implementation of Component C.

As per the detailed guidelines, the options of net metering and stand-alone pumps running purely on solar power have been made available for the solarisation of agricultural pumps. Furthermore, depending on the model adopted, discoms will be allowed to purchase solar power from the farmer at the rate decided by the respective state level regulatory authorities. As Component C will be implemented on a pilot basis, the implementing agencies may work out innovative technical and financial models and test them during the pilot phase.

Components A and C have been implemented in pilot mode for a capacity of 1,000 MW and 100,000 pumps during 2019-20. Upon successful implementation of the pilot it is likely that these components would be further scaled up. The government has sanctioned capacities to various state agencies based on demand. Tenders have been issued under Components A and C by the state implementation agencies for the respective components.

Recent tenders and state-wise progress

A centralised tender was floated by EESL for the discovery of price and the selection of vendors under Component B for stand-alone solar pumps for the year 2019-20. Some of the vendors selected through the EESL tender are Rotomag Motors, Shakti Pumps, Junna Solar Systems, Solex Energy Limited, Premier Solar Systems, Ecozen Solutions, and Central Electronics. The price range discovered for submersible DC pumps of capacity 1 HP-7.5 HP was Rs 95,540 to Rs 340,000, while the price range for AC pumps was Rs 88, 603 to Rs 337,500. Surface pumps of 1 HP-7.5 HP saw price ranges of Rs 84,905 to Rs 341,961 for DC pumps, and Rs 84,315 to Rs 333,695 for AC pumps.

In January 2020, the Tripura Renewable Energy Development Agency floated a tender for the solarisation of 1,300 grid-connected agricultural water pumps in the state. In the same month, Haryana issued an expression of interest for 279 MW of solar projects under KUSUM. The solar power generated will be purchased by discoms at a pre-fixed tariff of Rs 3.11 per kWh, as approved by the Haryana Electricity Regulatory Commission. Uttar Pradesh has also made some progress in implementing KUSUM scheme. It opened the application process on February 4, 2020 for providing farmers a 70 per cent subsidy for setting up pump sets and tube wells. In March 2020, the Agency for New and Renewable Energy Research and Technology issued a tender for rate contract for the solarisation of grid-connected agricultural pumps of a cumulative capacity of 300 HP under the scheme in Kerala.

Rajasthan too has been making steady progress under KUSUM. It floated several tenders for solarising agricultural pumps in February 2020. Ajmer Vidyut Vitran Nigam Limited floated a tender for the solarisation of 5,874 pumps, distributed to  92 selected feeders, to aid  consumers using grid-connected pumps. Jaipur Vidyut Vitran Nigam Limited has floated a tender for the solarisation of 6,367 grid-connected water pumps, while Jodhpur Vidyut Vitran Nigam Limited has floated a tender for the solarisation of 504 agricultural pumps, to be distributed to 17 select feeders of the Jodhpur distribution company. These tenders have been floated under Component C of KUSUM. In addition, the Rajasthan Electricity Regulatory Commission has set the pre-fixed levellised tariff for Component A of PM-KUSUM at Rs 3.14 per kWh. Further, under Component C, the rate for the purchase of excess power from grid-connected solarised agricultural pumps has been set by discoms at Rs 3.44 per kWh. This tariff will be applicable for the entire useful life cycle of the solar pumps set up under the programme.

In February 2020, the MNRE asked all the states to prepare innovative business models for implementing PM-KUSUM scheme. It cited the example of business models adopted for the solarisation of pumps in Haryana, Gujarat and Maharashtra. The implementation of similar models is not only expected to benefit farmers, but also help state governments to save funds due to the reduced burden of subsidies. Moreover, discoms would be able to save costs on account of reduced subsidy requirement, and availability of cheaper surplus solar power at the tail end. This power can be used for meeting the nearby rural load, thereby leading to savings in the cost of power, and reducing transmission and distribution losses.

The Gujarat government has allocated Rs 1.25 billion for KUSUM under its state budget for 2020-21. Of this amount, Rs 250 million has been set aside for implementing Component C of the KUSUM and the remaining Rs 1 billion for the solarisation of grid-connected agricultural pumps under Component B. Gujarat Urja Vikas Nigam Limited will be implementing both the components.

Finance and the way forward

In the Union Budget 2020-21, the government has allocated Rs 10 billion for expanding KUSUM. As part of this, a proposal has been made to provide help to 2 million farmers for setting up stand-alone solar pumps and for another 1.5 million farmers to solarise their grid-connected pump sets. In addition, a scheme to enable farmers to set up solar power generation capacity on their fallow or barren lands and to sell it to the grid would be brought into operation. This would help in reducing farmers’ dependence on diesel and kerosene, increasing solar power deployment, decreasing the subsidy burden on the government, and supplementing farmers’ revenues.

Successful implementation of the scheme would require support from the central government for at least 10 years. KUSUM scheme has a total outlay of Rs 1,400 billion, to be distributed over this period. Of this, the central government is estimated to contribute Rs 480 billion (34 per cent). Initially, the central government will provide Rs 220 billion for the distribution of solar pumps. The second phase of the programme will see the infusion of another Rs 48 billion by relevant departments. The third phase will involve the solarisation of ordinary pumps, and the central government will disburse around Rs 157.5 billion for this purpose. Apart from this, Rs 50 billion will be required for the fourth and fifth phases.

The KUSUM is aimed at ensuring reliable day time power supply for irrigation, and reducing the subsidy burden on discoms. Apart from the savings incurred by using solar pumps for irrigation, it is expected to help farmers earn revenue by selling the excess energy from solar plants to the grid.

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