Renewables ministry guidelines for PM-KUSUM fail to address key concerns

The scheme aims to provide energy security along with financial and water security to farmers

By Pratha Jhawar
Published: Friday 26 July 2019
Union Ministry of New and Renewable Energy issued operational guidelines for implementation of Pradhan Mantri Kisan Urja Suraksha evam Utthaan. Photo: Getty Images

The Union Ministry of New and Renewable Energy (MNRE) has issued operational guidelines for the implementation of Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM Kusum) Scheme on July 22, 2019.

The scheme aims to provide energy security along with financial and water security to farmers. It targets to add decentralised solar power capacity of 25,750 megawatt by 2022.

PM Kusum was held in abeyance for almost a year after its announcement and got finally approved in February 2019.

The approved scheme comprises three components:

  1. Setting up of 10,000 MW of decentralised ground / stilt-mounted grid-connected solar or other renewable energy based power plants
  2. Installation of 17.5 lakh standalone solar agriculture pumps
  3. Solarisation of 10 lakh grid-connected solar agriculture pumps.

The Centre will provide financial support of Rs 34,422 crore. Full-fledged implementation of components A and C is subject to the successful implementation of pilot projects. Under components B and C, central financial assistance of 30 per cent of the benchmark cost or the tender cost — whichever is lower — of the standalone solar agriculture pump will be provided.

The respective state governments will subsidise another 30 per cent, while the remaining 40 per cent will have to be borne by the farmer.  

The guidelines discuss in detail the roles of various stakeholders and the procedure. It talks about the involvement of a new party – the Central Public Sector Units (CPSU).

Tendering of off-grid solar water pumps will be done by designated CPSUs while centralised tendering of on-grid solar pump systems may be carried out by either of CPSUs or state implementation agencies.

The scheme and the guidelines inter-alia fail to address the following issues

In the context of 100 per cent electrification of villages under Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) the government’s push for solar off-grid pumps seems unnecessary.

The document mentions the inability of distribution companies (Discoms) in energising 10 million diesel pumps through grid connection given the long waiting lists for electricity connections.

Under Saubhagya (Pradhan Mantri Sahaj Bijli Har Ghar Yojana), the government has electrified more than 20 million households in almost a year.

The discoms should be able to electrify 10 million diesel pumps in a short time as the grid has already reached the hinterlands.

Component C will require metering which seems to be a humungous task as the agricultural sector largely relies on un-metered connections. Net-metering is yet a big challenge even in urban areas.

Hardly any on-grid pump beneficiary has received any payment from discoms for generating excess power and supplying it to the grid, according to a survey by New Delhi-based non-profit Centre for Science and Environment.

It raises a serious question on the discoms’ ability to pay to millions of additional prosumers (on-grid pump beneficiaries who are both producers and consumers of solar power) for the next 25 to 28 years.

According to the guidelines, bank financing may be made available for farmers’ contribution, so that they have to initially pay only 10 per cent of the cost and remaining up to 30 per cent of the cost as loan.

This requires to develop a financial ecosystem and the guidelines fail in suggesting on how it will be done. The guidelines also miss suggesting a mechanism to develop local maintenance markets as the successful bidder will provide post-sale services for only five years from the date of installation.

The implementation guidelines mandate the use of indigenously manufactured solar panels with indigenous cells and modules for the installation of solar pumps (under Component B & C).

At present, the indigenous solar cell and module production is almost one-tenth and one-third of the required capacity of 15,750 MW respectively.

Numerous efforts by the MNRE in the last year have not kick-started indigenous manufacturing in India. Therefore, this clause may delay the whole programme and adversely impact its implementation.

The farmer will end up paying higher costs for the pumps. Component A could encourage large and economically well-off farmers to shift from agricultural activities to putting up renewable / solar plants.

Further, it is unclear if the benefits of the subsidised solar pump will reach small and marginal farmers.

At present, large farmers are disproportionate beneficiaries of solar pump schemes implemented by various states. Poor farmers are not even able to pay 10 per cent of the cost of the pumps and few of them have installed solar pumps.

Finally, though the document mentions differential treatment for dark-zone areas, implementation will be a challenge. Free electricity through a large number of solar pumps will increase the chances of over-exploitation of water and risks the water table even in safe zones. 

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