Government’s special scheme for farmers for the installation of solar pumps and grid-connected solar power plants
India is an agriculture-based country. The agricultural sector provides a livelihood to over 50% of India’s population. In fact, the sector contributes 18% to the country’s GDP. However, the agricultural sector needs proper irrigation facilities and other amenities to reap proper benefits. The major constraint in this sector is farmers’ dependency on pumps for irrigation. Most of the farmers use pumps some of which are connected to the grid while some pumps run on diesel and other fossil fuels.
According to a study conducted by KPMG.this sector consumes almost 20% of the installed power in India.
Another issue in this sector is related to the plight of farmers. Since some of the crops are seasonal, most of the farmers are deprived of regular source of income. Furthermore, farmers are not being able to earn anything from their dry/uncultivated land. Solar energy can be put to good use to address these critical issues of the agriculture sector. Solar energy is one of the most vital renewable sources of energy that can be utilized for various purposes.
Solar energy is widely being adopted in residential, commercial and industrial sectors and it has huge potential to benefit the agriculture sector. So, with an endeavour to offer financial and water security to farmers, the Indian government has launched various schemes to promote the installation of grid-connected solar power plants and solar pumps.
The scheme is divided into three different components – installation of standalone solar pumps, solarisation of grid-connected pumps and commissioning of grid-connected solar power plants. Through this scheme, the government targets to add 25,750 MW of combined solar capacities (all three components) by the year 2022.
Components of the new scheme
The scheme has a total of three main components:
- Component A – 10,000 MW of Decentralized Ground-Mounted Grid-Connected Renewable Power Plants of 500 kW to 2 MW individual plant size to be commissioned by 2022.
- Component B – 17.50 lakh standalone solar powered pumps with capacity up to 7.5 HP to replace diesel-powered agricultural pumps.
- Component C – 10 lakh grid-connected agricultural pumps with up to 7.5 HP individual pump capacity to be solarised by 2022.
- The government intends to execute components A and C of the scheme in a pilot mode till 31st December 2019 whereby commissioning of 1000 MW capacity of ground-mounted solar power plants and solarisation of 1 lakh grid-connected pumps would be completed. In the case of component B, the entire scheme would take place full-fledgedly.
- Component A and its implementation:
1000 MW of decentralized ground mounted grid-connected renewable power plant
- Individual farmers, panchayats, cooperatives, Farmer Producer Organisations (FPO) can install solar power plants of capacity ranging from 500 kW to 2 MW. In specific cases, distribution companies (Discoms) may allow installation of plants with less than 500 kW capacity.
- It is preferred to install the solar plant within 5 km radius of substations to keep the losses and well as the cost of sub-transmission lines low.
- Discoms will declare sub-station wise generation capacity which can be fed to the grid by solar plants through a particular sub-station.
- Discoms would purchase the power generated by solar plants.
- The State Electricity Regulatory Commission (SERC) of each state determines the feed-in-tariff (FiT) at which Discoms can purchase power. A PPA (power purchase agreement) for 25 years will also be signed by them.
- If the aggregate capacity generated is more than that notified by the Discom, then a bidding route will be followed as directed by MNRE. Here, the ceiling tariff for bidding will be the FiT.
- The project can be installed on any land. In the case of agricultural lands, stilt fashion should be adopted to set up the power plants and sufficient space between panel rows must be ensured. In this way, farming can also be carried out in the land.
- The Indian government will offer Procurement Based Incentive (PBI) at the rate of 40 paise per kWh or Rs 6.60 lakhs per MW per year (whichever is lower) to Discoms. The PBI will be given for five years from the plant’s Commercial Operation Date.
- If the applicant is not being able to gather enough equity for the installation of the project, then they can approach the local Discom or a developer. In such a case, they can receive lease rent for their land. The rent will be set after the mutual agreement of both parties. A model lease agreement will be created by MNRE.
- If developers are involved, then the lease rent would be set as Rs/unit energy generated/unit land area or Rs/year/unit land area.
- The lease rent will be directly credited to the bank account of farmers/landowners.
- The State Nodal Agencies (SNAs) in coordination with Discoms, State/ UTs and farmers will implement the scheme.
- Farmers will receive assistance from SNAs throughout the project be it in case of project development, DPR creation, PPA/EPC contracts, getting bank loans or issues related to the selection of power plants.
- The Discoms would act as facilitators for the beneficiaries and help them in the successful implementation of the scheme. ‘Must-run’ status of the plants and ‘ON’ state of feeders during the daytime would be ensured by them.
- It will offer a stable source of income to landowners for at least 25 years.
- In this way, farmers can even earn from their uncultivable land.
- A minimum installation height will ensure that farming activities can take place along with solar plants in case of cultivable lands.
- Through the scheme, sufficient solar power can be generated to power agriculture pumps and to fulfil other power requirements of the area.
- Transmission losses can be reduced as the decentralized power plants would be installed near substations and agricultural loads.
- Discoms can achieve RPO target through the scheme.