Kusum Scheme: Greening the green revolution


Agricultural power subsidies are a major financial burden on state DISCOMs, and aggregate subsidies to agriculture have been on the rise, almost doubling in the last five years to over Rs 1 lakh crore. In India, power supply in agriculture constitutes approximately 20 per cent of the country’s total power use and is either free or heavily subsidized, costing DISCOMs between Rs 6 to Rs 8 per unit to serve agricultural consumers. For states charging nominal rates for the supply of agricultural power, the share of revenue amounts to just 5 to 7 per cent. State subsidies and cross-subsidies account for some of this, while the balance is not covered. According to data from State Electricity Regulatory Commissions, the revenue realized from DISCOMs is low as subsidies incurred by the state are at normative costs while costs of service to rural areas are between Rs 6-8 per unit. These are states with agriculture consumption in excess of the national average, and the normative tariff for subsidy is Rs 4.25 per unit.Solar Initiative Challenges

THE PM-KUSUM scheme was announced by the Government with incentives of over Rs. 34,000 crores ($4 billion) and was amended in 2019 to include the solarisation of feeders and the inclusion of sustainable services like efficient pumps and lighting in rural areas. Under the scheme, component C aims to ensure a reliable daytime power supply for irrigation, reducing subsidy burdens on DISCOMs and providing additional sources of income to farmers*. The target installation of decentralised solar for agriculture was kept at 25 GW. A similar scheme was launched in Maharashtra to significantly reduce transmission and distribution losses. However, both schemes have faced significant challenges which affect their impact ability. The solar power plants envisaged in the scheme (1-10 MW) are disaggregated, and the transaction cost of acquiring small tracts of land as well as the enabling transmission infrastructure are high. DISCOMs would have found tariffs from smaller plants more favourable had they been offered at a lower rate. For standalone solar pumps, while the central and state governments provide 60 per cent of capital costs as incentives, the balance accounts for about Rs. 1 lakh and farmers, who do not pay for electricity, do not find any incentive to change. There is a lack of awareness and information about benefits like getting reliable power during the day and selling power to the grid when it is not required for pumping. These challenges can be overcome through aggregating land parcels, acquiring land, and enabling transmission networks. This was successfully demonstrated by a partnership between the Government of Maharashtra and EESL, where almost 300 MW of decentralised solar plants were installed, benefitting almost 1 lakh farmers and providing significant financial benefits to the DISCOM. These plants have helped reduce losses as the cost of providing power to agriculture has reduced to Rs. 3 as against Rs. 7.48 per unit and provide power during the daytime. If the total agriculture consumption of 26,483 MUs is solarised at the rate of Rs. 3-3.5 per unit, Maharashtra could realise a benefit of approximately Rs. 10,000 crores annually. These benefits can be further enhanced by installing Battery Energy Storage (BES) at these sites to service local power requirements at half the cost that MSEDCL incurs at present. This helps reduce commercial loss in providing power for rural street lighting and enables several other future benefits to accrue to MSEDCL.Need for Innovation

In order to facilitate energy transitions, innovations across technology, policy, finance and regulations are a must. Convergence, a unique concept in the policy/regulatory space, brings together the supply and demand sides’ efficiency under one platform and uses the instrument of the Power Purchase Agreement (PPA) to deliver an optimised and decentralised solution for DISCOMs. It allows for a host of efficient services to be delivered to rural areas like efficient lighting (domestic and public), replacement of pumps with energy-efficient ones for farmers, electric cooking, efficient fans, etc. The value of the equipment/services is added to the decentralised solar PPA and the same is delivered free of cost in rural areas, enabling clean, efficient, reliable energy at costs to DISCOMs that is almost 50 per cent of their current cost of delivery of electricity in these areas. Conclusion

Using the Maharashtra government as an example of success, pilots could be initiated in other states with a national programme on clean energy for agriculture, enhance the reliability and sustainability for rural areas, reduce losses and subsidy burden on states and when linked to a sustainable livelihood program, can accelerate green jobs in rural areas.

[This piece was written exclusively for ETEnergyworld by Saurabh Kumar, Saurabh Kumar, Vice President- India, Global Energy Alliance for People and Planet (GEAPP)]

  • Published On Jul 7, 2023 at 07:13 PM IST

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