PM-KUSUM Scheme

In Context 

• Under the PM-KUSUM scheme, Solar power generation is set to make rapid strides in Rajasthan.
• The work was earlier affected as the farmers faced difficulty in getting bank loans 
  • Now, the public sector banks acceding to the State government’s request to grant loans without collateral security to farmers for installing solar plants on their infertile or semi-barren land.

Major Points 

• Rajasthan became the first state to complete the selection of farmers for installation of solar plants on their land in July 2021 with the capacity exceeding the targets set by the Union Ministry of New and Renewable Energy. 
  • The Rajasthan Renewable Energy Corporation allotted 722 MW plants to 623 farmers under the KUSUM scheme.
  •  The electricity generated at the solar plants would be purchased at the rate of ?3.14 per unit for 25 years following the signing of power purchase agreements. 

About PM-KUSUM

• It was launched in 2019 by the Ministry of New and Renewable Energy (MNRE).
• It  envisages income generation for farmers from their infertile land with the establishment of solar power plants.
  • While the farmers can sell the power generated from the solar plants to the power distribution companies, the solar pumps can also be installed for irrigation of agricultural land.
• Aim: 
  • To help farmers access reliable daytime solar power for irrigation, reduce power subsidies, and decarbonise agriculture. 

• Components of Scheme: Three components:
  • Component A: 10,000 MW of Decentralized Ground Mounted Grid Connected Renewable Power Plants of individual plant size up to 2 MW.
  • Component B: Installation of 17.50 lakh standalone Solar Powered Agriculture Pumps of individual pump capacity up to 7.5 HP.
  • Component C: Solarisation of 10 Lakh Grid-connected Agriculture Pumps of individual pump capacity up to 7.5 HP.
• Deployment Models: 
  • They can use one of three deployment models: 
    • off-grid solar pumps, 
    • solarised agricultural feeders, or 
    • grid connected pumps. 
  • Off-­grid pumps have been the most popular, but the nearly 2,80,000 systems deployed fall far short of the scheme’s target of two million by 2022. 
• Implementation: 
  • State Nodal Agencies (SNAs) of MNRE will coordinate with States/UTs, Discoms and farmers for implementation of the scheme.
• 2020 Amendment:
  • In November 2020, MNRE amended/clarified implementation Guidelines of Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan (PM-KUSUM) Scheme based on the learnings from the implementation of the Scheme during the first year. 
  • Amendments made: 
    • The scope of the scheme has been increased by including pasturelands and marshy lands owned by farmers. 
    • The size of solar plants has been reduced so that small farmer can participate.
    • Increased completion period from nine to twelve months. 
    • Penalty for the shortfall in generation removed for ease of implementation by farmers.
    • Central Financial Allowance (CFA) will be allowed for solar pumps to be set up and used by Water User Associations (WUAs)/Farmer Producer Organisations (FPOs)/Primary Agriculture Credit Societies (PACSs) or for cluster-based irrigation systems along with individual farmers.

(Image Courtesy: PIB )

Significance

• Source of income: 
  • The scheme will open a stable and continuous source of income to the rural landowners for 25 years by utilisation of their dry/uncultivable land. 
    •  It would also help increase the production of green energy and generate employment in the rural areas and would later provide for solarisation of tube-wells and lift irrigation projects of the government sector.
  • In case cultivated fields are chosen for setting up solar power projects, the farmers could continue to grow crops as the solar panels are to be set up above a minimum height.
• Energy availability and security:
  • The scheme would ensure that sufficient local solar/ other renewable energy-based power is available for feeding rural load centres and agriculture pump-set loads, which require power mostly during the daytime. 
• Less transmission losses:
  • As these power plants will be located closer to the agriculture loads or electrical substations in a decentralized manner, it will result in reduced Transmission losses for STUs and Discoms. 
    • Moreover, the scheme will also help the Discoms to achieve the RPO target.
• Reduced expenditure: 
  • The solar pumps will save the expenditure incurred on diesel for running diesel pumps and provide the farmers with a reliable source of irrigation through solar pumps.
• Bypass waiting list for connection:
  • In light of the long waiting list for electric grid connection, this scheme will benefit 17.5 lakh farmers over four years, without adding to the grid load.
• Environment Friendly:
  • The scheme will help in preventing harmful pollution formed from running diesel pumps. 
• Achieve National Aim: 
  • It will help in India’s commitment to increase the share of installed capacity of electric power from non-fossil fuel sources to 40% by 2030.

Challenges

• Regulatory: 
  • Only a handful of states have initiated tenders or commissioned projects for solar feeders or grid-connected pumps.  
• Operational and Technical:
  • Discoms often find utility-scale solar cheaper than distributed solar (under the scheme) due to the latter’s higher costs and the loss of locational advantage due to waived inter­-State transmission system (ISTS) charges. 
  • Many farmers struggle to pay 30-­40% of upfront costs in compliance with scheme requirements. 
• Financial:
  • Current obstacles to their adoption include concerns about their economic viability in the presence of high farm subsidies and farmers’ potential unwillingness to feed in surplus power when selling water or irrigating extra land are more attractive prospects. 
  • Further, many farmers cannot access bank loans without collateral. 
• Lack of trust:  
  • The grid-connected model requires pumps to be metered and billed for accounting purposes but suffers from a lack of trust between farmers and discoms.
• Awareness: 
  • Barriers to adoption include limited awareness about solar pumps and farmers’ inability to pay their upfront contribution. 
• COVID: 
  • Pandemic induced disruptions, limited buying from States, and implementation challenges have all affected the scheme’s roll­out.

Way Forward 

• Extend the scheme’s timelines:
  • Most Indian discoms have a surplus of contracted generation capacity and are wary of procuring more power in the short term. 
  • Extending PM ­KUSUM’s timelines beyond 2022 would allow discoms to align the scheme with their power purchase planning. 
• Create a level playing field for distributed solar plants: 
  • To tackle the bias against distributed solar, there is a need to address counter­party risks and grid unavailability risks at distribution substations, standardise tariff determination to reflect the higher costs of distributed power plants, and do away with the waiver of ISTS charges for solar plants. 
• Streamline land regulations through inter-departmental coordination: 
  • Doing so will help reduce delays in leasing or converting agricultural lands for non­agricultural purposes such as solar power generation.  
• Innovative Solutions:
  • Support innovative solutions for financing farmers’ contributions. 
  • Out­of­the­box solutions are required like Karnataka’s pilot of a farmer developer special purpose vehicle to help farmers install solar power plants on their farms.  
• Smart solutions:
  • Adopting solutions like smart meters and smart transformers and engaging with farmers can build trust.

Source:TH