PM KUSUM Scheme

Ministry of New and Renewable Energy (MNRE) has launched the Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan ( PM KUSUM ) Scheme for farmers for installation of solar pumps and grid connected solar and other renewable power plants in the country. PM Kusum scheme aims to add solar and other renewable capacity of 25,750 MW by 2022 with total central financial support of Rs. 34,422 Crore including service charges to the implementing agencies.

• The Scheme consists of 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.

Scheme implementation:

State Nodal Agencies (SNAs) of MNRE will coordinate with States/UTs, Discoms and farmers for implementation of the scheme.

Components A and C of the Scheme will be implemented in Pilot mode till 31st December 2019. The Component B, which is a ongoing sub-programme, will be implemented in entirety without going through pilot mode.

 On successful implementation of pilot run of Components A and C of the Scheme, these components would be scaled-up, after getting necessary approval.

Component A:

• Renewable power projects of capacity 500 kW to 2 MW will be setup by individual farmers/ group of farmers/ cooperatives/ panchayats/ Farmer Producer Organisations (FPO). 
• In the above specified entities are not able to arrange equity required for setting up the REPP, they can opt for developing the REPP through developer(s) or even through local DISCOM, which will be considered as RPG in this case.
• DISCOMs will notify sub-station wise surplus capacity which can be fed from such RE power plants to the Grid and shall invite applications from interested beneficiaries for setting up the renewable energy plants.
• The renewable power generated will be purchased by DISCOMs at a feed-in-tariff (FiT) determined by respective State Electricity Regulatory Commission (SERC).
• DISCOM would be eligible to get PBI @ Rs. 0.40 per unit purchased or Rs. 6.6 lakh per MW of capacity installed, whichever is less, for a period of five years from the COD.

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Component B

• Individual farmers will be supported to install standalone solar Agriculture pumps of capacity up to 7.5 HP.
• CFA of 30% of the benchmark cost or the tender cost, whichever is lower, of the stand-alone solar Agriculture pump will be provided. The State Government will give a subsidy of 30%; and the remaining 40% will be provided by the farmer.
• Bank finance may be made available for farmer’s contribution, so that farmer has to initially pay only 10% of the cost and remaining up to 30% of the cost as loan.
• In North Eastern States, Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttarakhand, Lakshadweep and A&N Islands, CFA of 50% of the benchmark cost or the tender cost, whichever is lower, of the stand-alone solar pump will be provided. 
• The State Government will give a subsidy of 30%; and the remaining 20% will be provided by the farmer. Bank finance may be made available for farmer’s contribution, so that farmer has to initially pay only 10% of the cost and remaining up to 10% of the cost as loan.

Component C

• Individual farmers having grid connected agriculture pump will be supported to solarise pumps. Solar PV capacity up to two times of pump capacity in kW is allowed under the scheme.
• The farmer will be able to use the generated solar power to meet the irrigation needs and the excess solar power will be sold to DISCOMs.
  CFA of 30% of the benchmark cost or the tender cost, whichever is lower, of the solar PV component will be provided. 
• The State Government will give a subsidy of 30%; and the remaining 40% will be provided by the farmer. Bank finance may be made available for farmer’s contribution, so that farmer has to initially pay only 10% of the cost and remaining up to 30% of the cost as loan.
• In North Eastern States, Sikkim, Jammu & Kashmir, Himachal Pradesh and Uttarakhand, Lakshadweep and A&N Islands, CFA of 50% of the benchmark cost or the tender cost, whichever is lower, of the solar PV component will be provided. 
• The State Government will give a subsidy of 30%; and the remaining 20% will be provided by the farmer. Bank finance may be made available for farmer’s contribution, so that farmer has to initially pay only 10% of the cost and remaining up to 10% of the cost as loan.

Scheme Benefits:

• The scheme will open a stable and continuous source of income to the rural land owners for a period of 25 years by utilisation of their dry/uncultivable land.

• Further, in case cultivated fields are chosen for setting up solar power project, the farmers could continue to grow crops as the solar panels are to be set up above a minimum height.

• 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 day time.

• As these power plants will be located closer to the agriculture loads or to 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
• The solar pumps will save the expenditure incurred on diesel for running diesel pump and provide the farmers a reliable source of irrigation through solar pump apart from preventing harmful pollution from running diesel pump.

• In light of the long waiting list for electric grid connection, this scheme will benefit 17.5 lakh farmers over a period of four years, without adding to the grid load.

Solar power for farming and for fallow lands by extending the Kusum scheme. This could potentially result in 10-15 GW of new capacity creation if it materializes. This will be a big push for farmer’s income, but will in turn require lesser demand for grid scale power, targets for which then should be adjusted downwards.