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KUSUM program to line up innovative business models

Recently Union Budget has allocated Rs 220 Billon for 2020-21, against power and renewable sectors. Government has also planned to expand KUSUM to provide two million standalone solar agricultural pumps and 1.5 million farmers to set up grid-connected pumps.

MNRE has asked states to prepare innovative business model for implementation of KUSUM program. Some solar models prevalent in market are inclusive of net metering concept integrated with subsidy mechanism. Some states offer to replace old agricultural pumps with solar operated pumps where farmer will utilize power for irrigation purpose and when pump is not in operation solar will injected into the grid through inverter and DISCOMS will purchase electricity at Rs. 1 per unit. Payback period for farmers will be around 8-9 Years.

Some other states have started replacing old pumps with new solar pumps with enhanced capacities to 1.25 times. In this scheme state government provides a capital subsidy of 30%, the National Bank for Agriculture and Rural Development (NABARD) provides a loan of 65%, and the farmer will meet the remaining 5%. DISCOM will also pay Rs 3.5 /kWh to the farmer for a period of 25 years.

These innovative business model offers win to win situation for both Discoms and farmers. DISCOMS will be double benefited, one through saving on subsidy on agriculture and other through getting cheaper solar power at Rs 1 per unit against average power purchase cost’s (APPC) rate. On the other side, farmers will benefited from solar power as well as making additional income by selling solar power.