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Web Exclusive | February 2019

Indian government’s Rs 344 bn bonanza for solar sector

The Government of India has approved the launch of KUSUM (Kisan Urja Suraksha evam Utthaan Mahabhiyan) scheme, to promote the use of solar powered agriculture pumps by farmers and installation of small renewable power plants (500 KW to 2 MW) by farmers/cooperatives/panchayats on their lands, with a funding support of Rs 344.22 billion.

Sabyasachi Majumdar, Group Head - Corporate ratings, ICRA, says, “The launch of KUSUM scheme with 30 per cent capital subsidy from the central government and 30 per cent capital subsidy from the state government is expected to provide an impetus for improving the adoption of the solar powered agriculture pumps by the farming community.”

According to Mahumdar, this (Kusum) would also reduce the subsidy dependence for discoms on the state governments, in our view. Further, the proposal for installation of small-scale renewable power plants by the farmers/cooperatives/panchayats on their lands with discoms purchasing the power at the approved feed-in tariff rates would augment the renewable energy consumption in the long run.”

Under the KUSUM scheme, the central government proposes to add 25.75 GW solar power capacity by 2022 by promoting the installation of 10 GW decentralised ground mounted grid-connected renewable power plants, deployment of 17.5 lakh standalone solar powered water pumps and 10 lakh of grid-connected solar powered water pumps. Based on a benchmark capital cost of about Rs 70,000 per HP and average pump size of 5 HP, the funding outlay for the scheme is expected to support the target set by the government.

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