Fund Crunch Eclipses Modi’s Plan To Promote Solar Power Among Farmers

India's plan to make farmers generate solar power and wean them away from using diesel-run water pumps hasn't taken off.

An ambitious project to generate 10,000 MW of solar power on farmlands and operate pumps hasn't started because of paucity of funds, according to officials in the Power Ministry. This comes even as India targets 225 gigawatts of renewable energy by 2022.

KUSUM or Kisan Urja Suraksha Evam Utthaan Mahaabhiyan announced in this year's budget in February aimed to incentivise farmers to run solar water pumps. The outlay for the scheme was estimated at Rs 1.4 lakh crore and was to be implemented by July.

The Ministry of New and Renewable Energy, the implementing agency, sought financial assistance from Finance Ministry which is yet to give its approval. “We want to seek extra budgetary support for solar pumps, which is under consideration,” Anand Kumar, secretary at the ministry, told BloombergQuint.

The scheme's beneficiaries, Kumar said, would have to bear 10 percent of the cost of solar pumps. They would receive a 60 percent subsidy on the cost—to be borne equally between central and state governments—while 30 percent would come as a loan. Farmers can also sell back the power generated to distribution companies.

Kumar said the ministry would tap the markets should the Finance Ministry not provide the centre's share of Rs 48,000 crore. “Our proposal has been sent to the IREDA (Indian Renewable Energy Development Agency Ltd.) for seeking loans,” he said, adding: “We have to take various things into account (such as) how much we will raise money from the market.”

However, KS Popli, chairman and managing director of IREDA, told BloombergQuint over the phone that the ministry has been asked to launch the scheme with its resources. The scheme, according to him, will be scaled down. “It will comprise solar capacity of 2000-3000 MW in the first phase now,” Popli said. “Subsequently, they (the renewable energy ministry) will ask us to raise money in the second phase.”

Yet, the ministry wants the scheme to be entirely funded by the Finance Ministry. An official of the New and Renewable Energy Ministry said on the condition of anonymity that the scheme will be notified after cabinet approval.

Response from farmers is said to be tepid.

“The uptake in the farming community is very low in the sense that they think if they are getting free power, then why should they try to buy solar pumps and get into all this hassle,” Vinay Rustagi, managing director of the clean energy consultancy Bridge to India, told BloombergQuint over phone.

He pointed to the challenges the scheme might face, given that other states have issued smaller tenders for solar pumps. “The idea behind the Kusum scheme was that the Centre takes the lead,” Rustagi said, adding: “They announced a target of more than 1 million pumps and said the government will set aside Rs 48,000 crore for subsidies… the financial outlay becomes quite demanding.”

On the government's sweetener of permitting farmers to sell back power to discoms, Rustagi said: “The question is, is there enough interest in the farming community based on the past schemes?”