Roadblocks: Policy flaws, lack of low-cost credit hit farm solar projects

Though this means it is indeed feasible to double farmers’ income in a few years, policy flaws and lack of low-cost credit facilities are hampering the ambitious project. A two-year-old exclusive government scheme to incentivise such ventures has been of little help.


By Prabhudatta Mishra & Anupam Chatterjee

Farmers could earn a tidy sum — additional Rs 15-20 lakh annually from a hectare of land — from unconventional uses of the land like solar power generation without interrupting farming activities, according to analysts. This is up to three times what they currently earn from such land holding through agriculture alone.

Though this means it is indeed feasible to double farmers’ income in a few years, policy flaws and lack of low-cost credit facilities are hampering the ambitious project. A two-year-old exclusive government scheme to incentivise such ventures has been of little help.

Installation of solar panels is capital-intensive; it is estimated that roughly Rs 50 lakh is needed for erecting the panels in one acre of land. For a large majority of the farmers in the country, such a cost is barely affordable.

So despite subsidies on offer, only a few projects have been developed so far and even these merely enabled farmers to get lease income of a few thousand rupees per annum from the solar developers.

Given that 2.2 hectares of land suffices to produce 1 megawatt (MW) of agrivoltaics — a term used to refer to co-developing the same area of land for both solar photovoltaic power as well as for agriculture – a massive amount of solar power – 629.69 gigawatts (GWs) – could be generated from the country’s from net sown area of 140 million hectares, according to a report by National Solar Energy Federation of India (NSEFI) released in May. The potential of agrivoltaics is 49.50 GW and 56.6 GW from fallow lands and other uncultivated lands, respectively, as per the report.

Some 15 pilots have been in operation until now. Some states have also started the registration process to assess farmers’ interests in the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-Kusum) scheme, unveiled in February 2019 to catalyse the process. The government also eased the guidelines for the setting up of solar plants on farm lands, allowing capacities below 500 kilowatt, meaning farmers with small holdings could start the ventures.

As India has 85% small and marginal farmers out of total 14.5 crore land-owning cultivators, solar power could potentially be the easiest way to augment their income, said OP Yadav, director at Jodhpur-based Central Arid Zone Research Institute (Cazri). The institute commissioned a 105 kilowatt solar plant in 2017 in its campus with an investment of about Rs 55 lakh in one acre of land where farming is continuing on two-thirds of the area. This, Cazri believes, is the perfect model for small and marginal farmers.

The PM-Kusum scheme aims to set up 10 GW of solar plants in farm lands, install 17.5 lakh agricultural solar pumps and connect agricultural electricity feeders with solar power to ensure only clean energy is used for irrigation. The total outlay of the scheme is pegged at Rs 1.2 lakh crore with central financial assistance of Rs 34,422 crore. The state governments could give a 30% subsidy and the balance 40% will have to be provided by the farmer.

Besides providing an additional source of income to farmers via sale of surplus power from their solar plants to state-run power distribution companies, the PM-Kusum scheme is aimed at lowering the subsidy burden of the states by reducing the quantum of electricity to be supplied for irrigation.

Solar plants can even be erected on farm land without hindering mechanised farming. “Our solar plant is elevated at a height of about 3.5 metre which allows regular agricultural activities and even mechanised farming on tractors,” said Sharavan Sampath, CEO of Oakridge Energy. Sampath’s firm has developed a 110-kilowatt solar unit on an elevated structure on a farmland on the outskirts of Delhi under the state government’s Mukhyamantri Kisan Aay Badhotri Solar Yojana scheme. “The farmer earns an average lease income of Rs 50,000-70,000 per acre, in addition to his basic income from agriculture,” Sampath added.

“Around 1.5-2.5 acres is needed to build 500 kilowatt solar units on farm lands and on a ballpark basis, around 4 units of electricity is generated per kilowatt in a day,” Subrahmanyam Pulipaka, CEO of NSEFI, said. “The expenditure for building solar units on farm lands is also relatively higher owing to smaller capacities, and the cost of building a 500-kilowatt plant is more than Rs 1 crore and the cost will be 10-12% higher if the panels are installed on elevated structures,” Pulipaka added.

However, making credit available through banks at cheaper interest rate and facilitating grid connectivity are two major demands of farmers who are interested in solar farming. “Even if government gives 60% subsidy (Centre 30% and Rajasthan government 30%), making the requisite investment will still be difficult. Unless banks lend 30-35% against our land, we will not be able to generate funds on our own,” said Hariram Baswana of village of Budi Arjunpura in Nagaur district of Rajasthan. If the banks are ready, at least 15-20 farmers of his village are ready to set up solar plants, Baswana added.

Unfortunately, due to non-availability of credit, farmers are being forced to lease their land at very cheap rates of as low as 50,000/acre to any developer, said Bhagirath Choudhary of South Asia Biotechnology Centre. The PM-Kusum guidelines also facilitate this as it says: “If farmers/group of farmers/cooperatives/panchayats/Farmer Producer Organisations (FPOs) are not able to arrange equity required for setting up the renewable power project (REPP), they can opt for developing the REPP through developer(s) or even through local DISCOM.” Choudhary said: “Solar farm is a revolutionary approach to generate additional income for small farmers. States must develop a workable bridge platform to connect solar farm to electricity grid.”

The NSEFI report has suggested that a specific agrivoltaic temporary land conversion or another mechanism must be found to prevent agricultural land used for agrivoltaics to be governed by non-agricultural land use regulations. It also has recommended that a minimum of 80% of the total surface is available and used for agricultural purpose.

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