A cloud system for agriculture

Gulati is Distinguished Professor at ICRIER, Reddy is Executive Director, Global Agri-Entrepreneurship Academy, and Guntuboyina is Regional Manager, International Cooperation (Asia) at Wageningen University, Holland

Andhra Pradesh Chief Minister Chandrababu Naidu has proved to be a visionary and an investment-friendly politician. He has bagged the biggest investment in recent years with Google committing $15 billion to build a one-gigawatt artificial intelligence (AI) data centre at Visakhapatnam. This is supposed to be Asia’s largest data centre, and is likely to be operational from 2028. One of the key requirements for such a large data centre is 24 gigawatt-hours of power per day. Cutting supplies to other sectors, especially agriculture, to supply uninterrupted power to this data centre can lead to a backlash. Augmenting overall power supply through thermal sources is highly polluting.

So, Andhra Pradesh will have to look for either nuclear energy or renewables like solar power. And here is a chance for agri-households to participate in this emerging AI boom by providing power while cultivating their lands. Agri-photovoltaics (PV) promote the dual use of land. Farmers can be providers of food as well as power, while augmenting their incomes manifold. An agri-PV system involves solar panels mounted 10-12 feet above farmland to enable seamless cultivation of high-value crops. Two irrigated crops beneath the agri-PV panels can be chosen to ensure diversification — such as shade-loving, high-value crops (ginger, chillies, vegetables, etc.) Solar thus becomes a “third crop” and augments farmers’ incomes (eight to 10 times on ICRIER pilots).

Andhra Pradesh is already a pioneer, having introduced a policy innovation that grants data centres a deemed distribution licence (DDL), allowing hyperscale operators to procure and manage their own power rather than draw it as ordinary consumers. However, this needs to be followed up with a series of complementary measures to avoid any power cuts for other sectors.

A potential measure is that Google invests a modest slice of its capital to develop captive solar power generation capacity on farmers’ fields, where farmers can participate in equity and be co-owners of the power while cultivating their lands. This is a tested model which can lift household incomes. In the process, Google will build enormous goodwill with farmers, and it would yield a political dividend.

ICRIER has already set up pilots of agri-PVs in Rajasthan, Odisha, and Madhya Pradesh. These need to be scaled up, and Naidu can take the lead here. But it would require an ecosystem of farmers organised into a community-owned solar utility cluster (on the lines of milk cooperatives); as well as a special-purpose vehicle (SPV) company where farmers too hold some equity (borrowed from banks) but contribute mainly through granting utilisation of their land. A blended stack of investment from Google and public finance will help in developing the requisite infrastructure. Google could provide zero- (or very low-) interest long-term loans that could be adjusted against the energy supplied by the SPV. PM-KUSUM can be tweaked to provide capital subsidy. Commercial capital could also be leveraged with credit guarantee from the Credit Guarantee Trust Fund for Small and Medium Enterprises. Agri-PVs can also ensure value addition through processing, and that farmers are able to sell energy to the Google data centre.

Under the new DDL licence, Google can contract agri-PV-generated power through open-access and banking arrangements and stand behind it as a long-term off-taker. The farmers’ solar utility would thus gain a creditworthy, permanent customer. In a single stroke, the data centre’s load becomes the demand that finances rural electrification, not the one that starves it.

All in all, this model can create an extraordinary win-win situation for farmers, Google, and the government. For the farmer, land works twice over, produces a high-value crop, and generates a dividend from the power company that they partly own. For Google, it can buy while earning the farmers’ lifelong trust. A gigawatt or even a few hundred megawatts sourced from farmer-owned agri-PVs is a legacy story the company can tell for decades to come. In a country where large projects live or die on social licence, that goodwill is not a soft sentiment. It is the cheapest insurance Google can ever buy. For the state government, the model dissolves the very conflict that could have otherwise dogged its proudest investment. Instead of being forced to choose between the cloud and the cultivator, it can point to an arrangement in which the former pays for the later.

It is now for Sundar Pichai and Chandrababu Naidu to work with farmer producer companies, cooperatives, and rural entrepreneurs to set up at least 5,000 agri-PV systems of 1 Mw each across the state. Assuming each 1-Mw agrivoltaics system costs ~` 4 crore, we estimate an investment of Rs 20,000 crore, ($2.2 billion) to fulfil the self-sustaining captive energy requirement for Google. As mentioned earlier, innovative blended financing instruments and guaranteed buyback can ensure that funding does not become a stumbling block. More importantly, there will be minimal burden on the state or national budget, as it would be a market-based mechanism.

The choice that Andhra Pradesh faces is not between development and farmers. It is between two different kinds of development models. In one model, land is acquired, power is drawn, and what is left behind is a one-time rent and a long-lasting grievance. The other model treats farmers as co-owners, the agri-PV system as an asset, and the data centre as a customer. Being a proponent of the very licence (DDL) that makes it possible, Andhra Pradesh is uniquely placed to show the rest of the country how the cloud can shower prosperity on agri-households.

Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.