Sustainable Development

Government initiatives to drive the uptake of solar and energy-efficient pumps

In terms of revenue, the pump market in India is expected to grow at a compound annual growth rate of over 7 per cent during the period 2021-26. The factors that will contribute to its growth include the demand for energy efficient pumps and solar pumps, increased export of centrifugal pumps and growth in the agricultural sector. The demand for pumps is expected to grow at a steady rate due to the increased application of pumps in several end-use sectors. The organised pump market contributes significantly to the country’s GDP, with pumps playing a major role in the agricultural and infrastructure sectors. On its part, the government has been introducing various irrigation initiatives and programmes to develop the agricultural sector.

Government irrigation schemes

The government has introduced several policies to promote agricultural growth. These policies range from subsidised electricity to exemptions on the use of solar water pumps. The announcement of such policies has enabled farmers to install independent irrigation facilities to ensure consistent availability of water, and is enhancing the demand for water pumps in the country.

Various flagship irrigation initiatives have been launched by the government to develop the agricultural sector such as the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), the Interlinking of Rivers (ILR) programme, and the Command Area Development and Water Management (CADWM) programme.

Launched in 2015, the PMKSY aims to improve access to water for farms and expand the cultivable area under assured irrigation. The scheme also ensures convergence with all rural infrastructure-based programmes related to water conservation and management such as the Mahatma Gandhi National Rural Employment Guarantee Scheme, the Rashtriya Krishi Vikas Yojana, the Jawaharlal Nehru National Solar Mission and rural electrification programmes. Under the PMKSY, Rs 500 billion was allocated between 2015 and 2020 for four key components: The Accelerated Irrigation Benefit programme, the Har Khet Ko Pani and Per Drop More Crop Programme, and watershed development.

The ILR programme aims to ensure greater equity in water distribution by enhancing water availability in drought-prone and rain-fed areas. Further, the CADWM was launched in 1974 to improve the irrigation potential utilisation and optimise agricultural production from irrigated land through an integrated and coordinated approach to efficient water management.

Government initiatives to promote solar pumps

The government launched the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM-KUSUM) scheme with an outlay of Rs 344.22 billion in 2019. The main objectives of the scheme include increasing farmers’ income, providing a reliable source for irrigation and de-dieselising the agricultural sector.

The PM-KUSUM scheme has three components. The first component involves the setting up of 10,000 MW of decentralised grid-connected renewable energy power plants on barren land. The second component encompasses the installation of 1.75 million stand-alone solar agricultural pumps. Through this component, individual farmers will be supported to install stand-alone solar agricultural pumps of capacity up to 7.5 HP for replacing the existing diesel agricultural pumps/irrigation systems in off-grid areas, where grid supply is not available. The third component, entailing the solarisation of 1 million grid-connected agricultural pumps, is aimed at supporting individual farmers with grid-connected agricultural pumps to shift to solar pumps. The farmers will be able to use the generated solar power to meet irrigation needs and the excess solar power will be sold to discoms at a predetermined tariff.

As of October 2019, around 181,521 solar water pumps had been installed throughout the country. Chhattisgarh accounted for the highest number of installations with 60,430 solar pumps, followed by Andhra Pradesh with 28,267 installations.

In the union budget for fiscal year 2020-21, the PM-KUSUM scheme was expanded to cover 2 million farmers. It was announced that 2 million farmers will be provided with funds to set up standalone solar pumps whereas 1.5 million farmers will be helped to solarise their grid-connected agricultural pumps. The scheme, through all three of its components, aims to add a solar capacity of around 25,750 MW by 2022.

Such schemes have also been introduced at the state level. The Gujarat government announced the Suryashakti Kisan Yojana in July 2018 to provide solar panels to farmers for generating clean and low-cost energy. The Himachal Pradesh government approved the Saur Sinchayee Yojana, worth Rs 2.24 billion, in August 2018. Other states such as Maharashtra, Uttar Pradesh, Bihar and Karnataka have also initiated comprehensive solar pump programmes to address farmers’ issues and reduce discom losses.

Challenges in the solarisation of water pumps

There are various challenges associated with large-scale solarisation of water pumps. These include technological, production and financial issues. In terms of technological challenges, there are concerns regarding system quality and performance of solar water pumps. Since it is a budding concept in India, the technological aspects are still being studied. Solar pumps were introduced to reduce the production risks related to lack of reliable access to irrigation. However, the risks due to reduced water availability for irrigation in the long run and lack of other input resources would still need to be addressed.

As far as financial challenges are concerned, there are issues in investment appraisal. Due to high upfront costs, loans for solar pumps have long tenors (3-10 years). Therefore, the viability of investment in solar pumps needs to be carefully assessed, in order to avoid default and the associated costs. Hence, appraising solar pump investment is a challenging task, as it involves estimation of additional income accrued to the farmer due to the proposed investment.

The operational issues with solar water pumps are shortage of trained operators, concerns about after-sales service, and risk of physical damage and theft, etc. Hence, all such challenges need to be addressed before widespread solarisation of water pumps is carried out.

Future outlook

Government regulations and the energy crisis are motivating water pump manufacturers to develop energy efficient products. Going forward, state agencies and local authorities will have to work together and create more awareness regarding the benefits of solar water pumps through demonstration and pilot projects. Innovative financing schemes also need to be developed to increase the uptake of solar pumps by small debt-ridden farmers, who would benefit the most from these pumps. Local discoms can also work with renewable energy service companies to implement large solar irrigation programmes in certain areas. This would help them in load management and reduce their financial burden. With government policies and business models already in place, what is now required to drive solar pump uptake is capacity building by farmers and local authorities.

 

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