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Substantial Investment Subsidies for Solar Power

  • 31 Aug 2021
  • 5 min read

Why in News

In recent years, the Government of India has introduced several solar irrigation schemes like PM KUSUM, Suryamitra Skill Development Programme, SPaRC Program, etc.

  • These schemes seek to provide Substantial Investment Subsidies (SIP) and incentivise farmers to conserve groundwater and energy, increase farmer income and enable more efficient irrigation.
  • SIPs promise a low carbon footprint, consistent energy availability, zero fuel costs and low operational costs. However, there are some issues associated with these schemes.

Key Points

  • About Substantial Investment Subsidies:
    • The Government of India through PM KUSUM has been promoting solar irrigation pumps by offering Substantial Investment Subsidies (SIP).
    • The objective of SIP is to provide subsidies to farmers for buying and installation of solar pumps and power plants.
    • The farmer will be able to use the generated solar power to meet the irrigation needs and the excess solar power will be sold to power distribution companies (DISCOMs) at pre-fixed tariff.
  • Need:
    • The massive power subsidies in the Indian agriculture sector has led to development of the irrigation-energy nexus.
      • Electricity in the agriculture sector is supplied at subsidised rates.
    • This irrigation-energy nexus is characterised primarily by depleting groundwater and a growing debt burden of power DISCOMs.
      • SIP can help in breaking this irrigation-energy nexus and provide other benefits.
  • Advantages of Offering SIP:
    • Eco-friendly Approach: SIPs will help move towards a zero-carbon footprint in the groundwater economy by decreasing reliability on fossil fuel-based electricity production.
    • Providing Water and Electricity Security: The west-south corridor spanning from Punjab to Tamil Nadu has lower groundwater availability than the Ganga-Brahmaputra belt.
      • Farmers in this corridor also face frequent power cuts, low voltage and receive stable electricity only at night.
      • The west-south corridor will benefit significantly from introducing SIPs since the region has many solar hotspots and receives peak sunlight hours.
    • Reducing Burden of DiISCOMs: It will also help relieve the DISCOM’s subsidy burden from Rs 30,000-35,000 per year per SIP.
    • Favourable Condition for Solar Energy Development: SIPs now, are more affordable, owing to the falling price of solar photovoltaic [PV] cells.
      • The recent rise in diesel prices has naturally increased the costs of irrigation.
      • Therefore, introducing SIPs may boost agricultural growth while curbing the need to lay rural electric networks.
  • Associated Challenges:
    • Over-exploitation of Groundwater: The only possible drawback of SIPs could be the risk of the over-exploitation of groundwater since on-demand cheap power will always be available after introduction of SIPs in the corridor.
    • Favours Medium and Large-scale Farmers: The schemes that are launched for solar energy promotion, gives preference to farmers who are already using water-saving micro-irrigation systems.
    • High Initial Cost: Despite subsidies, the initial capital investment remains high, raising questions about the viability of SIPs.
      • Moreover, the operation and maintenance of solar PV systems require trained professionals and machine components, which may be hard to find in rural areas.
    • Costly Grid Connection: The financial costs associated with grid connection can be enormous.
      • According to the Centre for Science and Environment, installing a 100-kilowatt solar-powered system to an electricity grid costs around Rs 85 lakh.
      • Due to this, SIPs might not be the silver bullet to solve the irrigation-energy nexus.

Way Forward

  • Awareness programmes about efficient water management practices and the benefits of SIPs must be undertaken through existing networks of farmers.
  • Apart from promoting Joint Liability Groups (JLG) among small and marginal farmers, their inclusivity in existing solar irrigation schemes must also be ensured.

Source: DTE

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