KUSUM scheme

KUSUM scheme

The Union Budget 2018 announced Kisan Urja Suraksha evam Uhaan Mahaabhiyan (KUSUM) to replace diesel pumps and grid-connected electric tube-wells for irrigation by solar irrigation pumps (SIPs) with a buy-back arrangement for farmer’s surplus solar energy at a remunerative prices. However, the program got delayed and eventually, in February 2019, The Cabinet Committee on Economic Affairs (CCEA) approved the launch of KUSUM program.Consequently, the Scheme was issued by MNRE on 08.03.2019. This post looks at various aspects of KUSUM Scheme.

August, 2019 – EESL issues tenders for 175000 Off-grid solar Pumps

July, 2019 – MNRE issues guidelines with Model PPA and Model LA

UPDATES

Background of KUSUM Scheme:

At present, over 30 million agricultural pumps are installed in India, out of which nearly 10 million pumps are diesel based. The Distribution Companies (DISCOMs) are not in a position to energize these pumps through grid connection as seen from the long waiting lists with such Distribution Companies. Hence there is a need to provide energy to these pumps through solar energy.

Also, over 20 million grid-connected agriculture water pumps installed in the country consume more than 17 percent of total annual electricity consumption of the country. Solarization of the same can reduce dependence of these pumps on conventional sources of energy supplied by DISCOMs and thus reducing their burden of subsidy on agriculture consumption of Electricity. This will also provide additional source of income to farmers who will be in a position to sell the surplus power to DISCOMs.

There is need for the decentralised renewable energy plants, Solar agriculture water pumps and solarisation of existing Grid connected Agriculture pumps.

About KUSUM Scheme:

Kisan Urja Suraksha evam Uhaan Mahaabhiyan (KUSUM Scheme) with aim to develop decentralized renewable power, replace Agriculture Diesel pumps with Solar Water pumps and Solarise Grid connected Agriculture pumps.

Objectives of Kusum Scheme:
  • Water security to farmers through reliable Solar power.
  • Utilization of degraded land of farmers.
  • Additional income to farmers by selling surplus power to DISCOM.
  • Water conservation.
  • Promotion of decentralized Solar power generation.
  • Reduction of burden of subsidy to agriculture sector.
The program:
  • The Scheme consists of three components:
    • Component A: 10,000 MW of Grid Connected Solar or any other RE Plants (500 KW to 2 MW capacity)
    • Component B: 17.50 lakh standalone Solar Agriculture Pumps (up to 7.5 HP)
    • Component C: Solarisation of 10 Lakh grid-connected Agriculture Pumps (up to 7.5 HP)
  • Total 25,750 MW capacity to be created by the year 2022.
  • Central Financial Support of Rs. 34,422 Crores.
Implementation & Targets
  • Component-A and Component-C to be implemented initially on pilot mode.
  • Target for 2019-20
    • Component A: 1000 MW
    • Component B: 1,75,000 solar pumps
    • Component C: 1,00,000 pumps (solarisation)
  • Beyond 2019-20:
    • Evaluation of Component A and C.
    • Component A and C to be scaled up after modifications, if any.
    • Component B to be implemented on a continuous basis.

Component A in Detail:

  • Capacity per Plant : 0.5 to 2 MW.
  • Distance from sub-station : 05 Km
  • Substation capacity : 33/11 kV or 66/11 kV or 110/11 kV
  • Setup by farmers/cooperatives/panchayats/ project developer/ Farmer Producer Organisation (FPO)/ Water User associations (WUA)
  • Scheme to be implemented primarily on barren / uncultivable land
  • On agricultural land solar power plant to be installed in stilt fashion
  • DISCOM eligible for PBI @ Rs. 0.40 per unit or Rs. 6.6 lakh per MW
  • DISCOMs to purchase power :
    • At pre-fixed tariff or
    • Tariff based bidding if applications are more than capacity feasible.
  • DISCOM will:
    • Notify sub-station wise capacity feasible for injection
    • Invite applications from interested beneficiaries for setting up the renewable energy plants
    • Ensure “must-run” status to solar plants and keep feeders ‘ON’ during day.
  • Any RE technology can be proposed by applicant
  • Power generated will be purchased by DISCOMs at pre-fixed tariff or tariff arrived through bidding with pre-fixed tariff as ceiling tariff
  • Duration of PPA will be 25 years from Commercial Operation Date (COD)
  • In case of project set up by a developer :
    • Lease rent to farmers by developers on basis of per acre per year or per unit energy generated per acre per year
    • Lease rent payment directly to the farmers by DISCOM
  • DISCOM obliged to buy the entire power from RPG within the contract capacity
  • Extension of the PPA period beyond 25 years through mutual agreement between the RPG and DISCOM
  • DISCOM to maintain LC and Escrow Arrangement
  • RPG to commission plant within nine months from issued of LoA
    • Two months extension permitted with penalties
    • No penalties if delay beyond control of RPG
  • DISCOM to get PBI on submission of documentary evidence:
    • Timely payment of monthly lease rent to the land owner, if applicable
    • Payment made to RPG for power supplied to DISCOM

Component B in Detail:

  • Standalone Solar Agriculture Pumps : 17.50 lakh
  • Aggregate capacity : 8250 MW
  • Pump capacity : up to 7.5 HP
  • Solar PV capacity permitted : as per MNRE Spec
  • Higher capacity pumps allowed with limit of CFA upto 7.5 HP pumps.
  • Individual farmers, Water User Associations and community/cluster based irrigation system eligible under Scheme.
  • Cost Breakup
    • CFA @ 30% of benchmark cost or the Tender cost, whichever is lower (50% for NE States including Sikkim, Hilly States and Island UTs )
    • 30% subsidy by the State Governments
    • Balance 40% by farmer (20% in case of NE/ hilly States & Island UTs). Bank finance may be available to farmers for 30% / 10% of the Cost
  • Implementation through DISCOM/ Agriculture Department/ Minor Irrigation
  • Department or any Department designated by State Govt.
    • Service charges @ 2% of the eligible CFA to Implementing Agency
    • MNRE to retain some part of service charge for centralised IEC activities
  • Priority to small and marginal farmers and preference to the farmers using Micro irrigation systems
  • Sizing of pump based of water table in the area, land covered and quantity of water required for irrigation
  • Convergence with present schemes on promotion of micro irrigation system and replacement of agriculture pumps with energy efficient pumps
  • Indigenous components to be used
  • In Dark/Black zones only diesel pumps to be replaced provided they use micro irrigation techniques.
  • Whenever the grid reaches, the stand alone solar pumps can be connected to the grid to feed surplus power depending on grid capacity
  • Web-based remote monitoring system for performance monitoring
  • MNRE specifications and testing procedures to be followed
  • CFA to be released on benchmark cost or cost discovered through tenders, whichever is low
  • Option of Universal Solar Pump Controller (USPC) to enable use of solar power for other activities
    • Bidder to indicate additional cost for Solar PV pumping system with USPC
    • The entire additional cost Solar PV pumping system with USPC would be borne by the farmer
  • State-wise allocation of solar Pumps to be issued by MNRE once in a year
  • Online portal for submission of proposal and progress
  • Sanction will be issued to States on acceptance of allocation and availability of State/UT share
  • Centralized tendering of solar PV pumping system through PSUs
  • Selection of beneficiaries and implementation by State Implementation Agency.
  • Cluster based approach for allocation of districts to the selected bidders
    • AMC for 5 years maintenance to be part of supply
  • Provision for blacklisting in case of non-performance
  • Vendor shall have one authorized service center in each operational district and a helpline in local language
  • Remote monitoring system shall be provided with each system and all data to be monitored through web-portal
Component B Benefits:
  • Reliable source of irrigation to farmers
  • Saving on diesel costs to the farmers
  • Increasing farmer’s income and living conditions
  • Option to connect to Grid in future whenever Grid supply is available and feed surplus power to Grid to get additional income
  • No additional Electric load on the Grid for Agriculture Pumps.
  • De-dieselisation & thereby equivalent foreign exchange savings

Component C in Detail:

  • Solarisation of Agriculture Pumps : 10 lakh
  • Aggregate capacity : 7500 MW
  • Pump capacity : up to 7.5 HP
  • Solarisation capacity permitted in kWp : Twice pump capacity
  • Solarisation of higher capacity allowed with limit of CFA up to 7.5 HP
  • Individual farmers, Water User Associations and community/cluster based irrigation system eligible under Scheme
  • Surplus power to be sold to DISCOM (Tariff by the State/SERC)
  • Cost-Breakup:
    • CFA @ 30% of benchmark cost or the tender cost, whichever is lower (50% for NE States including Sikkim, Hilly States and Island UTs )
    • 30% subsidy by the State Governments
    • Balance 40% by farmer (20% in case of NE/hilly States & Island UTs). Bank finance may be available to Farmers for meeting (30% /10%) of the cost.
  • Priority to small and marginal farmers and preference to farmers using micro irrigation systems
  • In Dark/Black zones solarisation of pumps only if they use micro irrigation techniques
  • Feeder-wise implementation to be carried out: all agriculture pumps in a feeder will be solarised
  • Indigenous components to be used
  • DISCOMs will ensure “must-run” status to the solarised feeders
  • AMC for 5 years maintenance to be part of supply
    • Provision for blacklisting in case of non-performance
  • Vendor shall have one authorized service center in each operational district and a helpline in local language
  • Remote monitoring system shall be provided with each system and all data to be monitored through web-portal
  • Implementation through DISCOM/ GENCO or any Department designated by State Govt.
    • Service charges @ 2% of the eligible CFA to Implementing Agency
    • MNRE to retain some part of service charge for centralised IEC activities
  • Implementing Agencies to select vendors through transparent bidding
  • Web-based remote monitoring system for performance monitoring
  • States may formulate state specific policy for grid connected solar pumps, customised to needs of the respective State
  • Online portal for submission of proposals and progress
  • Sanction will be issued to States on acceptance of allocation and confirmation for State/UT share.
Component C Benefits:
  • DISCOM will save on recurring deficit by low agriculture tariff.
  • Farmers will receive reliable day time power.
  • Farmers can sell excess power to Grid and increase their income
  • Farmers will be incentivised to conserve energy as well as ground water.
  • No additional Electric load on the grid for Agriculture Pumps.

Progress & Status of KUSUM Scheme:

References: