Gujarat farmers can now produce, sell solar power under Suryashakti Kishan Yojana

Gujarat is poised to become the first state in the country to roll out a scheme where farmers can generate electricity using solar energy and sell the surplus to the electric grid.

Chief minister Vijay Rupani on Saturday announced Suryashakti Kishan Yojana or SKY as it’s called as per which farmers, besides producing electricity for farm and irrigation purposes, can also sell surplus power to the state owned power companies at Rs7 per unit for a period of seven years under this scheme.

The state government today launched a pilot project for the scheme which aims to cover 33 districts by setting up 137 feeders, covering 12,400 farmers. The cost of the pilot project is estimated to be about Rs870 crore, according to a state government statement. To produce 1,42,000 horse power of energy for irrigation through water pumps will require 177 megawatts of solar power generation in the pilot stage.

“SKY would be an able element in fulfilling Prime Minister Narendra Modi’s pledge to double the income of farmers by year-2022,” Gujarat energy minister Saurabh Patel said at a press conference in Gandhinagar that was attended by chief minister Rupani, deputy chief minister Nitin Patel and other senior Gujarat government officials.

As per the new scheme, a farmer signing up for it will have to spend only 5 % amount of the total expenditure for installing the solar project (including solar panels and inverters).

The central and state governments would pay 60 % amount as a subsidy. While remaining 35% amount would be a loan to farmer, interest on which would be paid by the state government. The duration for repayment of the loan amount has been fixed for seven years.

Farmers in Gujarat get about 8 hours of power supply for irrigation purpose and with implementation of SKY they can avail this for up to 12 hours.

The central government has been aggressively promoting clean and renewable energy initiatives with an ambitious target to install 100 giga watts (GW) of energy capacity from solar power by 2022.

With over 300 sunny days and high solar radiation, coupled with low prices of solar panels, this new initiative by the Gujarat government offers a powerful clean energy solution to power irrigation pumps and connect them to the grid.

The extra electricity given to grid would be purchased at a rate of Rs7 per unit. Of this, Rs3.50 would be paid by Electricity Distribution Company and Rs3.50 per unit (maximum limit of 1,000 units every year) by state government as a subsidy. Of this amount, after deducting the loan installment, the remaining money will be deposited directly into the bank account of the farmers.

The investment by the farmers for availing the benefits of the SKY would be recovered within 8 to 18 months through selling of extra electricity generated, said Patel.

The advantages

After the pilot, if the scheme is launched successfully across the state, it can benefit the state government financially as it will save a lot of expenditure that goes in providing subsidized power to the farmers. Currently farmers in Gujarat pay about 50 paise per unit for using power for irrigation.

“The state government spends about Rs4,500- 5,000 crore every year for the subsidy given to farmers for using electricity for irrigation purpose. With SKY, this will come down immensely in due course. The government can achieve a break even in about 5-7 years for the investment it has to make in setting up the solar infrastructure,” said a senior state government official on conditions of anonymity.

The present power demand of the state is about 14,000 MW and with some of the private companies unable to keep their commitment to supply power due to a change of law by the Indonesian government from where they source coal, Gujarat government is forced to buy about 3,000 MW of costly power from other sources. If farmers in Gujarat start generating their own power as in this case, the state government will not have to look for other sources, said a second government official in the know of the development.

A solar project developer who has been shortlisted by the state government for supplying panels and inverters for SKY is hopeful that more farmers would join the project once it is rolled out across the state.

Also, if a farmer has to purchase electricity when it’s cloudy and generating electricity using the solar energy gets difficult, he will have to buy it at market rates which is about Rs3.50 per unit currently.

The challenges

However, the going may not be that easy for the government when it launches on a larger scale. According to an industry expert, it will not be an easy task to convince a farmer to give up the subsidized power that he is getting currently and invest in a solar project.

The farmers joining the SKY must form a committee per feeder.

“There are challenges of making everyone in the area agree to set up solar projects. While a farmer may recover the 5% that he has paid initially in about 2 years, it will take 7 years or more to achieve a breakeven on the total cost of the project for which he has taken a loan. If a farmer has a 5 horse power motor for irrigating his field and he is required to install solar panels that can generate 4-5 KW that will keep them running, he can sell about 500 units per year to the state electricity company. Also, there is a risk that some large farmers may move away from farming and try to make money by selling solar power,” said an energy expert in the know of the development. He also did not wish to be named.