PM-KUSUM Component A: A Complete Guide to Solar Power Plant Installation & Benefits for Farmers

The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme is a crucial initiative by the Indian government to promote solar energy adoption in the agricultural sector. Component A of this scheme focuses on the installation of 10,000 MW of decentralized, ground-mounted, grid-connected solar power plants, known as Renewable Energy Power Plants (REPPs), with capacities of up to 2 MW.

Who is Eligible to Set Up Solar Power Plants?

The following entities, collectively termed Renewable Power Generators (RPGs), are eligible under Component A:

• Individual farmers

• Groups of farmers

• Water User Associations

• Farmer Producer Organizations (FPOs)

• Primary Agriculture Credit Societies (PACS)

• Community/cluster-based irrigation systems

  
  

Where Can the RPGs Install Solar Power Plants?

RPGs can set up solar power plants on the following types of land:

• Barren and uncultivable lands

• Pastureland or marshy lands

• Agricultural land (provided solar panels are installed on a stilt structure to ensure continued farming activity)

  
  

Capacity of Ground-Mounted Solar Power Plants

The eligible capacity range for a ground-mounted solar power plant is between 500 kW to 2 MW. In some cases, plants of sizes smaller than 500 kW may be permitted based on techno-commercial feasibility.

Proximity to Substations and Feeder Connectivity

• Ideally, the REPP should be installed within a 5 km radius of a substation to minimize transmission losses and sub-transmission costs.

• Sites with 11kV feeders in proximity may also be considered, even if they are beyond the 5 km range.

  
  

Benefits of Component A

• Power Purchase Agreement (PPA): RPGs can sell solar power to DISCOMs through a 25-year PPA at a feed-in tariff (FiT) determined by the State Regulatory Commission (SERC).

• Leasing Income: Farmers can lease their land for solar plants and earn a stable rental income.

• No Penalty for Shortfall: There is no penalty for shortfall in solar power generation.

  
  

Implementation Methodology

How to Apply?

• DISCOMs assess renewable energy generation capacities near substations and invite Expression of Interest (EOI) for participation in the scheme.

  
  

Other Key Implementation Points

• RPGs can set up multiple REPPs if they are connected to different substations.

• The commissioning timeline is 12 months from the date of the Letter of Award (LoA).

• A PPA must be signed within two months of LoA issuance.

• Penalty for Delay: If the RPG fails to sign the PPA within the stipulated timeframe, the Earnest Money Deposit (EMD) will be forfeited.

  
  

Financial Requirements & Support

• Cost of REPP: Estimated at ₹4 crores per MW.

• No Subsidy: RPGs must arrange capital on their own.

• Financing Options: RPGs can take loans from financial institutions or lease their land to developers.

• Developer Eligibility: Developers must have a net worth of ₹1 crore per MW of capacity applied for.

• Bank Guarantees:

  • EMD of ₹1 lakh/MW at the time of EOI submission.

  • Performance Bank Guarantee (PBG) of ₹5 lakh/MW within 30 days of LoA issuance.

    
    

Roles & Responsibilities

Implementing Agencies

• DISCOMs, GENCOs, or State-designated departments will implement Component A.

  
  

Ministry of New and Renewable Energy (MNRE) Responsibilities

• Allocate initial capacities for pilot projects.

• Monitor and evaluate scheme implementation.

• Provide model PPA and lease agreement templates.

• Issue Procurement-Based Incentives (PBI) to DISCOMs.

  
  

DISCOM Responsibilities

• Assess demand and declare solar capacity for 33/11 kV substations.

• Carry out the selection process for power generators.

• Issue LoA and sign PPAs.

• If a farmer leases land to an RPG, ensure monthly lease rent is paid on time.

  
  

State Nodal Agencies (SNA) Responsibilities

• Coordinate between states, DISCOMs, and farmers.

• Assist farmers in project development, feasibility studies, and financial support.

  
  

Conclusion

Component A of the PM-KUSUM scheme offers a lucrative opportunity for farmers and rural communities to harness solar energy, generate income, and support India's renewable energy transition. While the scheme does not provide direct subsidies, various financing options make it accessible. The long-term PPA and lease options provide financial security, making it a viable investment for farmers and entrepreneurs .