PM-KUSUM Yojana Explained: Overview, Objective & Components

The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) Yojana is an initiative by the Indian Government to promote renewable energy and support farmers in using solar power for agriculture.

Main Objectives

To provide energy and water security, increase farmers’ income by selling surplus solar power electricity to DISCOMs, de-dieselize the farm sector, and reduce environmental pollution.

PM-KUSUM Yojana Components Explained

PM KUSUM Scheme has 3 components:

Component-A: Development of 10 GW of decentralized, grid-connected renewable energy plants. These small-scale solar power plants (0.5–2 MW) are installed on Barren/ Fallow/Marshy/ Pasture or Cultivable land to supply power directly to the grid.

Component-B: Installation of 14 lakh standalone solar-powered agricultural pumps, replacing diesel-based pumps for irrigation and improving energy independence.

Component-C: Solarization of 35 lakh existing grid-connected agricultural pumps, including feeder level solarisation, to ensure that these pumps function on solar energy, reducing electricity demand from DISCOMs.

Let’s understand these components in detail:

Component A: Renewable Energy Power Plants (REPP)

Key Features:

• Farmers, cooperatives, panchayats, Farmer Producer Organisations (FPOs), and others can set up solar power plants ranging from 500 kW to 2 MW capacity.
• If beneficiaries cannot arrange the required funds (equity), they can:
  > Work with developers.
  > Collaborate with the local DISCOM (electricity company), which will act as the Solar Power Generator (SPG).
• DISCOMs will:
  > Announce sub-station-wise available capacity.
  > Invite applications for setting up solar power plants.
• Power Purchase: The solar power generated will be bought by DISCOMs at a feed-in tariff (FiT) decided by the State Electricity Regulatory Commission (SERC).
• Financial Benefit: DISCOMs will get a Performance-Based Incentive (PBI) of Rs. 0.40 per unit purchased or Rs. 6.6 lakh per MW installed (whichever is lower) for 5 years.

How to Avail Financial Assistance:

1. The generated solar power will be sold to DISCOMs at the FiT, as approved by SERC.
2. Developers or local DISCOMs can help set up the plant if funds are unavailable.
3. Landowners will earn lease rent (mutually agreed terms) when developers or DISCOMs set up the REPP.
4. Implementing agencies must submit their PBI claims annually for up to 5 years after the plant starts operating. They must provide:
   > Joint Metering Report.
   > Lease rent payment receipts (if applicable).

Component B: Standalone Solar Agriculture Pumps

Key Features:

• It is for off-grid areas where no electricity supply is available.
• Farmers will get support to install solar-powered agriculture pumps.
• Cost Sharing:
  > Central Financial Assistance (CFA): 30% of the benchmark or tender cost (whichever is lower).
  > State Government Subsidy: At least 30%.
  > Farmer’s Share: Up to 40%. Farmers can take loans to reduce their upfront payment to just 10%.
• Special Areas (North Eastern States, Ladakh, J&K, Himachal Pradesh, Uttarakhand, Lakshadweep, Andaman & Nicobar Islands):
  > CFA increases to 50%.
  > Farmer’s share reduces to a maximum of 20%.

How to Avail Financial Assistance:

1. The Ministry of New and Renewable Energy (MNRE) will allocate solar pumps state-wise.
2. Implementation agencies must submit project proposals for approval.
3. Once approved, projects must be completed within 24 months (extensions possible with valid reasons).
4. Funds will be released in two stages:
   > 30% Advance after issuing work orders to vendors.
   > Remaining balance after project completion and verification.

Component C: Individual Pump Solarisation (IPS)

Key Features:

• For grid-connected agriculture pumps.
• Farmers can install solar PV systems up to 2 times the pump capacity.
• Benefits:
  > Solar power meets irrigation needs.
  > Excess power is sold to DISCOMs, earning farmers additional income.
• Cost Sharing:
  > CFA: 30% of the benchmark or tender cost (whichever is lower).
  > State Government Subsidy: At least 30%.
  > Farmer’s Share: Up to 40%. Farmers can reduce this with bank loans.
• Special Areas (North Eastern States, Ladakh, J&K, Himachal Pradesh, etc.):
  > CFA increases to 50%.
  > Farmer’s share reduces to 20%.

How to Avail Financial Assistance:

1. MNRE will do state-wise allocation after approval.
2. Implementation agencies submit proposals and get approval.
3. Projects must be completed within 24 months.
4. Funds will be released in two stages (similar to Component B).

Also read: Agrivoltaics Explained: Can Solar Panels & Farms Work Together?

Component C: Feeder Level Solarisation (FLS)

Key Features:

• Entire agriculture feeders can be solarised instead of individual pumps.
• Loan for Feeder Separation: If feeders are not separated, states can take loans from NABARD, PFC, or REC.
• Solar plants will supply power for 25 years through:
  > CAPEX Mode (State or DISCOM funds the plant).
  > RESCO Mode (Third-party developers set up and operate the plant).
• Cost Sharing:
  > CFA: 30% of the installation cost (up to Rs. 1.05 Cr/MW).
  > Special Areas: CFA increases to 50% (up to Rs. 1.75 Cr/MW).
• Farmers get reliable daytime power for irrigation, either free or at subsidized rates.

How to Avail Financial Assistance:

• CAPEX Mode:
  > Up to 40% CFA is released after tendering and signing agreements with contractors.
  > Remaining CFA is released after successful commissioning.
• RESCO Mode:
  > No advance CFA. Further, the CFA up to 100% of the total eligible CFA will be released to the RESCO developer through DISCOM on successful commissioning and declaration of the Commercial Operation Date (COD) of the solar power plant..