Net-Metered Solar Irrigation Pumps: Social Cost-Benefit Analysis Of Karnataka’s Surya Raitha Scheme.

Abstract

Energy use in irrigation has had an interesting development in India since farmers started depending on groundwater as their primary source of irrigation. Groundwater irrigation constitutes the highest share (60%) of available means of irrigation in the country and it rests firmly on access to electricity. Since late 1970s, state governments have provided unmetered, subsidised (sometimes free) agricultural power to run electric Irrigation Pump (IP) sets. Over the years, the number of electric IP sets in the country has multiplied and so has the state power subsidy. Still, the farmers complain of intermittent power supplied (usually during night-time) by discoms which hurt agricultural production. Simultaneously, the debt-ridden discoms are being forced by the Government to limit power procurement from the cheaper coal-fired thermal stations and shift to much expensive renewable energy sources. Moreover, the increasing number of agricultural pumps also threatens the sustainability of groundwater irrigation. It is in this context, the Karnataka‘s Surya Raitha (literal translation is ‗Sun Farmer‘) scheme promoting net-metered solar irrigation pumps is an innovative policy intervention that addresses these issues afflicting groundwater irrigation. It is aimed at providing reliable and uninterrupted quality power for irrigation, augment farmers‘ income through net-metering tariffs, reduce the state agricultural power subsidy, add to the clean energy generating capacity of the state, improve the discoms‘ finances and arrest excessive groundwater depletion. The problem seems to be the high upfront costs of installing solar pumps and connecting it to the grid. Farmers, who are getting free power to run agricultural pumps, would not be interested to invest lakhs in installing a new technology. Hence, Surya Raitha scheme provides 93% subsidy on the initial capital cost of solar pumps and the rest 7% is offered as soft loans by the implementing agency, BESCOM. The total cost of the project is Rs. 23.98 crores with zero upfront cost from farmers. As part of the pilot project in Haarobele village, 310 grid-connected solar pumps are being installed replacing the electric IP sets. Interviews conducted with beneficiary vi farmers reveals that the solar pumps has eliminated operation & maintenance costs and minimised the burden on farmers. The yield has seen improvement too. The systems are remotely controlled by BESCOM feeding two-third of generated solar power to operate pumps for irrigation and the remaining one-third is fed into the grid. The farmers receive a token amount of Re. 1 per unit as compensation for evacuating solar power and the BESCOM collect Rs. 4.83 per unit as repayment of the loan taken by farmers to install the solar pumps. The Surya Raitha scheme is still in the experiment stage and the pilot project is an expensive investment. The scheme largely benefits the farmers who receive an advanced technology for free increasing their incomes and reducing their operating costs. However, the scheme imposes high capital investment cost on public finances. This research study is a comprehensive account of Surya Raitha‘s pilot project. The opportunity cost of the scheme is evaluated using Social Cost-Benefit Analysis (SCBA) technique. All financial and environmental costs and benefits are monetized and accounted for time value of money. Results show that the Net-Present Value of the pilot project is Rs. 5.26 crores and the Net Benefit-Cost Ratio is marginally positive, implying that the pilot project is financially and environmentally sound investment. This study recommends that the Surya Raitha scheme should make possession of micro-irrigation systems mandatory to conserve groundwater. Also, the capital subsidy should be reduced by assuring farmers alternate financing mechanism (e.g. loans from banks). Lastly, the Government should create mass awareness about the manifold benefits of the net-metered solar irrigation pumps to promote large-scale adoption.