Written: Tushaar Shah, Neha Durga, Omkar Jani & Akhilesh Magal
Last week, a Solar Pump Irrigators’ Cooperative Enterprise (SPICE) was up and running in Dhundi, a village in Gujarat’s Anand district. Members of this cooperative — the first of its kind in the world — are using solar power not only to run irrigation pumps, but also pool their surplus energy to sell to the Madhya Gujarat Vij Company Ltd (MGVCL)at Rs 4.63/unit under a 25-year power purchase agreement (PPA).
The Dhundi SPICE’s six solar pumps, having an aggregate capacity of 56.4 kilowatts (kW), can generate nearly 85,000 units (kilowatt-hours) of energy annually, assuming 5 units per kW on an average daily over 300 sunny days. Of this, the six farmer-members would use 40,000 units for watering their total seven acres land and inject the balance 45,000 units into the grid, grossing over Rs 2 lakh revenues from power sales to the distribution company or Discom.
Under the PPA contract, the six farmers have surrendered their right to apply for grid power connections for 25 years. Solar power for them comes much cheaper than diesel — roughly 3,600 litres are required to produce 40,000 units — and is also more reliable than subsidised grid power that is available for only 7-8 hours daily, with voltage fluctuations and during night-time in half of the days every month. Solar power, by contrast, is uninterrupted, predictable, available during daytime, and free of cost.
Further, this is a ‘cash crop’ that can be ‘grown’ without any seeds, fertilisers, pesticides, irrigation or backbreaking labour. Income from it is also free of risk from drought, floods, pests and diseases. All that is required is land for erecting panels. The Dhundi farmers initially were worried about the land-footprint of the solar panels. But they are already experimenting with a range of high-value crops like spinach, carrots, garlic, beet and a few medicinal plants that grow well under panels.
The Dhundi-pattern SPICEs deserve a better feed-in tariff than what is being given now for megawatt-scale solar power plants or even roof-top installations. Megawatt scale plants require large public investments in transmission, whereas the micro-grid for the Dhundi SPICE was erected by farmers at their own expense. Roof-top solar plants, too, would probably only end up depriving Discoms of revenue from their highest-paying consumer segments.
The Dhundi-pattern SPICEs, on the other hand, will liberate the discoms and state governments from debilitating farm power subsidies. Had the Dhundi farmers obtained grid power connections for 56.4 kW instead of solar pumps, MGVCL would have been obliged to provide them over 162,000 units of electricity — taking 8 hours supply for 360 days — at Rs 0.7/unit, as against its cost of Rs 4.5/unit to deliver. Even if only two-thirds of the power supplied was used, the annual subsidy burden on MGVCL would have worked out to well over Rs 4 lakh. Besides, MGVCL would have had to invest Rs 12 lakh on poles and cables to connect the tube-wells to the grid, at Rs 2 lakh for every new connection. The annual interest and depreciation cost on this investment, even at a conservative 10 per cent, would be Rs 1.2 lakh.
But that’s not all. The Dhundi SPICE will also enable MGVCL earn money from the sale of renewable energy certificates (REC). As per the PPA, the sale of RECs against the entire 85,000 units generated by the SPICE would accrue to the Discom. Taking the current value of Rs 3,500/megawatt-hours for RECs being traded on electricity exchanges, it comes to an income of almost Rs 3 lakh.
Taken together, the subsidy on grid power saved, not having to bear the amortised cost of connecting tube-wells, and sale of RECs, courtesy the Dhundi SPICE, would leave MGVCL better off by about Rs 8.2 lakh annually for 25 years. That, over 45,000 units, translates into a gain of Rs 18.2 per unit. Even if MGVCL shared a third of it with the Dhundi SPICE, the latter’s members are entitled to a higher feed-in tariff of about Rs 6.05 per unit. In buying solar energy from the SPICE, MGVCL’s break-even feed-in tariff offer can be anything up to Rs 6.05 plus its average power purchase cost of Rs 3.5/unit. Even after that, it would be better off than supplying grid power at Rs 0.70/unit.
There’s a lesson to be learnt here. State governments have until now been promoting solar irrigation pumps by offering around Rs 90,000/kW subsidy on capital costs to farmers opting out of grid power connections. A better way, however, would be through PPAs that guarantee attractive feed-in tariffs. The capital cost subsidy on solar pumps can actually be scaled down to, say, Rs 50,000/kW and farmers, instead, be offered feed-in tariffs of Rs 8-9/unit.
Discoms would, of course, loath the prospect of net-metering, billing and paying individual farmers supplying small marketable surplus of solar power; the transaction and vigilance costs would be just too high. But Dhundi-pattern SPICEs can be the answer. In this case, even as new members join, MGVCL would meter the SPICE at a single evacuation point and pay it for pooled power sales. It will be the cooperative’s work to meter each pump and pay each member based on the power evacuated by him/her.
India currently has 15 million-odd grid-connected irrigation tube-wells that account for some Rs 70,000 crore of power subsidies. Cutting these isn’t easy, given the fear of farmer backlash. Dhundi-pattern SPICEs can, however, painlessly eliminate farm power subsidies once and for all. They can also be the answer for groundwater overexploitation. The existing regime of electricity subsidies mutes farmers’ incentive to conserve both power and water. By weaning them off grid power, farmers are being helped to make money from conserving energy and water. Moreover, metering energy will make it possible for measuring water withdrawals, to manage a scarce natural resource better.
With proper promotion, Dhundi-pattern SPICEs could have the kind of impact on small farmer livelihood systems that the Amul-type dairy cooperatives have had in many parts of India. A 7.5 kW solar pump with an assured power buy-back contract at Rs 8/unit can enable a one-hectare farmer to meet her irrigation needs and generate extra income of Rs 60,000, equivalent to what three buffaloes give.
Besides, there is the promise of making irrigation climate-smart. Using electricity and diesel in groundwater irrigation produces about 26 million tonnes of carbon emissions — about five per cent of India’s total. Solarising the groundwater economy could eliminate this huge carbon-footprint, reducing the carbon-intensity of the country’s economic growth. The Dhundi SPICE is albeit a small experiment. But it can go a long way in reconfiguring our power economy, our groundwater economy and our agrarian livelihoods.