Andhra Pradesh Chief Minister Chandrababu Naidu has proved to be a visionary and investment-friendly politician. He has secured one of India’s largest technology investments in recent years. Google has committed $15 billion to a one-gigawatt AI data centre in Visakhapatnam, expected to be the largest such centre in Asia when it becomes operational in 2028. Such a large data centre will require 24 GWh of power each day. Meeting this demand by diverting power from other consumers, particularly agriculture, could provoke social tensions, while expanding thermal generation would come at an unacceptable environmental cost. Andhra Pradesh will have to look for alternatives like nuclear energy or renewables like solar power. Herein lies an opportunity for agri-households to become participants in the emerging AI economy by generating clean electricity while continuing to cultivate their land. Agrivoltaics enables this dual use of farmland, allowing farmers to produce both food and power while multiplying their incomes.
Andhra Pradesh has already introduced a policy innovation that grants data centres a Deemed Distribution Licence (DDL), which allows hyperscale operators to procure and manage their own power rather than draw it as ordinary consumers. However, this innovation needs to be followed up by a series of complementary measures to avoid power cuts for other sectors.
We propose that Google devote a modest portion of its investment to developing captive solar generation on farmers’ fields. Farmers would continue cultivating their land while also holding equity in the solar enterprise, becoming co-owners of the clean energy that powers the data centre. This agri-photovoltaic model is a tested one and can improve incomes many times. This way, Google will build enormous goodwill with farmers, and the Government of Andhra Pradesh, too, can reap political dividends.
ICRIER has already established agri-photovoltaic pilot projects in Rajasthan, Odisha and Madhya Pradesh. This needs to be scaled up, and Naidu can take the lead here. But it would require an ecosystem to be created by organising farmers into a community-owned solar utility cluster (solar cooperatives on the lines of milk cooperatives) and creating a special-purpose vehicle (SPV) company in which farmers also hold some equity (borrowed from banks) but contribute mainly through utilisation of their land, while holding its title. In the agri-photovoltaics system, solar panels are mounted at about 10 to 12 feet to enable seamless cultivation of high-value crops beneath them. A blended stack of investment from Google and public finance will help in developing the requisite infrastructure. Google could provide zero- (or very low) interest long-term debt that could be adjusted against energy supplied by the SPV. The PM-KUSUM programme can be tweaked to provide some capital subsidy. Commercial capital could also be leveraged through a credit guarantee from the Credit Guarantee Trust Fund for Small and Medium Enterprises. In such agri-photovoltaic systems, solar energy is virtually the third crop and augments farmers’ incomes (eight to 10 times in ICRIER pilots). Beyond producing renewable energy, agrivoltaics would enable farmers to grow two irrigated crops beneath the panels, diversify into higher-value shade-loving crops, undertake value addition through processing, and earn recurring revenue from electricity sales to the Google data centre.
Under the new DDL licence, Google can contract that green generation through open-access and banking arrangements and stand behind it as a long-term offtaker. The farmers’ solar utility gains a creditworthy, permanent customer. In one stroke, the data centre’s load becomes the demand that finances rural electrification, not the demand that starves it.
This model can create an extraordinary win-win-win situation for farmers, Google and the government. Their land works twice over for farmers — it produces a high-value crop, and earns a dividend from the power company it part-owns. For Google, the difference is between merely buying electricity in a competitive market and earning the lasting trust of farmers by helping them become producers of that electricity. A gigawatt or even a few hundred megawatts of it sourced from farmer-owned agri-photovoltaic systems is a legacy story the company can tell for decades to come. In a country where large projects live or die on social licence, that goodwill is not a soft sentiment. It is the cheapest insurance Google can ever buy. For the state government, the model could pre-empt a conflict that might otherwise have become the defining controversy surrounding its marquee investment. Instead of being forced to choose between the cloud and the cultivator, it can point to an arrangement in which the former pays for the latter.
It is now for Sundar Pichai and Naidu to work with farmer-producer companies, cooperatives and rural entrepreneurs to set up at least 5,000 agri-photovoltaic systems of 1 MW each across the state. Assuming each 1 MW agrivoltaics system costs about Rs 4 crore, we estimate an investment of Rs 2,0000 crore (about $ 2.2 billion) to ensure a self-sustaining captive energy requirement for Google. As mentioned earlier, innovative blended financing instruments and guaranteed buyback can ensure that funding does not become a stumbling block. More importantly, there will be minimal burden on the state or national budget as it would be a market-based mechanism.
The choice that Andhra Pradesh faces is not between development and farmers. It is between two kinds of development models. In one, land is acquired, power is drawn, and what is left behind is a one-time rent and long-lasting grievance. The other model treats farmers as co-owners, the agri-photovoltaics system as an asset, and the data centre as a customer. Being a proponent of the very licence (DDL) that makes it possible, Andhra Pradesh is uniquely placed to show the rest of the country how the cloud can shower prosperity on agri-households.
Gulati is distinguished professor at ICRIER, Reddy is executive director of Global Agri-Entrepreneurship Academy, and Guntuboyina is regional manager for International Cooperation (Asia) at Wageningen University, Netherlands. Views are personal
The choice that Andhra Pradesh faces is not between development and farmers. It is between two kinds of development models. (Illustration: C R Sasikumar) 
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