Published on July 27th, 2020 |
by Anand Upadhyay
July 27th, 2020 by Anand Upadhyay
The power demand for agricultural irrigation in India requires about 18% of its electricity consumption.
60% of the irrigation is dependent on groundwater. This requires 21 million electrical pumps and 9 million diesel pumps. In order to take advantage of the benefit of falling solar prices to power irrigation needs in India and increase farmer incomes, the PM KUSUM scheme was launched in 2019.
Solar pumps, in my very humble opinion, are the best application of solar energy. Incidentally, my first post on CleanTechnica was on solar pumps!
One of the most common complaints against solar energy is that the sun doesn’t shine all the time. Thankfully, solar pumps are seasonally compatible (irrigation is not required during rains!). At least in the majority of Indian agricultural regions, solar pumps can work all year long.
Moreover, they don’t need batteries as the water pumping activity can be easily distributed over the course of daylight hours. If water storage is still required, doing so directly is much cheaper than using electrical batteries.
However, the solar pumps currently installed across India add up to only about 250,000. That number is minuscule in comparison to the operating electrical pumps.
In a matter of 2 years, the benchmark costs of solar water pumps used by the Ministry of New and Renewable Energy for providing capital subsidy has come down from ₹255,000 (US$3400) in 2018 to ₹168,300 (US$2200) in 2020 for a 3 HP submersible system, a drop of over 35%.
It goes without saying, with a larger scale of implementation, the costs can fall substantially.
So the question is, would it be feasible to meet the entire irrigation needs of India through solar power?
Before we dive into analyzing that, it is important that I take you through a crash course on the key parties involved in this area and the major unresolved issues. This would help you get a 360 degree view of the real benefits of solar powered irrigation.
Some Background Issues
Currently, most of the farmers in India are supposed to receive highly subsidized power (practically free) which is catered to by the state government and also “cross-subsidies” from other electricity consumers in power tariffs.
In a nutshell though, the state governments are found wanting when to comes to releasing payments to the electricity distribution companies (DISCOMs). This takes a toll on the DISCOMs’ finances.
DISCOMs are no innocent lambs themselves. Time and again they have been accused of exaggerating the agricultural consumption so as to hide the losses due to their own operational inefficiencies.
How can they do this? Simple. Most of the electricity supplied to farmers is not metered.
All this would have been OK if farmers were able to meet their irrigation requirements. Except they don’t. The quality of supply is poor and unreliable.
All in all, no one is happy and the system does not incentivize energy efficiency, thereby leading to wastage of both electricity and water.
I wanted to get deeper into these issues, but I’ll probably cover them in a separate post. For now, let’s focus on the feasibility of solar irrigation.
Let The Number Crunching Begin
Similar to any other feasibility analysis, we need to calculate the cost of solarizing all of India’s irrigation power needs, quantify the benefits, and finally make sense of the results.
We would only be looking at macro-level guesstimates here for obvious reasons. Also, I am only focusing on electric pumps, as the economics of diesel-powered pumps vs solar pumps is an open and shut case.
The key idea we are evaluating is whether the sum-total of annual irrigation subsidy currently spent can be used to finance a solar alternative which can meet the current demand.
If this turns out to be feasible, the annual subsidy is the prize money that can be saved EVERY year once the payback has been achieved on the proposed solarization program.
Potential Savings Per Year
I could not come across any consolidated study which looks at the aggregate subsidy for irrigation in India, so let’s try to estimate it through independent sources.
Energy Efficiency Services Limited (EESL) has been running an interesting program to replace inefficient electrical pumps with efficient ones at no cost to farmers. The investment costs are recovered from the annual savings which accrue on account of energy efficiency.
You can read more about the “Agriculture Demand Side Management Program” (AgDSM) at this link.
In the context of our discussion, EESL estimates that the implementation of the AgDSM program has achieved over 30% in energy savings. It also estimates that scaling energy efficiency alone to cover the whole of India would save over ₹227.5 billion of annual subsidy (US$3. billion).
So their estimate of the annual aggregate agriculture power subsidy is probably ₹758 billion (US$10 billion).
In another approach, one can estimate in ballpark terms the total subsidy to the agricultural sector using the formula below.
Total agriculture power subsidy = (Total annual electricity consumption in India) * (% of electricity consumed by the agri-sector) * (Average cost of electricity supply) * (% of average cost of supply subsidized)
- Based on their analysis of major agri-states in India, Prayas Energy Group estimated that about 90% of the cost of electricity supplied for agricultural use was subsidized in 2013-14. Let’s assume this has not increased further and still holds (it’s difficult to imagine it would have gone down).
- As stated earlier in this post, the percentage of electricity consumed in the agri-sector is 18%. The assumption being that all of it is used for irrigation.
- As per CEA, the average cost of supply was ₹5.2/kWh in 2014-15 in India. The annual increase in the cost of supply has been about 7% during the 2005-2015 period. Accordingly, the average cost of supply could have been ₹6.8/kWh in 2019.
- India’s annual electricity consumption in 2018-19 was 1158 billion kWh.
So using the formula above, the total electricity subsidy to agriculture comes to about ₹1275 billion (~US$ 17 billion).
In my opinion, the previous estimate of US$10 billion is perhaps based on subsidies coming purely from state governments’ coffers. It does not take into consideration the element of cross-subsidy coming in from non-agri electricity consumers, hence the difference.
In spite of this, let us consider both the estimates and carry on.
Cost Of Solarizing The Irrigation System
Before we move on to size up the solar powered system required for irrigation and put a cost to it, I would like to point out that there are two ways to implement such a system.
The first one is to provide independent solar pumping systems (solar PV and efficient pumps) to all farmers individually. This would probably cost ₹50 million/MW and also include a single axis tracking system.
The second option would be to build a sort of a community solar power plant (of a few megawatts) and supply power to the agricultural feeders.
In the second case, farmers only have the water pumps at their location and do not need to worry about the safety, operation, and maintenance of the solar power plants. Being a larger system at a single location, the solar power plant can be professionally managed.
Going by recent numbers, the second option would cost ₹40 million (US$ 0.53 million), including the cost of feeder separation. And an additional 10% for the cost of efficient electrical pumps. All in all ₹44 million (US$ 0.58 million).
The second option is cheaper due to the scale and efficiency (a large single site solar plant).
The major benefit here is that since it would be connected to the main grid, it would perhaps be more reliable. Any electricity drawn from the main grid would be readily supplemented by unused solar power which can be fed back into the grid.
I have only considered the second option in the calculations below.
The size of the solar component to be added to the system and its cost can be calculated as follows:
Size of the system (in MWs of solar capacity required) = (electricity required for irrigation) * (1 – efficiency improvement) / (output from a typical 1 MW solar power plant)
Cost of the system = (Size of the system in MW) * (cost of option 2 as considered above)
- As per EESL, efficient pumps can reduce electricity consumption by more than 30%. Let’s stick with 30% for efficiency improvement.
- The typical output of a 1 MW solar power plant in India would be at least 1.2 million kWh annually.
- The electricity requirement for irrigation is 18% of 1158 billion kWh = 208 billion kWh
So the size of the system required in solar capacity terms would be 122 gigawatts, with a cost of US$70 billion.
To put the numbers above into perspective, India is currently chasing a target of 100 gigawatts (GW) of solar capacity by 2022. Up to now, it has commissioned about 35 GW with another 22.7 GW in the pipeline.
Now that we are in the final leg of our analysis, what would be the payback on this massive investment?
It would be 4.1 years if you consider the irrigation subsidy as US$17 billion. If you consider the previous subsidy estimate of US$7 billion, the payback would be 7 years.
I for one think this analysis is worth consideration at a more detailed level.
Given the scale involved, several implementation costs would be greatly reduced due to the economy of scale involved.
Before we move any further, let’s estimate how much CO2 emissions such an exercise could reduce. If you go by the estimations of India’s Central Electricity Authority, the carbon emissions from the Indian grid are about 0.83 kg CO2 eqvt. per kWh.
So powering the entire agri-irrigation system by solar would reduce about 160 million tonnes of CO2 per year.
In terms of trees, this is equal to the action of 6.4 billion trees every year! Per some quick Google searches, India as a whole has 35 billion trees.
In The End, Does It Make Sense?
Remember the payback was calculated above by considering only the benefit of eliminating the state subsidy.
In reality, since this would primarily be a state-funded exercise, the benefits would be much more and are better evaluated using an economic rate of return as against an internal rate of return.
A few of these benefits include an increased output from farms on account of better irrigation, a boost to the rural economy due to additional revenues, an increase in the number of jobs (renewable energy and others), environmental benefits, financial stability in DISCOMs, and lower electricity prices for commercial and industrial organizations. I will stop here.
Solarization of all agricultural feeders would benefit not only the agri-sector but the entire power ecosystem in India.
From the political perspective as well, farmers are a large voting base and the political leaders who can get this done will go on to reap huge rewards.
How Easy Would This Be To Implement?
Understandably, the solarization itself would have to be implemented in phases. The biggest issue, however, is going to be financing this program.
US$70 billion is no pocket change. Can the fossil fuel banks take up this challenge? Difficult to say.
The DISCOMs themselves are in no position to do it by themselves. The state governments would possibly need to pitch in and they should, because the albatross is actually around their neck.
Given some of the recent fiascos, whether or not state governments will live up to the agreements once they enter them is a multi-billion dollar question.
Beyond financing, the actual on-ground implementation, though humongous, should not be an issue. Agencies like EESL have substantial experience in undertaking similar projects in the states of Maharashtra and elsewhere.
Thank you for staying until the end of this long post. Does this make sense? Should this be explored in more details? What do you think?
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