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Today, we will learn about Solar Pumps industry.

Solar Pumps industry - Will PM-KUSUM scheme prove to be a game changer? Also, which companies are active in Solar pumps industry?

PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evem Utthan Mahabhiyan) - This scheme was launched by the Ministry of New and Renewable Energy (MNRE) for the installation of solar pumps and other renewable power plants across the nation.

It was launched in 2019 with 3 components.


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Component - A: For setting up of 10,000 MW of Decentralized Grid Connected Renewable Energy Power Plants on barren land. Under this component, renewable energy based power plants (REPP) of capacity 500 kW to 2 MW will be setup by individual farmers/ group of farmers/ cooperatives/ panchayats/ Farmer Producer Organizations etc.

The power generated will be purchased by local DISCOM at pre-fixed tariff

Component - B: For installation of 17.50 Lakh off-grid/stand-alone solar agriculture pumps. Under this Component, individual farmers will be supported to install standalone solar agriculture pumps of capacity up to 7.5 HP for replacement of existing diesel agriculture pumps / irrigation systems in off-grid areas, where grid supply is not available.

Pumps of capacity higher than 7.5 HP can also be installed, however, the financial support will be limited to 7.5 HP capacity.

Component - C: For Solarization of 10 Lakh On-Grid Connected Agriculture Pumps. Under this Component, individual farmers having grid connected agriculture pump will be supported to solarize pumps. The farmer will be able to use the generated solar power to meet the irrigation needs and the excess solar power will be sold to DISCOMs at pre-fixed tariff.

Objectives of the scheme

To increase the income of farmers and provide sources for irrigation, de-dieselize the farm sector, reduce dependency on grid power, low electricity billing and additional income by selling surplus electricity back to the grid.

For Components B and C, the details of the financial assistance from the Centre and the State Governments are as follows:

  • Central Financial Assistance (CFA) of 30% of the benchmark cost or the tender cost, whichever is lower. State Government subsidy 30%; Remaining 40% by farmer
  • In North Eastern States, Sikkim, J&K, Himachal, Uttarakhand, Lakshadweep and A&N islands, CFA of 50%, State Government subsidy 30%, remaining 20% by farmer

How does the scheme work?

  • Step 1 – Farmer submits interest for Solar equipment and contributes 10% to State Nodal Agency
  • Step 2 – MNRE contributes 30% to State Nodal Agency (MNRE is controlled by Central Govt.)
  • Step 3 – State Govt contributes 30% to 60% (including loan to farmers at subsidized rates, if any) to State Nodal Agency
  • Step 4 – State Nodal Agency opens tender and issues work order to the bidder
  • Step 5 – Bidder supplies materials to farmers and completes installation
  • Step 6 – Bidder submits document to the Nodal Agency for the release of the payment against the work completed
  • Step 7 – Nodal Agency verifies the installation and releases the payment to the Bidder

Source: Shakti Pumps Presentation May-2022

Status of KUSUM scheme?

KUSUM Scheme – 1.0:

  • Total Size of Order: 1,50,000 Solar Pumps
  • Total Executed Qty – 78,940
  • Shakti Pumps alone executed 22,340 pumps (28%) of the total installed pumps
  • The Government will decide for the remaining quantity, i.e., whether to carry forward it to KUSUM – 2.0 or scrap the quantity

KUSUM Scheme – 2.0:

  • Total Size of Order: 3,17,000 (not final yet, but tentative)
  • Shakti pumps expected to execute 1,00,000 pumps order out of the same
  • As per various sources, the average cost of a 5 HP solar pump installation is around Rs 2.5 lakh

Key states where the PM-KUSUM scheme is active


Key players in the Solar Pumps industry

Tata Power, Shakti Pumps Ltd and other MSME’s firms.

Tata Power manufactures solar panels and outsources rest of the components. Shakti Pumps outsources solar panels from Adani and other suppliers and manufactures rest of the components such as SS structures, copper motor, VFD, etc., in house.

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Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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