On June 17, 2015, well-known water resources expert Dr Tushaar Shah* delivered the first Anil Shah Memorial lecture in Ahmedabad. Organized in the memory well-known bureaucrat-turned-activist, late Anil Shah, who founded Development Support Centre (DSC), Dr Shah’s lecture focused on finding a solution to the energy-irrigation nexus, suggesting solarising groundwater supply to agriculture. Excerpts from the lecture:
Solar energy, long considered ideal for home-lighting uses, has suddenly become attractive for pumping irrigation water. India already has some 20,000 solar irrigation pumps (SIPs) in fields; andfarmers everywhere seem happy with their performance and potential. The new NDA government manifesto emphasizes irrigation under ‘Pradhan Mantri Gram SinchayeeYojana’. However, in fulfilling its promise of ‘har khet ko paani’, reliable energy for pumping is as much of a challenge for the new government as availability of water. This makes SIPs important.
Despite inheriting the world’s largest canal irrigation network in 1947, India today has become the world’s largest groundwater irrigation economy. Farmers owning 12 million electric and 9 million diesel pump sets have installed some 115 GW equivalent of distributed pumping capacity to lift some 230 Billion Cubic Meters (BCM)/year of groundwater. This irrigates over 60 million ha of land, three times more than all government canals manage (Shah 2009). This groundwater juggernaut would still keep rolling but for the perverse nexus that has emerged and persisted between energy and groundwater.
An energy-divide defines India’s groundwater economy with electric pumps dominating the western corridor from Punjab down to Tamil Nadu and diesel pumps preponderant in the East. If only eastern India’s prolific aquifers were more intensively used for irrigation, it would have improved millions of livelihoods and reduced the intensity of recurrent floods in Bihar and Bangladesh. However, with diesel prices rising over 10 times faster than prices of agricultural commodities since 1990, groundwater irrigation in eastern India is rapidly approaching stagnation and decline.
In Western India, the nexus played out differently. A long history of farm power subsidies initially made groundwater irrigation affordable for farmers but has, over time, depleted groundwater aquifers and so bankrupted electricity distribution companies (DISCOMs) that they have hard time managing their rural supplies. Frequent interruptions, low voltage and fewer hours of mostly nightly farm power supply are proving increasingly irksome for farmers here. Promoted right, SIPs offering reliable, day-time, uninterrupted free power can be a one-stop solution for the energy-irrigation nexus in eastern as well as western corridors of India.
The Promise of Solar Irrigation Pumps (SIPs)
Imagine, for moment, what would happen if all of India’s 21.5 million irrigation pumps were replaced overnight by SIPs of equivalent capacities. Farmers throughout the Ganga-Meghana-Brahmaputra basin, who have so far faced high and rising variable cost per hour of pumping groundwater, will now be faced with virtually zero variable energy cost of pumping. The same shallow tubewell, which until now was pumped for barely 400-500 hours/year, will now be pumped for 1500-2000 hours/year. The monopolistic groundwater markets operating in villages will turn highly competitive as SIP owners compete with each other to maximise their pump utilization factor. The diesel pump owner who until now sold irrigation at Rs 130-150/hour will now happily sell SIP irrigation at Rs 20-30/hour. The proverbial Ganges Water Machine will get revved up pumping every year 3-4 times more shallow groundwater for irrigation and creating room in the vast porous alluvial aquifers of the Ganga basin to receive more recharge and reducing intensity of floods further east. Accelerating agricultural growth will no longer need to wait for laying expensive and time-consuming rural electricity network to deliver grid power to farms.
In the western corridor, the power grid will be relieved, at one fell swoop, from the deadweight subsidy burden of Rs 35,000 crore/year. Every tubewell electricity connection replaced by a solar pump will reduce DISCOMs’ losses by Rs 30,000-Rs 35,000/year. Farmers will have access to free, uninterrupted, day-time energy supply for pumping for 6-10 hours daily, more during winter and summer when irrigation is most needed. Electricity and diesel used in pumping groundwater emits 16-25 million mt/year of carbon, nearly 6 percent of India’s total. Solarization will completely wipe out this carbon footprint, and transform a dirty groundwater economy into a clean one.
The major risk, however, is that solarization will aggravate the threat of accelerated depletion for western India’s aquifers. Poor quality nightly grid power supply may be irksome to farmers but is not without its eco-system benefits; it has helped check relentless groundwater overdraft. By replacing poor quality grid power by 2500-3000 hours of top quality day-time free power, solarization will intensify the race to the bottom of the aquifers. Karnataka’s Surya Raitha is remarkably prescient because it intends to pay farmers not to run this race.
The Jawaharlal Nehru National Solar Mission (JNNSM) incentivizes solar investments through two mechanisms. Solar Home Systems (SHS) are promoted through attractive capital cost subsidies. In contrast, MW-scale Photo Voltaic (PV) plants are incentivised by generation-linked incentives in the form of an attractive Feed-in Tariff (FiT) now hovering around Rs. 7.50/kWh, besides tradable Renewable Energy Certificates (REC) valued atRs 1.50/kWh in early 2014.
The two incentive mechanisms produce different operating performance. The performance of SHSs—installed in homes or on community water systems– is uniformly poor. Under high capital cost subsidy, ‘install-and-forget’ is the name of the game for suppliers who have little interest in providing after-sales support but strong incentive to ‘gold-plate’ their products. As a result, SHS segment is neither growing as fast nor performing well as it needs to. In contrast, MW scale PV sector is performing very welland growing fast,having grown from next to nothing in 2010 to over 2.5 GW in 2013.
SIPs are best incentivized by a careful blend of capital cost subsidy and FiT; however, they are promoted as SHSs are, through attractive capital cost subsidy of 86-100 percent. There are several problems with this strategy:
[i] high subsidy stimulates demand but the small annual fund allocation leaves a large unmet demand;
[ii] high subsidy kills the non-subsidy market as potential buyers wait for subsidized SIP;
[iii] to benefit large numbers from small subsidy budget, governments allow only 1.5-2.5 kWP SIPs which complement, and not replace electric or diesel pumps on tubewells, thus defeating the key gain from solarisation;
[iv] high pro-rata capital cost subsidy creates oligopolies of a few large suppliers, and induces them to maximize share in subsidy rather than growing the SIP market, to use subsidy as a substitute for product promotion, and to keep putting up the unit cost of SIP to skim the subsidy.
That subsidies lead to ‘gold-plating’ is evident in the emergence of suppliers in Gujarat and Rajasthan offering SIPs at 40-50 percent discount over the ‘gold-plated’ price of subsidised SIPs.
The worst problem with the current subsidy schemes is that, over time, they will aggravate groundwater depletion. Restricting subsidized SIPs to 1.5-2.5 kWp, making farm pond and micro- irrigation pre-condition to avail of SIP will not contain this threat. As SIP numbers increase, the enforcement of these conditions will become difficult. In Rajasthan, pressure is already building to increase the size of SIP under subsidy. Given the steeply falling solar PV prices, as the market for non-subsidy SIPs begins growing, it will become impossible to prevent over-exploitation of groundwater by SIP owners—except by providing them attractive avenue to dispose off their surplus solar power.
Solar Power as a Remunerative Crop (SPaRC)
Promoting decentralised generation by millions of farmers of solar power as a remunerative crop (SPaRC) does precisely this. It can be done by offering guaranteed buy-back of surplus solar power from SIP owners at an attractive Feed-in Tariff (FiT), as is the case with roof-top solar generators in Germany, Japan, Italy and California. Roof-top solar generation for evacuation to the grid is rapidly emerging, and is strongly advocated in India too. But this is only a distributed green energy solution.
A SPaRC program, however, will promote several goals at one go:
[a] improve agrarian livelihood by providing farmer cash income for ‘growing’ solar energy as a lucrative cash crop;
[b] conserve environment through built-in incentive to conserve groundwater and energy use in pumping;
[c] enhance quality of irrigation by providing farmers reliable, uninterrupted, day-time power supply;
[d] reduce carbon footprint of groundwater irrigation by reducing electricity and diesel use in pumping ;
[e] improve finances of the power sector by liberating DISCOMs from the deadweight of farm power subsidies;
[f] reduce T&D losses by replacing grid power by locally generated power.
Farmers have strong comparative advantage in solar power generation and, in principle, could accept lower levelled FiT to sell solar energy than MW scale plants do. Solar PV arrays need land; and farmers own half of India’s land. A 10 kWp solar pump needs 1/20th of a hectare to lay panels but can irrigate 5-8 ha of crops; moreover, unlike MW-scale solar plants, SIPs have little or no land footprint since farmers can grow high value vegetable crops under the PV arrays that act somewhat like a makeshift green house.
JNNSM has set a target of 20 GW of solar generation capacity by 2020 for India which, if generated with MW-scale plants would remove nearly 50,000 ha of land from existing uses. India can generate many times more solar energy, without removing any land from existing uses, by enlisting its farmers as distributed solar generators. They can grow solar energy as a profitable cash crop and in the process retire some 115 GW equivalent of conventional generation capacity currently deployed to run 21 million electric and diesel pumps.
Devil in the Detail
Surya Raitha, Karnataka’s new solar pump promotion policy pursued SPaRC, but has gone astray on implementation details. The basic idea of Surya Raitha—that combines capital cost subsidy with guaranteed buyback of surplus solar power—for promoting SIP makes it smart. But the devil lies in the detail of design and implementation. Surya Raitha intends to give priority to farmers without grid connection for allocating subsidized SIP. However, it should also give priority to farmers who are willing to surrender their grid connection in lieu of a subsidized SIP because solarizing irrigation pumps is the best way of reducing the subsidy burden on DISCOMs.
Government should also significantly enhance the annual funds allocation for Surya Raitha given its potentially beneficial impacts on the DISCOM finances. Then, the incentives presently offered are unrealistically high and will make the policy unsustainable: like Bihar, it offers 90 percent capital cost subsidy and on top of that guaranteed FiT of Rs 7.20/kWh (Rs 9.56/kWh if the farmer has not taken a subsidy). In our view, the capital cost subsidy should be lower and flat at Rs 40,000 per kWp (instead of pro rata as percent of gold-plated unit cost) to encourage high-volume-low-margin business strategy among PV suppliers.
Lower flat subsidy will also make it possible to reach out to over twice as many farmers with the given subsidy budget. We also believe that the FiT should be pegged at around Rs 4.5-5/kWh for subsidized SIPs, as the Delhi Electricity Regulator has just announced in its new policy for roof-top PV owners. Much higher FiTwill distort farmer incentives: many farmers will use their PV plant just to sell power to the grid and irrigate with diesel or electric pump. One can also not rule out farmers feeding grid power (or power produced with diesel genset!) back to the grid to claim high FiT.
A somewhat contrasting position is taken by DISCOMs in Gujarat. Again, their focus is on giving solar pumps to close the backlog of applications for grid power connections rather than also offering solar pumps to farmers in lieu of surrendering grid power connections. Moreover, a solar connection of only up to 5 kWp is allowed, regardless of the size of the grid connection the farmer has applied for. Above all, in a pilot project to create a Solar Pump Irrigators’ Cooperative Enterprise (SPICE), the DISCOM insists on offering only Rs 3/kWh as FiT which will weaken the stimulus for groundwater conservation and selling surplus solar power to the grid. The SPaRC challenge then is to deploy the right mix of capital cost subsidy and FiT to maximize overall benefits of this business model.
Tamperproof net-metering, preferably time-of-the-day, of surplus power evacuated to the grid will be critical. Installing 3-way switches can help stem malpractice. We must not forget that all the present ills of the electricity-groundwater nexus in India have their root in metering problems on tubewells back in the 1970’s which led to the birth of flat tariffs and then to free power. As farmers realize the lucrative gains from feeding solar energy into the grid, chances of malpractices will multiply. Surya Raitha should focus on minimizing room for malpractice.
In doing so, it will also be helpful to organize SIP owners into an SIP owners’ cooperative or Joint Liability Groups (JLG) which can vouch for honest dealing by members and collectively evacuate surplus solar power at a single point which is easy for the DISCOM to monitor on a real-time basis. Penalties for malpractices will have to be high enough to serve as deterrent; and vigilance will need to be vigorous from the beginning. Buying energy from small, decentralized generators is a big and growing business and is no rocket science. But the smart solar pump promotion strategy will need careful running in and implementation.
*Senior fellow, International Water Management Institute (IWMI), Colombo. Contact: email@example.com