Solar water pumps market in India, by Shiv Shanker Singh, Sr Consultant, Energy Vertical,
Agriculture plays a vital role in India’s economy. Over 52 per cent of India’s total workforce is currently employed in the farm sector. As per estimates by the Central Statistics Office (CSO), the share of agriculture and allied sectors (including agriculture, livestock, forestry and fishery) was 15.35 per cent of the Gross Value Added (GVA) during 2015-16 at 2011-12 prices.
Given that rains are not always timely and evenly distributed, farmers prefer pump sets as a more reliable and assured source of irrigation. Power used for irrigation is highly subsidised by the government. Farmers are getting electricity either free or on very low cost (flat rate or Rs 1 to 1.5/unit) which has built up significant inefficiency in power consumption.
There are around 20 million electrified pumps in India, being used for agriculture consuming around 170 billion units. The implications of this aren’t small for discoms. While agriculture accounted for 22 per cent of total electricity consumption, it generated just 8 per cent of the revenues of discoms in FY 2014-15. To reduce this burden the government is working to increase the installation of solar water pumps in India.
The Ministry of New and Renewable Energy (MNRE) and several state governments have starting promoting solar water pumps for agriculture. The solar water pumps come under the off-grid PV scheme of the JNNSM, and are provided up to 30% capital subsidy and soft loans at 5% interest rates. Among the states, Rajasthan has been a pioneer in the same, and offers an additional subsidy of 56% over and above the MNRE subsidy, which means that the solar water pump owner gets 86% subsidy in total. In Tamil Nadu, a total of 80% subsidy is provided, whereas in Punjab, the total subsidy comes to about 70%.
State governments are procuring the pumps from suppliers (OEMs/integrator) approved by MNRE and distributing it to the farmers. 31472 solar pumps have been installed in 2015-16 and the expected figure for 2016-17 is around 38,000 pumps. Under the scheme, 92305 solar pumps have been installed as of 31 October, 2016. Government demand is expected to cross a mark of 50,000 solar pumps in 2017-18.
Though the scheme has seen much traction in the last 2 years, it is still far behind the initial target of 1,00,000 solar pumps in 2014-15 and 1 million pumps by 2021. Key reasons are the flawed procurement process and lack of awareness among farmers.
The Maharashtra government has given a contract for at least 10,000 solar pumps to be installed in the pilot phase and initially only 6,500 farmers had applied to the government and agreed to put up solar pumps in their farms and benefit from the scheme. This is because of the stringent government application criteria (farmers should hold less than five acres of land) and also farmers are wary about power metering and its future implications.
Energy Efficiency Services Ltd (EESL) also launched the National Programme for Smart Pumps in April 2016 to distribute 2 million, Five-Star rated smart pumps to farmers at no cost. However, their first tender to supply 150,000 smart pumps in Andhra Pradesh, announced in August 2016, has seen much resistance from the industry. The Andhra Pradesh HC stayed the tender after hearing the petition filed by Southern India Engineering Manufacturers’ Association (SIEMA). The main reason for the stay is the limited participation opportunities for MSME players in the EESL tender. EESL is expected to alter the scope and come up with a fresh tender. EESL’s entry in the solar water pumps sector can accelerate growth to unprecedented numbers.
The next two years are expected to be eventful and packed with high growth for solar pumps. States in conjunction with MNRE are expected to ramp up their purchase of solar pumps. MNRE, state govt and EESL will explore other procurement, financing and distributing models. A learning can be drawn from EESL’S UJALA programme to distribute LED lighting.
The author is Senior Consultant, Energy Vertical, Feedback Business Consulting Services Pvt Ltd.