Rajasthan has a predominantly agrarian economy. The state has witnessed rapid agricultural growth in recent years. The agriculture sector contributes approximately 30 percent of the state’s gross domestic product (Directorate of Economics and Statistics 2021).Electricity supply for irrigation is an essential component in agriculture production. The agriculture sector consumed around 42 percent of total electricity sales by distribution utilities in Rajasthan during fiscal year 2022. This is expected to reach 45 percent by 2030, assuming an 8 percent compounded annual growth rate projected in the 20th National Electric Power Survey by the Central Electricity Authority.Rajasthan offers a heavily subsidized electricity tariff for the agricultural consumers, INR 16,000 Cr. annually.

In this context, the PM KUSUM scheme has huge potential to benefit Rajasthan. KUSUM supports DISCOMs to reduce the cost of power purchase and minimize transmission and distribution losses. In addition to reducing the average cost of supply and direct costs for DISCOMs, KUSUM may also help decrease revenue gaps. Thus, the motivation to develop such a cost-benefit analysis (CBA) tool for deploying solar irrigation pumps (SIPs) under component C.

In this technical note four methods of economic viability were used to determine the costs and benefits of SIPs for different stakeholders, such as DISCOMs, the state government and farmers. Economic viability includes net present value (NPV), internal rate of return (IRR), benefit-to-cost (B:C) ratio, and payback period.

Executive Summary:

The implementation of solar irrigation pumps (SIPs) has the potential to contribute significantly to reducing the energy and emissions impacts of irrigation in Rajasthan by replacing conventional power sources with solar energy for existing grid-connected pumps. This transition would benefit distribution companies (DISCOMs) and farmers by meeting their irrigation demand while reducing reliance on utility-procured power. When a pump is not in use, grid-connected solar pumps can feed electricity generated by the solar panel back to the grid. This can create an extra source of income for farmers. To strengthen the financial sustainability of the agriculture sector, the associated economic aspects of grid-connected SIPs must be explored under component C of the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM KUSUM) scheme. This technical note seeks to develop a Microsoft Excel–based cost benefit analysis tool to assess the economic viability of SIPs by calculating the monetary benefits to stakeholders such as distribution companies, the Rajasthan state government, and farmers by creating an additional income source. Outputs of the tool include net present value, benefit-to-cost ratio, internal rate of return, and payback period to help stakeholders to understand the benefits of deploying SIPs. This technical note also highlights the reduced carbon footprint resulting from the avoided power procurement costs by DISCOMs.


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