Farmers Need a Share of India’s Solar Boom

29 Sep 2026

Tags: Governance   Policy Interventions   Sectoral development schemes

Source: The Indian Express

Context: India’s installed solar capacity has risen sharply from 2.82 GW in 2014 to 168.04 GW by August 2026, making India the third-largest solar market after China and the U.S.

• However, most utility-scale solar capacity is concentrated with large companies, while the PM-KUSUM scheme, intended to bring farmers into solar generation, has not achieved comparable momentum.
• The article argues for making farmers and Farmer Producer Companies (FPCs) active participants and owners in India’s solar expansion.

India’s Solar Expansion

• About 74% of India’s solar capacity is utility-scale, led by companies such as Adani Green Energy, ReNew, NTPC, JSW Energy and Greenko Energy; rooftop solar contributes around 20%, while off-grid and hybrid projects account for the remaining 6%.
• Utility-scale projects have enabled rapid and relatively cost-efficient deployment, generally using government-provided degraded or wasteland.
• Khavda Solar Park in Gujarat’s Rann of Kutch, with a planned capacity of 30 GW, is the largest upcoming project highlighted in the article.

Rooftop Solar: PM Surya Ghar

• PM Surya Ghar: Muft Bijli Yojana aims to install rooftop solar systems in 1 crore households.
• A household installing a 3-kW system receives a central subsidy of ₹78,000; some States provide additional support.
• In Uttar Pradesh, for example, an additional ₹30,000 can raise total assistance to ₹1.08 lakh against an estimated system cost of ₹1.8 lakh.
• The article contrasts this substantial support with the absence of an equivalent capital subsidy under PM-KUSUM Component A.

PM-KUSUM and the Missing Farmer Link

• PM-KUSUM was initially focused largely on solar pumps, but Component A also permits farmers to establish solar power plants of up to 2 MW on their land.
• Unlike PM Surya Ghar, Component A does not provide a capital subsidy, reducing farmers’ ability to participate as solar producers.
• The article proposes providing farmers with capital support under Component A while ensuring that solar development does not displace food production.

Agri-Photovoltaics: Food + Energy on the Same Land

• Agri-photovoltaics (Agri-PV) involves installing solar panels approximately 11 feet above the ground with sufficient spacing to permit cultivation underneath.
• It allows the same agricultural land to produce both food and electricity, avoiding a direct food-versus-energy trade-off.
• The proposed model could simultaneously increase farm incomes, reduce government power-subsidy pressures and supply clean energy for rural industrialisation.

Proposed Financing and Tariff Model

• Farmers and FPCs should receive access to capital at Priority Sector Lending (PSL) rates.
• A differentiated feed-in tariff of ₹4.5/kWh, roughly half the reported cost of supplying electricity to rural areas, is proposed to improve the viability of farmer-owned solar projects.
• The article argues that such a model could use existing electricity subsidies more efficiently rather than necessarily requiring additional government expenditure.

Evidence from Rajasthan

• An ICRIER-supported 600-kW PM-KUSUM-A project in Rajasthan was financed through a ₹1.4-crore State Bank of India loan, ₹60 lakh farmer contribution and ₹35 lakh in Kotak CSR support.
• The pilot combined energy sales with shade-tolerant horticulture.
• According to the article, this raised income potential from around ₹40,000 per acre from wheat and bajra to nearly ₹4 lakh per acre, indicating roughly a tenfold increase.

Agri-PV and the Power-Sector Subsidy Problem

• Agriculture consumes nearly 260,000 GWh of electricity annually, while agricultural consumers pay tariffs substantially below the cost of supply.
• The article cites a CAG assessment of approximately ₹8.5/kWh average cost of supply versus around ₹1/kWh realisation from agricultural consumers.
• This implies a subsidy gap of about ₹7.5/kWh, contributing substantially to the financial stress of electricity distribution companies (discoms).
• With an annual tariff-subsidy bill of around ₹2.35 lakh crore, agriculture could account for approximately 85% of the burden, potentially exceeding 90% if rural supply costs rise.

Solar Cooperatives: Learning from Operation Flood

• The article proposes creating solar cooperatives on the model of India’s dairy cooperatives established under Operation Flood.
• Operation Flood, supported by World Bank financing, created a self-sustaining network of village dairy cooperatives and expanded the participation of millions of milk producers.
• A similar cooperative approach could allow farmers to collectively own and operate solar assets, converting solar energy into an additional source of rural income.
• The article suggests a broader “PM Surya Khet Kranti” approach in which solar becomes the farmer’s “third crop.”

Emerging Energy Demand and Storage

• Rapid expansion of AI data centres is expected to increase electricity demand because such facilities are highly energy- and water-intensive.
• Future Agri-PV projects should therefore incorporate battery storage or pumped-hydro storage and be planned according to local grid requirements.
• This can help integrate intermittent solar generation while reducing dependence on lithium-ion storage supply chains.

Wider Rural Applications

• The article proposes exploring the conversion of gaushalas into solar power plants using the Agri-PV model.
• Dung could simultaneously be processed into organic manure, creating an integrated model linking renewable energy, livestock management and agriculture.

Feed-in Tariff

• A feed-in tariff (FiT) is a predetermined price paid to electricity producers for supplying renewable power to the grid.
• In the proposed model, a predictable tariff could improve the financial viability of farmer-owned solar projects and encourage decentralised renewable-energy generation.

Key Challenges

• High upfront capital requirement limits farmer participation in solar generation.
• Food-security concerns arise if ground-mounted solar projects occupy productive agricultural land.
• Grid integration and storage become important as decentralised solar generation expands.
• India needs stronger domestic supplier networks, financing mechanisms and technical capacity for farmer-led renewable projects.
• The success of the model depends on whether farmers become owners and beneficiaries of solar assets, rather than merely land providers for large projects.

Way Forward

• Expand Agri-PV under PM-KUSUM Component A with suitable capital support.
• Provide affordable finance to farmers and FPCs through Priority Sector Lending.
• Promote solar cooperatives that allow collective ownership and bargaining power.
• Link solar generation with storage, local grids and rural industrialisation.
• Prioritise productive use of agricultural land through dual-use Agri-PV rather than conventional ground-mounted projects.