Marry solar targets with those for hiking farm income
Prime minister Narendra Modi, an Icrier paper begins by saying, has an ambitious target to set up 100,000 MW of solar power by 2022 and, coincidentally, one of doubling farm incomes by the same year. The two, Ashok Gulati, Stuti Manchanda and Rakesh Kacker argue, can move hand-in-hand for a variety of reasons. For one, they point out, getting land at reasonable prices is going to be a challenge—between just FY12 and FY16, the share of land has gone up from 1% of project costs to 4.7%. There is also the challenge of being able to acquire the necessary amount of land—if 40% of the target is met through roof-top installations, the remainder will require around 120,000 hectares of land. But, the authors contend, experiments in countries like Japan, China, Germany and the UK have shown that it is possible to install solar panels in farms without adversely impacting the growth of crops. In India, the Gujarat Energy Research and Management Institute has already successfully tried a ‘chessboard’ model that allows sufficient sunlight for the crops—this has allowed farmers—and rake in a 30-40% share of the profits from the sale of such power. To the extent, upfront capital costs are required, the authors suggest Nabard be asked to pitch in with low-interest loans. A model the paper talks of is that of a Gujarat farmers’ solar irrigation co-operative, Dhundi Saur Urja Utpadak Shahakari Mandali, which has an installed capacity of 56.4 kW and entered into a 25-year power-purchase agreement with Madhya Gujarat Vij Company Ltd for supplying power at R4.63 per unit.
What is critical in this model, the authors suggest, is the feed-in-tariffs, or the rate at which the grid guarantees the purchase of power—if the feed-in-tariff is higher than the average realisation, the balance is to be passed on to the consumer by way of a surcharge. While that model may work in countries that have low theft levels, in India that would make electricity prices surge—which is why regulators are looking at moving to bidding in even wind power where feed-in tariffs are currently the norm; if the costs of power are too expensive, and with not too much chance to pass it on to customers, there may not be too many buyers. To the extent the government is willing to directly subsidise feed-in tariffs, it can be tried out, but there is a need to look at more innovative solutions. In Gujarat, Modi got increased thermal efficiency by placing solar panels on top of canals—if the bottom of a solar panel is cool, it generates more electricity—and reduced the problem of theft by connecting solar grids to nearby villages and obviated the need for expensive distribution lines to villages from the main electricity grid. While each state will have to work on its own model, the larger point from the Icrier paper, is that both goals have a lot of synergies and it is up to policymakers to figure out solutions to make them work.