Tail-end solar plants in India: A quick assessment of the chief minister’s Saur Krishi Vahini Yojana (MSKVY) in Maharashtra

This weADAPT article is an abridged version of the original text, which can be downloaded from the right-hand column. We highlight some of the report’s key messages below, but please access the original text for more comprehensive detail, full references, or to quote text. 

Introduction

India’s rural electrification policy since independence has focused on energizing pump sets to provide irrigation for agriculture. Currently, agriculture consumes 24% of the country’s power. Power supply to agriculture is highly subsidized by the government to cover the cost-revenue gap. This high subsidy is a strain on the exchequer and detrimental to the financial health of power distribution companies (DISCOMs). This unlocks the scope to use solar photovoltaic (PV)-based power in agriculture. 

The Maharashtra State Government’s Mukhyamantri Saur Krishi Vahini Yojana (MSKVY) launched in June 2017 promotes tail end solar plants near substations. Solar plants under MSKVY are typically of 2-10 megawatt (MW) capacity at the feeder level. The scheme has a target of installed capacity 5000 MW by 2025, with the State generation and distribution utilities as implementation partners. As on March 31, 2022, a total of 731 MW capacity had been commissioned under MSKVY, of which 372 MW were commissioned by 29 private players through the bidding route. The scheme’s progress as well as private sector participation in it have so far been moderate. 

This study assesses the progress made by MSKVY, its impacts on farmers and groundwater as well as its potential and roadblocks. 

Methodology

The study relies on data from the government and other agencies, interactions with stakeholders (officials of distribution and generation utilities, collaborating agencies, solar developers and tail end operators and managers of substations), primary data from a farmers’ survey, and interactions through focus group discussions (FGDs). A mix of purposive and convenience sampling was used to identify the district as well as solar units from six administrative divisions in Maharashtra and availability sampling was used to select 280 farmers. 

About MSKVY

The Government of Maharashtra launched the MSKVY scheme via a government resolution by the Industry, Energy and Labour Department. The objectives of the scheme are to: 

• Electrify agricultural lines with solar power
• Reduce Maharashtra State Electricity Distribution Company Limited (MSEDCL)’s revenue losses by avoiding the provision of costly and subsidized power for agriculture
• Conserve traditional power supply for other productive purposes
• Reduce cross-subsidy, thereby reducing tariffs for commercial and industrial buyers
• Provide daytime agricultural load to farmers
• Fulfil renewable purchase obligation (RPO) targets
• Reduce transmission and distribution (T&D) losses
• Ensure farmer satisfaction. 

The scheme is mandated to deploy 0.3 to 10 MW ground-mounted solar plants through Public-Private Partnership.

Physical and financial progress of the MSKVY

The Government of Maharashtra set a target of installing a capacity of 5,000 MW under MSKVY by 2025. Interactions with stakeholders revealed that to date projects totalling 2500 MW capacity have been approved and those of 1500 MW capacity have been signed off. Publicly available government data shows that by March 2022, 737 MW of solar installations (one-seventh of the target and approximately half of the projects signed off) had been commissioned under MSKVY. The physical and financial progress made under the scheme is given in Table 2. 

Engagement of private players and related challenges

The involvement of private players has so far been a mixed bag of success and failure. In the initial rounds of bidding, they showed very little interest because of the low tariff, timeline challenges, and difficult to comply guidelines. Over time, the tariff increased from INR 2.94/unit (USD 0.0359/unit) to INR 3.30/unit (USD 0.0402/unit) in some cases. As of February 2021, it was reported that 3,654 MW are at various stages of procurement; they will cover a fifth of the state’s total power sale to agriculture and 40% of the RPO of MSEDCL.

The scheme faces challenges due to increasing import duty and Goods and Services Tax (GST) on solar energy, and the cost escalation due to the COVID pandemic, making the prevailing power tariff unviable. The tariff might need a hike considering COVID related uncertainties. Also, a raised tariff will boost domestic manufacturing which will help in the long run not only 5 the MSKVY scheme, but also overall solar sector. Land availability is another bottleneck that the scheme needs to overcome. When the onus of finding land for solar deployment was on private players, it added to the project cost; and involved the additional responsibility of procuring land, which is not always easy. To facilitate land availability, the distribution utility introduced a land portal to encourage farmers to rent out their lands at INR 30,000/month (USD 366/month). While this is a promising initiative, it is too early to assess its feasibility and impact. 

Impact on farmers

The farmers’ survey conducted in the six administrative divisions in Maharashtra revealed that less than 5% of the sample were aware about the scheme, underlining the need for Maharashtra State Electricity Distribution Company Limited (MSEDCL) to have an awareness drive for farmers.

The survey also showed an overall increase in daytime power supply after the MSKVY scheme began. However, the district-wise results show no change in some cases and even a decrease. Feeder-level daily data since 2018 also indicated a reduction in the duration of daytime power supply, with farmer information on the same varying in three villages connected to the feeder. This could be due to the small sample size as well as the availability sampling used. While a consistent observation from farmers revealed a reduction in load shedding after MSKVY was implemented, this cannot conclusively be attributed to the scheme.

The survey also indicated a marginal increase in the use of pump sets (2.5%) and a handful of farmers changing their cropping pattern post-MSKVY. An interesting finding of the study was the improvement in voltage quality during daytime power supply with the advent of the scheme, fulfilling farmers’ irrigation needs with less duration of supply. This finding matches the data on sole feeder level power supply which indicated that there was a reduction in the duration of power supply in the period after the MSKVY scheme when compared to a period before it. 

Conclusions

Given that MSKVY projects can enable the greening of the power system, cater to the agriculture load, benefit the distribution utility by reducing T&D losses and meet RPO targets, the study recommends accelerating the scheme through a lease mode of land procurement, raising the tariff, encouraging implementation through EESL and rotation-based supply if the total agriculture load cannot be met. MSKVY also needs to be seen as an avenue to generate local jobs and help the local economy. 

Suggested citation

Nathan, Hippu Salk Kristle, Uday Shankar Saha, Rajeev A., and Sk Niyaj Mohammed (2023). A Quick Assessment of the Chief Minister’s Saur Krishi Vahini Yojana (MSKVY) in Maharashtra submitted to International Water Management Institute (IWMI).