Why the PM KUSUM Scheme has failed..?

In 2018, Government of India introduced a farmer focused solar scheme with a target of decentralised generation of solar at farmer fields with a targeted installation of 28250 MW over a period of five years, the Scheme was named as PM KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan ) Scheme. On the introductory note this scheme was considered to be highly thoughtful, where the farmers can not only use the solar power in their agriculture power requirements, but also can sell the surplus power to the grid at a feed in tariff. The scheme had a fund allocation of about ₹34,000 crore. The farmer is given a feed in tariff of about Rs. 3.14/kWh as a fair compensation of their surplus power to feed electricity in to the grid. As of 30/04/2022, the total installed capacity under the PM KUSUM scheme is about 42 MW, which is only 0.14% of the total targeted capacity. With installation only in two states, Rajasthan M(27MW0, and about 15 MW in Himachal Pradesh.

Whether it is for their crops produce or for the electricity farmers always demand a fair compensation from Government so that the farming business is a viable and they need not to migrate to become an urban labours. The scheme has a very good feature to reward farmers and use their land for decentralised power generation, however if we do the reverse engineering of the tariffs offered by the GOI as Rs. 3.14 feed in tariff, these projects are not bankable. In Rajasthan, Banks are reluctant to finance these projects due to poor financial viability at the proposed tariff.

Considering a project cost of 4.0 Cr/MW, and CUF of 19%, interest rate of 9%, the scheme is no where viable at the proposed tariff of 3.14 Rs/kWh. The payback period is of the order of over 10 years. There is no records available from MNRE, for justification of the proposed tariff.