PM-KUSUM Component-A in Telangana: Empowering Farmers with Solar Energy
The Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme, launched in March 2019, is a transformative initiative by the Government of India to boost farmers’ income, promote sustainable agriculture, and reduce fossil fuel reliance. Component-A focuses on decentralized, grid-connected solar power plants, and in Telangana, it’s paving the way for rural prosperity through solar energy.
What is PM-KUSUM Component-A?
Component-A enables the setup of solar power plants (capacity 500 kW to 2 MW) on barren, uncultivable, or agricultural land within 5 km of 33/11 kV substations. Farmers, cooperatives, panchayats, Farmer Producer Organizations (FPOs), Water User Associations (WUAs), Self-Help Groups (SHGs), or developers can install these plants on owned or leased land. The power generated is sold to Distribution Companies (DISCOMs) at a fixed tariff, ensuring income for 25 years.
Implementation in Telangana
The Telangana Renewable Energy Development Corporation Ltd. (TGREDCO) oversees Component-A, targeting 4,000 MW of solar capacity. Plants on agricultural land use stilts for dual-purpose farming. Participants must submit a Detailed Project Report (DPR) detailing technical and financial aspects, reviewed by TGREDCO for approval.
Key Features of Component-A in Telangana
Tariff and Payment Security: The Telangana Electricity Regulatory Commission (TGERC) sets a tariff of Rs. 3.13 per kWh, fixed for 25 years under the Power Purchase Agreement (PPA). DISCOMs provide a Letter of Credit (LC), with a 1.25% monthly surcharge for payments delayed beyond 30 days.
Incentives for DISCOMs: DISCOMs earn 40 paise per unit or Rs. 6.6 lakh per MW annually (whichever is lower) as a Procurement-Based Incentive (PBI) for five years.
Support for Participants: Benefits include electricity duty exemptions, 50% net SGST reimbursement, and waivers on stamp duty and water charges.
DPR Process: The DPR covers plant design, costs, and energy output, with TGREDCO offering preparation support.
Benefits for Telangana Farmers
Stable Income: Solar power sales supplement agricultural earnings.
Sustainability: Reduces emissions and diesel dependency.
Energy Access: Enhances rural power reliability.
Bank Loan Details for PM-KUSUM Component-A in Telangana
The cost of a 1 MW solar plant ranges from Rs. 3.5-4 crore. Banks like NABARD, SBI, and PNB offer loans covering 70-85% of the cost, with participants contributing 15-30% as margin money. Interest rates are 7-10% per annum, with repayment over 10-15 years. The PPA revenue acts as a repayment guarantee, and the plant or land can serve as collateral. Include a financial plan in your DPR, and TGREDCO assists with bank coordination.
Monthly and Yearly Earnings, EMI Payments, and Project Viability under PM-KUSUM Component-A
Here’s a breakdown of the financials for a 1 MW solar plant in Telangana, assuming standard conditions (e.g., 1,500 units/MW/year, tariff Rs. 3.13/kWh):
Yearly Earnings: A 1 MW plant generates approximately 1.5 million units annually (1,500 kWh/MW/day x 1,000 x 365). At Rs. 3.13 per unit, this yields Rs. 46.95 lakh per year (1,500,000 x 3.13).
Monthly Earnings: This translates to Rs. 3.91 lakh per month (Rs. 46.95 lakh ÷ 12), assuming consistent generation and no major downtime.
EMI Payments: For a Rs. 3.5 crore project, a bank loan of Rs. 2.8 crore (80% of cost) at 8% interest over 15 years results in an EMI of approximately Rs. 26.75 lakh per year or Rs. 2.23 lakh per month (calculated using standard loan amortization formulas). Participants contribute Rs. 70 lakh (20%) upfront.
Net Income:
Yearly: Rs. 46.95 lakh (revenue) - Rs. 26.75 lakh (EMI) = Rs. 20.2 lakh net profit (excluding minor maintenance costs of ~Rs. 2-3 lakh/year).
Monthly: Rs. 3.91 lakh - Rs. 2.23 lakh = Rs. 1.68 lakh net profit.
Project Viability:
Payback Period: With Rs. 70 lakh invested and Rs. 20.2 lakh net profit annually, the initial investment is recovered in 3.5-4 years. Post-loan repayment (15 years), annual profits rise to Rs. 44-45 lakh.
Internal Rate of Return (IRR): Over 25 years, IRR typically exceeds 12-15%, far above bank interest rates, making it a lucrative venture.
Risk Mitigation: The fixed tariff, 25-year PPA, and LC-backed payments ensure stability. Maintenance is minimal, and solar output is predictable in Telangana’s sunny climate.
To assess viability for your project, adjust these figures in your DPR based on local land costs, loan terms, and solar output (consult TGREDCO or a solar consultant). A positive cash flow from Year 1 and a short payback period make Component-A highly viable for Telangana farmers.
10 Years Down the Line: Vision for PM-KUSUM Component-A in Telangana
By April 2035, Telangana’s 4,000 MW target could power 2,000-2,500 plants, generating 5,000 million units annually and Rs. 1,500-2,000 crore in rural income. With bank loans repaid for early adopters, profits could soar, offsetting 3-4 million tons of CO2 yearly and inspiring innovations like solar irrigation.