Making money while the sun shines: Farmers in a Gujarat village are selling solar energy

Until three years ago, farmers in Dhundi, a village in Gujarat’s Kheda district south-east of the state’s capital city Gandhinagar, knew only one way of mechanical irrigation in their farms – using noisy and polluting diesel generators, since their village was not connected to the power grid.

Now, they are proud to have found a cheaper, noise-free and pollution-free way of irrigating their farms, using the sun’s energy. And as a bonus, they are also earning by selling the surplus energy.

With the intervention of International Water Management Institute or IWMI and Sir Ratan Tata Trust through the IWMI-Tata Water Policy Research Program, farmers in Dhundi are now harvesting the sun’s energy and are no more dependent on diesel generators for irrigating their farms. Before the advent of solar energy in Dhundi, there were 50 diesel generators for as many irrigation pumps in the village, said Rahul Rathod, a consultant with IWMI. “Now, the farmers and their families have not only got rid of the noise, diesel fumes and spending on diesel, but are also selling solar energy worth thousands,” Rathod said.

The farmers use solar energy for irrigating their farms and sell the surplus energy like a cash crop to Gujarat’s power distribution company, Madhya Gujarat Vij Company Ltd.

“Today, our village is free of noise because there are no diesel generators. It is a big relief,” Champaben, one of the village women, told Mongabay-India.

Climate-proof income

Nine farmers of Dhundi have formed a cooperative, Solar Pump Irrigators’ Cooperative Enterprise locally known as Dhundi Saur Urja Utpadak Sahakari Mandali, to pool their solar energy which makes it easy for Madhya Gujarat Vij Company Ltd to buy energy from them.

Madhya Gujarat Vij Company Ltd meters, monitors and pays money to the cooperative based on its own meter reading at a single evacuation point outside the village. The cooperative later distributes the revenue among its members based on units evacuated by each one of them as recorded on individual meters.

Dhundi solar cooperative is said to be the first of its kind. Its nine members have signed a 25-year power purchase agreement with Madhya Gujarat Vij Company Ltd at 4.63 rupees/kwh. But, effectively, they get 7.13 rupees/kwh as IWMI pays them a bonus of 1.25 rupees/kwh as green energy bonus and another 1.25 rupees/kwh as water conservation bonus. As part of the power purchase agreement, the farmers in return have given up their right to apply for farm power connection for 25 years.

According to Tushar Shah, senior fellow at IWMI, when IWMI-Tata Water Policy Research Program went to the farmers and discussed the solar energy option with them, they were uncertain whether solar pumps will deliver enough water and whether Madhya Gujarat Vij Company Ltd will actually pay for the surplus power farmers evacuate to the grid.

The farmers were offered contribution and the Dhundi farmers had to pay a comparatively smaller sum of Rs 5,000 towards the capital cost of solar pumps. After assurance and the offer of subsidies from IWMI-Tata Water Policy Research Program, the villagers agreed and the program kicked off in January 2016 and started selling power from May 2016 as it took three months to connect the solar farms to the grid.

“Now that both their doubts are put to rest,” Shah said that four more farmers, who joined the cooperative later, willingly contributed nearly 40% of the total investment despite the fact that solar tariffs in the country had plummeted by then (3.24 rupees/kwh). In Dhundi, locals say that the solar pump, these days, is viewed not only as an irrigation asset but also an income-generating asset that has potential to deliver “climate-proof” income.

Praveen Bhai Prama, a farmer and Solar Pump Irrigators’ Cooperative Enterprise member in Dhundi who owns about one acre of land, dreamt of owning a cow for years, but could not afford one. “As I started selling electricity, I was able to buy a cow within a year. I have sold electricity worth 90,000 rupees since May 2016 and am selling milk as well. We hope to carry it on which can enable us to send our two kids to private schools in the years to come. Solar [energy] has given us hope,” Prama said.

“Irrigating our farms has now become far easier and we, now, grow vegetables such as tomato which need many irrigations,” he said.

Another farmer, Udha Bhai, said that earlier, one time irrigation would cost him Rs 250 per beegha (1.75 beegha is one acre), “but now it is free and I am also able to sell power.” He said that he has earned as much as Rs 7,000 in several months since he began selling power in 2016. “The good thing is that I didn’t have to spend a penny for earning this money,” he added.

As regards the land-footprint of solar panels in the farms, the farmers said that it was something which discouraged them in the beginning. “We thought they (solar panels) will take a lot of land, but later we found out that crops like spinach and eggplants can be cultivated even under the panels,” said Udha Bhai who has nine solar panels in his 1.5 beegha farm.

No wonder that IWMI, Shah and his colleagues claim, is getting requests from farmers from near and afar to form similar cooperatives. “Farmers are excited by the idea of selling solar energy as a cash crop that needs no seeds, fertiliser, pesticides, irrigation and backbreaking labour,” Shah said.

Replacing diesel and subsidised power from farms

In India, mechanised irrigation pumps numbered just around 5,000 in 1951. Their numbers soared to 19 million by the turn of the millennium and between 22 and 25 million today. All these irrigation pumps run on subsidised electricity being provided to farmers by the government of India.

But models like the one in Dhundi seem to have inspired the government of Gujarat’s Rs 9 billion Suryashakti Kisan Yojana scheme and the central government’s Rs 480 billion Kisan Urja Suraksha Evam Utthaan Mahaabhiyan scheme. Under both these schemes, tube-well owners will be offered solar panels to run irrigation pumps and will have the option to sell surplus solar power to the grid.

IWMI’s experts like Shah say that paying farmers for surplus solar energy will not only help increase their income but also incentivise groundwater conservation.

Under the power purchase agreement with Madhya Gujarat Vij Company Ltd, Dhundi solar farmers surrendered their right to apply for grid power connections for 25 years. This, said Shah, suggests the potential to get India’s over 20 million electric tube-well owners to surrender their grid power connections in lieu of solar pumps with a power purchase guarantee.

“Using solar energy for irrigating India’s farms has a number of benefits. Besides increasing farmers’ incomes, it will help conserving ground water (as farmers would prefer selling solar energy for economic benefits rather than using it for extracting ground water unlike highly subsidised or free electricity) and reduce carbon emissions,” Shah said and added that India’s electric tube-wells receive electricity subsidy worth Rs 700 billion annually. He said that doing this will also contribute to India’s ambitious target of achieving 100 GW of installed solar capacity by 2022.

Shah added, “Given that governments fear a strong backlash from farmers for reducing or eliminating power subsidies, the Dhundi model offers a painless option to the governments to eliminate farm power subsidies and reversing the perverse incentives it creates for farmers to overuse energy and ground-water.”

State governments, Shah said, have so far promoted solar irrigation pumps only by offering 70%-95% subsidy on capital cost to farmers who opt out of the queue for grid power connections. “But a power purchase guarantee, on the lines of Dhundi model, can encourage farmers to aggressively take to solar pumps at far lower capital subsidy,” he said.

Opposing views however, claim that incentivising solar energy in India’s farms can spell a disaster for the country’s economy and ground-water. In a paper, Solar Irrigation Cooperatives: Creating the Frankenstein’s Monster for India’s Groundwater, published by the Institute of Resource Analysis and Policy in November 2017, the authors have argued that instead of committing such economic blunders, we need to wait till solar photovaultic systems become cheap through technological breakthroughs and market conditions become highly favourable.

“As it stands now, to keep such experiments afloat, a large amount of money will have to be pumped in. Replication of such experiments can only perpetuate pervasive subsidies, which, once rolled out on a large-scale, will be difficult to revoke,” the authors have argued and added that it can also lead to over-exploitation of ground-water resources.

However, Shah says that Dhundi model is a practical solution to potential groundwater exploitation by solar pumps as it motivates farmers to sell energy and use it judiciously. According to him, the government should lower the electricity subsidies to a modest rate and enable farmers to sell back surplus solar power to the utility grid.

This article first appeared on Mongabay.