Implementation of SPV based Water

pump for Irrigation in India

Concept Note

Presented By

Wasim Ashraf (M.Tech IIT Kharagpur)

During the Internship at

SOLAR ENERGY CORPORATION OF INDIA Ltd.

भारतीय सौर ऊर्ाा निगम

(A GOVERNMENT OF INDIA ENTERPRISE)

(भारत सरकार का उद्यम)

Solar Energy Corporation of India

Solar Energy Corporation of India (SECI) was earlier incorporated under section 25

of Companies Act as a „not for profit‟ Company in the year 2011. SECI operates

under the administrative control of the Ministry of New and Renewable Energy

(MNRE), Government of India.

The companies has recently been converted to section 3 of the companies‟ act 2013

as a commercial entity with expended RE (Renewable Energy) portfolio.

The main objective of SECI is to support the MNRE and function as the

implementing and executing arm of MNRE for facilitating activities under

Jawaharlal Nehru National Solar Mission (JNNSM). The company aims at the

development and promotion of the solar energy technologies in the country to

eventually achieve commercialization.

Carry on business of generation, forecasting, purchasing, producing, manufacturing,

importing, exporting, exchanging, selling and trading in power products and services

in India and abroad

Own, manage, investigate, plan, promote, develop, design, construction, operation,

maintenance, renovation, modernization of power projects in solar, on-shore/off-

shore wind, geo-thermal, tidal, bio-gas, bio-mass, small hydro and other renewable

energy sources in India and abroad

Carry on the business of planning, investigation, survey, research, design and

preparation of preliminary feasibility and detailed project reports, related to Power

Projects in India and abroad

Establish, provide, maintain, conduct, scientific and technical research, experiments,

pilot projects and tests of all kinds and to process, improve, innovate and invent new

products, technologies, directly or in collaboration with other agencies in India &

abroad to achieve commercialization

Promote, organize, conduct and render consultancy services in the related activities

of the Company in India and abroad

Assist, carry out such directions as may be issued by the Administrative Ministry

from time to time in executing, evolving, managing, overseeing and coordinating

programmes and projects under Jawaharlal Nehru National Solar Mission and all

such other Programmes or Missions as may from time to time to be implemented

In the present outlook of the RE sector, especially solar energy, SECI has a major

role to play in the sector‟s development.

SECI-owned Projects and under JNNSM Phase I:

10 MW Solar Power Project under JNNSM is being implemented by SECI in Rajasthan.

This would be commissioned in 2015-16. SECI has been undertaking Project Management

Consultancy (PMC) assignments for several clients. SECI is setting up two 50 MW SPV

projects for IREDA and THDC in the State of Kerala on turnkey basis. These projects are

likely to be commissioned during 2015-16.

Consultancy

Detailed Project Reports („DPRs‟)/Pre-feasibility Reports („PFRs‟) have been completed for

Ordinance Factory Board sites, Bharat Petroleum Corporation Ltd., HPSEB, Pondicherry

Power Corporation Ltd., Northern Coalfields Ltd., Hindustan Aeronautics Ltd. Etc.

Research and development work:

Solar power cost reduction potential is highly correlated with the efficiency improvement in

solar technologies. JNNSM has envisaged a progressive and focused research infrastructure

development. SECI is a member of the Solar Energy Research Advisory Council (SERAC)

constituted by MNRE to analyse the existing research infrastructure in solar sector and then

to set up a framework which would incubate a conducive environment for accelerating

research and development activities in the country in alignment with the vision of JNNSM.

Solar Radiation Activity

SECI is working on a R&D project for setting up calibration facility for solar radiation

measuring sensors in collaboration with Solar Energy Centre. The project also has the

objective of solar radiation data analysis at select locations.

Solar Guidelines Web portal

The Solar Guidelines web-portal has been created in coordination with GIZ for providing

comprehensive solar policy and projects related information at a single place. Phase II of the

project is being implemented by SECI.

Calibration Lab facility at NISE, Gwalpahari

A calibration facility for solar radiation measuring sensors at National Institute of Solar

Energy (NISE) has been set up by SECI.

Background

Solar energy is the most readily available source of non-polluting renewable energy resource. It

can be utilized in two ways viz. direct conversion in to electricity through solar photovoltaic

(PV) cells and indirect conversion through generating high temperatures by concentrating

collectors and thereby run the steam turbine in line with a conventional thermal power plant.

The uniqueness of the solar technologies is that it offers a wide range of applications in solar PV

as well as solar thermal technology in which case, the generated heat could be used for domestic

as well as industrial applications and power generation. India being a tropical country is blessed

with good sunshine over most parts; the number of clear sunny days in a year also being quite

high. India is located in the sunny belt of the world. As per Ministry of New and Renewable

Energy (MNRE), Government of India (GoI), the country receives solar energy equivalent to

more than 5,000 trillion kWh per year with a daily average solar energy incident over India

which varies from 4.0 to 7.0 kWh/m2 depending upon the location. India‟s equivalent solar

energy potential is about 6,000 million GWh of energy per year.

The cost of solar technology has come down, way down, making it is a viable way to expand

access to energy for hundreds of millions of people living in energy poverty. For farmers in

developing countries, the growing availability of solar water pumps offers a viable alternative to

system dependent on fossil fuel or grid electricity. While relatively limited, experience in

several countries shows how solar irrigation pumps can make farmers more resilient against the

erratic shifts in rainfall patterns caused by climate change or the unreliable supply and high costs

of fossil fuels needed to operate water pumps. Experience also suggests a number of creative

ways that potential water resource trade-offs can be addressed.

Feed-in pricing and the development of “smart” subsidies are a few of the solutions to mitigate

water over-use while encourage the uptake of a cleaner and more reliable water technology.

Governments, NGOs and the private sector need to act urgently to mitigate a future of water

scarcity while ensuring a consistent source of income for the majority agrarian population in

developing countries.

Intended Nationally Determined Contribution

On 1st October 2015, India submitted its Intended Nationally Determined Contribution (INDC),

including the targets to lower the emissions intensity of GDP by 33% to 35% by 2030 below

2005 levels, to increase the share of non-fossil based power generation capacity to 40% of

installed electric power capacity by 2030 (equivalent to 26–30% of generation in 2030), and to

create an additional (cumulative) carbon sink of 2.5–3 GtCO2e through additional forest and

tree cover by 2030. As per various analysis available in public domain, with currently

implemented policies, including targets for 175 GW renewable by 2022, it projected that the

share of non-fossil power generation capacity to reach 36% in 2030. In this direction, the GOI

has scaled up the National Solar Mission targets to 100 GW by 2022.

As of end July 2015, the following are the most prominent incentives:

Capital Subsidies: The capital subsidy available is 30% of the MNRE benchmark prices.

Target Sectors

Water pumping is an energy intensive activity and consumes a large amount of

electricity depending on the farm’s irrigation area and type of crop. Solar energy, which

is abundantly available in India, can be used for pumping water via solar Photovoltaic

technology.

India imports the petroleum oil to satisfy its need and its lack of conventional

commercial energy resources places a burden on the national economy due to the

relatively high cost of imported oil and the high energy investment needed for

economic and social development of the country.

With every challenge comes an opportunity, and that is to become self-sufficient, and

reliant on your own natural resources. Jordan is in fact very rich in renewable resources

but, due to a lack of investment and foresight, these resources have not been exploited.

So the government has opted to subsidize SPV Pump or solar irrigation pumps, and

there are about 19500 operating in fields by 31st March 2015 as per data of Ministry of

Statistics and Planning. They are more beneficial in India’s north eastern agricultural

regions where there is less access to grid power and diesel generators are more

prevalent.

Solar pumps can displace fossil fuels, reducing carbon emissions and general pollution

while providing a consistent source of energy suited to irrigation pumps.

After the initial investment in the pump system, the operating cost of pumping water is

close to zero, enabling farmers to pump as much as they want at no marginal cost. This

brings to the forefront the importance of developing “smart” subsidy schemes, where

farmers can benefit from increased yield/income and at the same time ensure an

efficient use of both energy and water resources.

The agriculture pump market in India is valued at about ₹ 8600cr. In 2014-15, and is

expected to grow at the rate of 7to8percent annually.

According to Ministry of Agriculture it accounts for 14% of India’s GDP Project Details.

India`s Agriculture sector consumes about 159 billion units a year which is equivalent

to around 18.03% of total National electricity consumption of India in 2013-14.

There is average 31% transmission and distribution loss and cost of establishing

transmission and distribution network in remote areas is comparatively higher about

per MW power.

At present Farmer is getting electricity either free or on very low cost (Flat Rate or

₹1to1.5/Unit).

While the average tariff of electricity is about ₹ 5 per KWh in India so there is

opportunity to reduce loss by selling the saved electricity from agriculture to industry,

ultimately decrease of current account deficit of state as well as central government

and reduction in loss of Discom power companies.

This will make healthy and green economy with green and healthy environment.

These “Smart” and “integrated” subsidy policies can be used to address or reduce indirect

risks, such as over extraction of groundwater, while still allowing farmers and governments to

reap the benefits of solar irrigation technology. In India, the government could more

aggressively subsidize solar pumps with higher capital cost coverage in the regions where

water is plentiful. In areas where water is scarce, the government could reduce equipment

subsidies and encourage farmers to generate solar power for sale to the grid, like a cash crop

in order to repay their portion of the loan.

Objective of proposal

The primary objective of the solar energy research enclave will be:

1- To reduce subsidy load on local Dis-Com as Irrigation accounts for 19% of electricity

supplied by the grid. In many states such as Rajasthan, Karnataka, it touches 40% level.

2- To improve „denial of service‟ due to-

Long delays in grant of new connections

Poor quality power

Unpredictable power availability

This leads to use of DG sets (~8-10 million pumps being used in India), which is

unaffordable for most commodity crops.

3- To reduce farmer stress by providing better control as Agriculture accounts for 80% of

water needs; 60% of irrigation needs met from groundwater, and this share is increasing.

Need to couple pumping with micro irrigation and better controls.

4- Irrigation pumps work ~50-200 days in a year. For remaining days, energy generated can

be exported to the grid. Irrigation pumps can act as anchor loads for rural micro grid

operation.

5- To make green and healthy economy with green and healthy environment by reducing

subsidy burden with SPV water pump.

Business Models:

OFF Grid Pump:

OFF

- G

rid

Pu

mp

Model-1.1: Irrigation Grid,managed by RESCO

Model-1.2: Individual Pumps, invested by RESCOs

Model-1.3: Individual pumps ;

Farmer Invested

RESCO:

Replaces old pumps with efficient

solar pumps

Sets up a generating station feeding

the pumps; connects the pumps with

distribution lines

Can also serve other segments to use

excess generation at pumps

RESCO sets up individual solar pumps

for each farmer / a group that shares

irrigation on its authenticated App.

RESCO finances it through capital

subsidy and its own arranged capital,

RESCO operationally controls and

maintains the pumps

Farmers pays for excess electricity

supplied and other valid charges.

Similar to model 2 but farmer invests

each solar pump system by applying

through authenticated APP

dedicated to SPV water pump

project.

Financing through subsidy and low

cost loans (like NABARD schemes in

which Aadhar card is linked to

account and subsidy transfer by

DBT.)

Implementing Mechanism:

Structure Flow Chart:

Option-A

30% Subsidy

50% of Project cost

3% Service charge

50% of Project cost

1.5% service charge

Get 30% subsidy

10% discount on EPC 40% of Project Cost

Pay to SECI (100%)

MNRE SECI TENDER

DISCOM

COMPANY X

(For EPC and O&M) BENIFICIARY

Under this structure:

1. SECI will mobilize funds worth 50% of the total project cost through CSR fund (if not

possible then customer will pay 100% cost of the project) and 30% project cost will be

given by MNRE through SECI.

2. MNRE will provide 3% service charges to SECI and SECI will provide 1.5% service

charges to concerned Discom.

3. Once these funds have been transferred to SECI, SECI will procure the materials

required by the company X using the entire amount contributed by the PSUs/Beneficiary

through a transparent tendering process.

4. SECI will collect the data about the customer either by common web platform/mobile

App or Discom.

5. The assets so procured will be sent directly to the site but will be transferred to the

Discom which will own the assets.

6. The Discom will then enter into a Service Contract with the company X to do the

Engineering, Procurement and Construction (EPC) and Operation and Maintenance

(O&M) for the required villages using the materials that SECI has procured. This

contract will be for 50% of the entire project cost as 50% has already been utilized by

SECI in the tendering process for procuring the major components required.

7. Company X will then carry out the EPC and O&M with the materials procured by SECI

providing a 10% discount as its contribution to the project as a credit note.

8. Once the project is commissioned, Discom will transfer the 40% sanction to Company X

as per its approval.

9. After accomplishing the project SECI will transfer 30% subsidy into the AADHAR

linked bank account of the beneficiary.

10. First beneficiary will pay 100% cost of the project to the SECI and after completion of

the project it will get 30% subsidy from the SECI and 50% CSR Fund from the SECI (if

possible).

11. Company X will provide EPC and operation & maintenance to the beneficiary and for

that it will provide awareness about the SECI‟s scheme and for that it will open its

service centres in each District or City which is possible.

12. Beneficiary will contact at the authorized centre of the company X to get benefits of this

scheme.

Structure Flow Chart:

Option B:

30 30% Subsidy

50% CSR Fund 3% service charge

100% Project Cost 1.5% service charges

Service contracts for EPC and O&M 10% discount

worth 100% of the Project cost on EPC and O&M services.

Gives the approved 90% sanction

30% subsidy from SECI

PSUs SECI

DISCOM

COMPANY X

MNRE

Web/Mobile

APP

Under this structure:

1. SECI will mobilize funds worth 50% of the total project cost through CSR contributions from

PSUs (if not possible then beneficiary will pay 100% cost of the project.)

2. Once these funds have been transferred to SECI, SECI will add 50% cost by itself and

transfer 100% cost of the project to the Discom.

3. MNRE will provide 3% service charges to the SECI for implementing the project in various

villages and also give 30% subsidy on the project cost.

4. SECI will provide 1.5% service charges to the Discom to implement the project.

5. The Discom will then enter into a Service Contract with Company X to do the EPC and O&M

for the required villages and also procure the materials required for the same. SECI will have

access to all information pertaining to fund utilization. These contracts will be worth 100% of

the project cost.

6. Company X will then carry out the EPC and O&M after procuring materials on its own. It

will provide a 10% discount on the invoice in the form of a credit note as its contribution to the

project.

7. Once the project is commissioned, Discom will transfer the 90% sanction to Company X as

per its approval.

8. First beneficiary will pay 100% cost of the project to the SECI and after completion of the

project it will get 30% subsidy from the SECI and 50% CSR Fund (if possible) from the SECI.

9. Company X will provide EPC and operation & maintenance to the beneficiary and for that it

will provide awareness about the SECI‟s scheme and for that it will open its service centres in

each District or City which is possible.

10. Beneficiary will contact at the authorized centre of the company X to get benefits of this

scheme.

Structure Flow Chart:

Option C:

30% subsidy

3% service charge

Donates 50% of the project cost Pays for procurement through CSR Funds on behalf of Company X Pay 100% to SECI

Get 30% subsidy

Enters into service contracts for EPC and O&M Provides a 10% discount on EPC and

worth 100% of the project cost O&M services. (Credit Note)

Gives the approved 90% sanction

Implements tender

Under this structure:

1. SECI will mobilize funds worth 50% of the total project cost through CSR contributions from

PSUs (if not possible then beneficiary will pay 100% coat of the project). These funds will

remain in SECI‟s books.

2. MNRE will provide 30% subsidy of the project cost and 3% service charges to the SECI.

3. SECI will give 1.5% service charges to the Discom.

4. The DISCOM will then enter into a Service Contract with Company X to do the EPC and

O&M for the villages and also procure the materials required for the same. This contract will be

worth 100% of the project cost.

5. Company X will float a procurement tender for the materials. This tender process will be

facilitated and overseen by a committee consisting of one member from Company X, one from

SECI and one of the trustees of the DISCOM.

6. SECI will make the payments to the vendors from whom materials are being procured on

behalf of Company X.

PSUs SECI

DISCOM

COMPANY X Floats a procurement Tender

Committee

MNRE

BENEFICIARY

7. Company X will then carry out the EPC and O&M using the materials so procured and hand

over the assets to the DISCOM on a turnkey basis.

8. Company X will provide a credit note to the DISCOM for the 10% discount it is providing on

the contract as its own contribution.

9. Once the project is commissioned, Discom will transfer the 90% sanction to Company X as

per its approval.

10. First the beneficiary will pay 100% cost of the project to the SECI but after completion of

the project SECI will provide 30% subsidy to the beneficiary by AADHAR linked bank account

and also 50% CSR Fund if possible.

11. The whole information about the subsidy, beneficiary, project site and company X will be

available on the web/mobile app.

Breakdown of Roles

SECI

SECI will help in mobilize the CSR funds from PSUs and subsidy from the MNRE.

Under option A, float a procurement tender for materials required by Company X and transfer

the materials to the DISCOM so that the DISCOM can remain the owner of the assets.

If option B is selected, transfer the funds directly to the DISCOM. It will access all information

pertaining to fund utilization through web/mobile app.

Under option C, SECI will make the payment for the materials under the Procurement tender on

behalf of Company X; it will also form a part of the implementing committee of the tender.

DISCOM

The DISCOM under option A, enter into a Service Contract with Company X for EPC and O&M

worth 50% of the estimated project cost for the villages if SECI is procuring the

Material.

The DISCOM under option B, enter into a Service Contract with Company X for EPC and O&M

worth 100% of the estimated project cost for since Company X is procuring the materials.

Under option C, the DISCOM will enter into a Service Contract with Company X worth 100%

Of the project cost for EPC and O&M. One member from DISCOM will also be a part of the

Committee that implements the procurement tender.

Company X

Company X will carry out the EPC and O&M for either 50% or 100% of the entire project

Cost depends upon whether option A or B is selected.

It is also a System Integrator under the SECI guidelines and therefore will receive a

Sanction of 40% or 90% of the total project cost as per option A or B is selected, after

Commissioning the project

Under option C, Company X will float the procurement tender and form a part of the

Committee that will facilitate the tendering process.

In all three scenarios, Company X will provide a discount of 10% in the form of a credit note as

its contribution to the project.

Thank You