DISCOMs Can Pass on Incentives to Solar Project Owners Under KUSUM Program

The Ministry of New and Renewable Energy (MNRE) has issued a clarification for the Pradhan Mantri Kisan Urja Suraksha evam Uttham Mahabhiyan (PM-KUSUM) program which states that the distribution companies (DISCOMs) can pass on the procurement-based incentive (PBI) given to them by the central government under Component- A of the program to the renewable project owners to get more competitive tariff.

The MNRE’s clarifications further state that the implementing agencies can invite a single bid under Component-A of the program based on a pre-fixed levelized tariff for the installation of projects for all the distribution sub-stations in the state or within the DISCOM area.

The ministry has also clarified that the solarization of pumps above 7.5 HP will be allowed but the Central Financial Assistance (CFA) will be limited to the cap of 7.5 HP (up to 30%).

Amidst growing disappointment among the stakeholders, the Energy Efficiency Services Limited (EESL) has invited bids for off-grid solar water pump systems across India. The National Solar Energy Federation of India has been opposing the program mandate of using domestic solar cells in solar modules used for the solar pump installations and also wrote to the Minister of Power, suggesting several modifications.


The Cabinet Committee on Economic Affairs approved the launch of the KUSUM program, which will provide ₹334.22 billion (~$4.69 billion) in central financial support under the KUSUM program. In all, 181,200 solar pumps are to be installed across the country, categorized under clusters in each state.

In November 2019, MNRE had mentioned that one million grid-connected agricultural pumps of individual capacity up to 7.5 HP are targeted to go solar by 2022 under Component-C of the program. Later in July 2019, it issued a memorandum for state-wise renewable energy capacity allocation under the KUSUM program for the country’s farmers.

The program has been divided into three components and aims to add a solar capacity of 25,750 MW by 2022.

  • The first component under the program includes the installation of 10,000 MW of decentralized ground-mounted grid-connected renewable power projects.
  • The second component will be the installation of 1.75 million standalone solar-powered agriculture pumps.
  • The third component is the solarization of 1 million grid-connected solar-powered agriculture pumps.

The latest guidelines also suggest that adequate measures should be taken to ensure transparency and objectivity while allocating capacities.

Image credit: volksenergie.in