The Water Dissensus – A Water Alternatives Forum

"How could anything non-controversial be of intellectual interest to grown-ups?" (Edward Abbey) This Forum is intended to provide space for critical debates and discussions about water issues. Existing dissensus, or antagonistic values and points of view, can be turned into a learning opportunity for the benefit of all and give way to reasoned debates that have the potential both to further understanding of complex water issues and to generate new ideas.

Can SPaRC fix India’s perverse energy incentives and save aquifers?

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We argue that promoting Solar Power as a Remunerative Crop (SPaRC) can help fix the perverse incentives that have frustrated groundwater demand management efforts in India.

India relies heavily on groundwater, primarily for irrigation, but also increasingly for meeting domestic and industrial water demand. The atomistic and anarchic development of groundwater since the 1970s has democratised irrigation access and lifted millions of small farmers out of poverty (Shah 2009). However, it has also spawned large and growing pockets of severe groundwater depletion and associated socio-ecological and livelihood distress. This is particularly alarming in the context of growing climate-induced uncertainties where groundwater can play an important buffering role.

Groundwater depletion in India is driven primarily by a political economy based on entrenched farm and energy policies. Farmers in arid and semi-arid regions face little or no economic water scarcity thanks to free or highly subsidized farm power supply and assured procurement prices for water intensive crops. At the same time, farmers in relatively water abundant eastern India tend to economize on water use due to limited public procurement, poor rural electricity grids and the rising cost of diesel fuel. The invidious water-energy-food nexus explains the perverse direction of virtual water trade as water-scarce India exports to water-abundant regions (Verma et al. 2009).

Agriculture accounts for nearly a fifth of India's total electricity consumption but contributes less than five percent to the utilities' revenues. Farmers get free or highly subsidized, but rationed and mostly poor-quality, power, often at inconvenient times. In response, farmers commonly deploy auto-switches and have little or no incentive to be energy- and water-efficient. Efforts to introduce efficiency have been frustrated thanks to farmers vehemently demanding – and often receiving – free farm power and assured procurement at attractive prices in return for votes. Thus, India's farm power subsidies, roughly US$ 20 billion per year, keep utilities bankrupt, farmers unhappy and groundwater depleted.

The growing popularity of solar pumps adds a new dimension to this nexus. Farmers love solar pumps as they free them from the tyranny of rationed and unreliable grid supply; electricity utilities are driven by the prospect of limiting farm power connections and subsidies; solar companies are excited by the tremendous opportunity in India's 21-million strong pump economy[i]; and climate scientists love solar pumps for their mitigation benefits.

However, indiscriminate promotion of solar pumps threatens India's groundwater aquifers. Field evidence from Rajasthan – one of India's driest states with significant groundwater depletion – shows that adoption of subsidized, stand-alone solar pumps significantly increases groundwater abstraction (Gupta 2019). This is not surprising since solar pumps offer 2200-2500 hours of reliable, unrationed, day-time power to farmers with negligible operating costs. With no other use potential, they create incentives for farmers to pump endlessly.

One way to avoid this is by incentivizing farmers not to use all the energy generated by solar panels for pumping groundwater. In 2015-16, the International Water Management Institute (IWMI) set up a small pilot in Gujarat to demonstrate SPaRC (Solar Power as Remunerative Crop). The basic idea behind SPaRC is this: farmers need power to pump groundwater to grow crops and earn income. Since energy supply to farms is free (or subsidized) and water rights are neither clearly defined nor easily enforceable, farmers will keep pumping even if the marginal returns are small. This drives groundwater over-exploitation and depletion. Instead, if farmers can also earn income from producing solar energy as a crop, this would incentivize them to use energy and groundwater efficiently.

In the field pilot, nine farmers with solar pumps were organized into the "world's first solar pump irrigators' cooperative". This cooperative entered into a 25-year power purchase agreement with the local electricity utility to sell surplus power to the grid at a fixed price. Data shows that farmers maintain baseline agricultural production and still export 2/3rds of the solar energy generated on their farms. The additional income from solar more than matches their crop income (DSUUSM 2018).

IWMI's SPaRC experiment inspired the Government of Gujarat's new solar pump policy, Suryashakti Kisan Yojana (SKY). So far, more than 4,200 farmers have been solarized with the option to sell surplus power to the grid. It is still early days for a systematic assessment of the long-term impact of SKY on agriculture, energy use and groundwater sustainability. But early analysis of SKY data shows that income from solar power sales has emerged as a driver of efficient pumping behaviour, particularly in groundwater-stressed regions (Shah and Rai 2021). At the national level, Government of India's ambitious PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan) campaign has set a target of installing 1.5 million grid-connected along with two million off-grid solar pumps over the next couple of years. This sets up a potentially significant natural experiment.

Can all solar pumps be SPaRC-enabled? Perhaps not – SPaRC requires reasonably good grid coverage and uptime, not available everywhere. Will all farmers respond uniformly to the incentives offered by SPaRC? Unlikely. Can SPaRC adoption solve all of India's groundwater over-extraction problems? Probably not. Will declining tariffs for solar energy trivialize SPaRC's incentives? Will the benefits of SPaRC be equitably distributed among rich and poor farmers; men and women; pump owners and water buyers? Will SPaRC trigger desirable behaviour changes among all farm categories across all hydro-geologies? Can the feed-in-tariff for 'solar crop' get engulfed in perverse politics? Will efficient water and energy use translate into sustainable groundwater regimes? Answers to all these questions will be clear over the next few years.

SPaRC has triggered a lot of interest among academia, policy and media. Its basic premise and assumptions have been discussed in a lively debate (Shah et al. 2017; Sahasranaman et al. 2018, 2021; Verma et al. 2019)[ii]. Meanwhile, other states are also experimenting with SPaRC variants and alternative models that claim to be more economical and rapidly scalable. SPaRC-enabled experiments have been initiated in Karnataka (Shah et al. 2014; Durga et al. 2021), Andhra Pradesh[iii], Rajasthan (World Bank 2020) and are in the works elsewhere. Maharashtra's agricultural solar feeder policy entails commissioning decentralized solar plants and is also a part of PM-KUSUM.

An external evaluation of SPaRC (Douthwaite and Shepherd 2020) has lauded its role in shaping policies and fostering an ecosystem of competition among various solarization trajectories. As the undisputed early adopter of solar irrigation – India is home to more than 93% of the world's installed solar capacity for irrigation (IRENA 2020) – India's experiments will shape, inspire and inform solarization in the rest of the world.

Shilp Verma

Senior Researcher, Water-Energy-Food Policies, IWMI: shilp.verma@cgiar.org

Photo Credit: IWMI


References

Douthwaite, B. and Shepherd, K. 2020. Outcome Evaluation of Climate-Smart Research on Solar-Powered Irrigation in India. Colombo, Sri Lanka: CGIAR Research Program on Water, Land and Ecosystems (WLE), 59p. Available online: https://wle.cgiar.org/outcome-evaluation-climate-smart-research-solar-powered-irrigation-india

DSUUSM. 2018. Tri-Annual Progress Report, 2015-18. Dhundi Saur Urja Utpadak Sahkari Mandali (DSUUSM), Dhundi Solar Energy Producers' Cooperative Society, Dhundi village, Thasra Taluka, Kheda District, Gujarat.

Durga, N., Shah, T., Verma, S. and Manjunatha, A.V. 2021.Karnataka's 'Surya Raitha' Experiment: Lessons for PM–KUSUM. Economic and Political Weekly, 56(48): 55-60.

Gupta, E. 2019. The impact of solar water pumps on energy-water-food nexus: Evidence from Rajasthan, India. Energy Policy, 129: 598-609.

IRENA 2020. Off-grid Renewable Energy Statistics 2020. International Renewable Energy Agency (IRENA), Abu Dhabi. Available online: https://www.irena.org/publications/2020/Dec/Off-grid-renewable-energy-statistics-2020

Sahasranaman, M., Kumar, M.D., Bassi, N. Singh, M. and Ganguly, A. 2018. Solar Irrigation Cooperatives: Creating the Frankenstein's Monster for India's Groundwater. Economic and Political Weekly, 53(21): 65–68.

Sahasranaman, M., Kumar, M.D., Verma, M. S., Perry, C.J., Bassi, N. and Sivamohan, M.V.K. 2021. What Will Solar Pumps Achieve? Managing Groundwater–Energy Nexus in India. Economic and Political Weekly, 56(11): 22–25

Shah, T. 2009. Taming the Anarchy: Groundwater Governance in South Asia. Washington D.C.: RFF press.

Shah, T. and Rai, G.P. 2021. Solar Pumps and Water-Energy Nexus in Gujarat, India: First Assessment of the World's Largest Pilot on Grid-connected Solar Irrigation Pumps. Preprint on Research Square. Available online: https://doi.org/10.21203/rs.3.rs-658617/v1

Shah, T., Durga, N., Rai, G.P., Verma, S. and Rathod, R. 2017. Promoting Solar Power as a Remunerative Crop. Economic and Political Weekly, 52(45): 14-19

Shah, T., Verma, S. and Durga, N. 2014.Karnataka's Smart, New Solar Pump Policy for Irrigation.Economic and Political Weekly, 49(48): 10-14

Verma, S., Durga, N. and Shah, T. 2019. Solar Irrigation Pumps and India's Energy–Irrigation Nexus. Economic and Political Weekly, 54(2): 62-65.

Verma, S., Kampman, D.A., Van der Zaag, P. and Hoekstra, A.Y. (2009). Going against the flow: A critical analysis of inter-state virtual water trade in the context of India's National River Linking Program. Physics and Chemistry of the Earth, 34 (4-5): 261-269.

World Bank. 2020. Grow Solar, Save Water, Double Farmer Income – An innovative approach to addressing Water-Energy-Agriculture nexus in Rajasthan. Washington DC: World Bank. Available online: https://openknowledge.worldbank.org/handle/10986/33375


[i] As per the most recent data (reference year 2013-14), India has 20.51 million groundwater-based minor irrigation structures (Rajan and Verma 2017).

[ii] See here: https://www.epw.in/engage/discussion/are-solar-irrigation-pumps-panacea-to-indian-agriculture-gujarat-sparc-model

[iii] https://cscportal.in/grid-connected-solar-bldc-pumpset-scheme/

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Comments 16

S.J. Mirnezami on Wednesday, 16 February 2022 10:17
Oversimplification!?

I am not against technology and have definitely witnessed some radical shifts induced by technology. But can not understand how come this new idea can fix/bypass all social and political concerns behind and inside the overexploitation? Here in this journal, people have talked about it a lot.

Of course, your utilitarian articulation of the problem and solution has shown we should be very optimistic about the idea. But is it all the problem?!

I come from Iran. There are some large desalination and transfer projects on the way in Iran from the sea to the desert. Once I was talking to the manager of one of these projects and he argued nicely as well, how this new precious water can bring efficiency and sustainability to the anarchic groundwater exploitation in Central Iran. As you have made your argument, he also referred to some potential fallibilities of the solution. And I was thinking, all these fallibilities he is talking about, are the inherent realities that have shaped the current overexploitation. I don't want to say the situation and this example is exactly like your case. My point is that in the formulation of new (utilitarian) solutions, people try to be very optimistic, and assume all problems as opportunities or abnormalities.

1
I am not against technology and have definitely witnessed some radical shifts induced by technology. But can not understand how come this new idea can fix/bypass all social and political concerns behind and inside the overexploitation? Here in this journal, people have talked about it a lot. Of course, your utilitarian articulation of the problem and solution has shown we should be very optimistic about the idea. But is it all the problem?! I come from Iran. There are some large desalination and transfer projects on the way in Iran from the sea to the desert. Once I was talking to the manager of one of these projects and he argued nicely as well, how this new precious water can bring efficiency and sustainability to the anarchic groundwater exploitation in Central Iran. As you have made your argument, he also referred to some potential fallibilities of the solution. And I was thinking, all these fallibilities he is talking about, are the inherent realities that have shaped the current overexploitation. I don't want to say the situation and this example is exactly like your case. My point is that in the formulation of new (utilitarian) solutions, people try to be very optimistic, and assume all problems as opportunities or abnormalities.
Shilp Verma on Tuesday, 22 February 2022 07:52
Not a panacea!

Dear Mirnezami, thanks for your comment. I completely agree, technology alone is not going to solve all problems - especially not the tricky socio-political ones. My submission is that in India - and elsewhere - efforts to manage groundwater have been frustrated because farmers often do not have any incentive to conserve (ground)water and/or use it efficiently. SPaRC can 'fix' this by creating an ecosystem where farmers' private interests can be aligned with larger societal and environmental interests. Farmers can earn income not only by pumping more groundwater and growing crops, but also by pumping less and selling solar energy. Perhaps this will also improve the buy-in for other 'demand management' strategies. The desalination example from Iran is quite interesting - but it is an example of 'supply augmentation', not 'demand management'.

0
Dear Mirnezami, thanks for your comment. I completely agree, technology alone is not going to solve all problems - especially not the tricky socio-political ones. My submission is that in India - and elsewhere - efforts to manage groundwater have been frustrated because farmers often do not have any incentive to conserve (ground)water and/or use it efficiently. SPaRC can 'fix' this by creating an ecosystem where farmers' private interests can be aligned with larger societal and environmental interests. Farmers can earn income not only by pumping more groundwater and growing crops, but also by pumping less and selling solar energy. Perhaps this will also improve the buy-in for other 'demand management' strategies. The desalination example from Iran is quite interesting - but it is an example of 'supply augmentation', not 'demand management'.
Guest
Guest - Chris Perry on Wednesday, 16 February 2022 15:10
What happens when the subsidies stop?

The article would be easier to follow if some numbers were included.

As I understand it, the capital costs of the PV systems is initially funded with a 95% subsidy from government. Farmers are expected to repay 35% of this amount back over a 7 year period.

During that 7 year period, the energy that farmers feed in to the grid is paid at a rate of Rs7/kWh (the generating agency is obliged to pay 3.5Rs/kWh for the energy—whether they need the energy or not at any given moment, with an additional subsidy of Rs3.5/kWh from government.

Whether demand for water falls or not is of course entirely dependent on the ratio of the value of water pumped per kWh to the feed-in tariff. The initial subsidy to the feed-in tariff is either designed to cover the costs to the farmer of repaying 35% of the capital cost of the PV equipment (making it overall 95% subsidised), or it is designed to ensure that it is more attractive to return power to the grid than to irrigate.

One can only assume that once the subsidy on feed in energy ends, assuming the PV equipment is still working, farmers will find it more profitable to irrigate themselves, or sell water to neighbours, and unsustainable overdraft of aquifers will ensue.

At that point, government will have almost entirely paid, via subsidy to the initial capital costs and subsidy to the feed in tariff, for billions of dollars worth of equipment that will facilitate the ongoing destruction of India’s aquifers, and the energy companies will cease to receive random, uncontrollable quantities of feed in power (which they may welcome).

No doubt PV energy generation has an important role to play, but it would probably be far more effective in terms of managing the national energy system, economies of scale, proper maintenance, etc etc, to construct large scale systems.

1
The article would be easier to follow if some numbers were included. As I understand it, the capital costs of the PV systems is initially funded with a 95% subsidy from government. Farmers are expected to repay 35% of this amount back over a 7 year period. During that 7 year period, the energy that farmers feed in to the grid is paid at a rate of Rs7/kWh (the generating agency is obliged to pay 3.5Rs/kWh for the energy—whether they need the energy or not at any given moment, with an additional subsidy of Rs3.5/kWh from government. Whether demand for water falls or not is of course entirely dependent on the ratio of the value of water pumped per kWh to the feed-in tariff. The initial subsidy to the feed-in tariff is either designed to cover the costs to the farmer of repaying 35% of the capital cost of the PV equipment (making it overall 95% subsidised), or it is designed to ensure that it is more attractive to return power to the grid than to irrigate. One can only assume that once the subsidy on feed in energy ends, assuming the PV equipment is still working, farmers will find it more profitable to irrigate themselves, or sell water to neighbours, and unsustainable overdraft of aquifers will ensue. At that point, government will have almost entirely paid, via subsidy to the initial capital costs and subsidy to the feed in tariff, for billions of dollars worth of equipment that will facilitate the ongoing destruction of India’s aquifers, and the energy companies will cease to receive random, uncontrollable quantities of feed in power (which they may welcome). No doubt PV energy generation has an important role to play, but it would probably be far more effective in terms of managing the national energy system, economies of scale, proper maintenance, etc etc, to construct large scale systems.
Shilp Verma on Tuesday, 22 February 2022 08:31
Subsidies

Dear Chris, thanks for your comments. I agree, we need more data and numbers. Let me share some:

1. Subsidies are declining: In IWMI's small pilot, first six farmers contributed only ₹5,000 per kWp of solar installation; next three contributed ₹25,000 per kWp. This was a sign that if we convert solar irrigation pump into an income generating asset, farmers will be willing to contribute more. In Gujarat's SKY, as much as 65% of the capital cost is recovered through sale of solar energy; this is in addition to 5% upfront contribution from farmers. Further, each farmer that goes solar reduces Government of Gujarat's 'farm power subsidy' bill, on average by ₹45,000 - ₹50,000 per year. Another significant gain for electricity utilities is that feeder losses have reduced from 26% to less than 6%. All of these are early results, shared either by GUVNL (Gujarat Energy Development Agency) or available in Shah and Rai (2021) but much more data is being collected and will be published soon.

2. PV costs are also declining: When IWMI started working on solar, a 1 kWP installation cost around ₹90,000; in SKY, the discovered cost was around ₹48,000 per kWp and today, the costs are even lower. One reason for high cost of solar pumps is that servicing small and remote installations is very costly for solar companies. With SPaRC / SKY, installations are done in clusters - this reduces costs further. As costs will continue to decline, it will be possible to ramp down capital subsidies. Of course, this remains to be seen.

3. Solarization of agriculture is a Net Gain: If we assume - even if only for a moment - that solar PV panels will continue to become cheaper and more efficient, it is likely that industrial / commercial users will find it attractive to solarize. This will leave utilities with farmers - who pay only a fraction of supply cost, if at all - and poor households - who also need to be subsidized. Purely from the point of view of financial viability of electricity utilities, it is better that farmers solarize quickly so that utilities can offer better energy services at lower costs to commercial customers.

Subsidies for solar irrigation adoption therefore need to be viewed - and evaluated - in the context of existing farm power subsidies. India's annual farm power subsidy bill is close to US$20 billion. Can solar irrigation subsidies be a better mechanism for spending the same money?

I have to disagree with your point on farmers finding it more lucrative to irrigate or sell water to neighbors than evacuate power. For this, we should look at marginal returns from irrigation, not average returns. SPaRC's objective should NOT be to prevent irrigation altogether, the objective should be to prevent 'inefficient' or wasteful irrigation. We have explained this point in some detail in Verma et al. (2019). Happy to discuss further.

Finally, the 'economies of scale' claimed by large-scale solar plants need to be viewed in conjunction with significant energy wheeling costs (because energy generation is far from energy use).

0
Dear Chris, thanks for your comments. I agree, we need more data and numbers. Let me share some: 1. [b]Subsidies are declining:[/b] In IWMI's small pilot, first six farmers contributed only ₹5,000 per kWp of solar installation; next three contributed ₹25,000 per kWp. This was a sign that if we convert solar irrigation pump into an income generating asset, farmers will be willing to contribute more. In Gujarat's SKY, as much as 65% of the capital cost is recovered through sale of solar energy; this is in addition to 5% upfront contribution from farmers. Further, each farmer that goes solar reduces Government of Gujarat's 'farm power subsidy' bill, on average by ₹45,000 - ₹50,000 per year. Another significant gain for electricity utilities is that feeder losses have reduced from 26% to less than 6%. All of these are early results, shared either by GUVNL (Gujarat Energy Development Agency) or available in [url=https://www.researchsquare.com/article/rs-658617/v1]Shah and Rai (2021)[/url] but much more data is being collected and will be published soon. 2. [b]PV costs are also declining:[/b] When IWMI started working on solar, a 1 kWP installation cost around ₹90,000; in SKY, the discovered cost was around ₹48,000 per kWp and today, the costs are even lower. One reason for high cost of solar pumps is that servicing small and remote installations is very costly for solar companies. With SPaRC / SKY, installations are done in clusters - this reduces costs further. As costs will continue to decline, it will be possible to ramp down capital subsidies. Of course, this remains to be seen. 3. [b]Solarization of agriculture is a Net Gain:[/b] If we assume - even if only for a moment - that solar PV panels will continue to become cheaper and more efficient, it is likely that industrial / commercial users will find it attractive to solarize. This will leave utilities with farmers - who pay only a fraction of supply cost, if at all - and poor households - who also need to be subsidized. Purely from the point of view of financial viability of electricity utilities, it is better that farmers solarize quickly so that utilities can offer better energy services at lower costs to commercial customers. Subsidies for solar irrigation adoption therefore need to be viewed - and evaluated - in the context of existing farm power subsidies. India's annual farm power subsidy bill is close to US$20 billion. Can solar irrigation subsidies be a better mechanism for spending the same money? I have to disagree with your point on farmers finding it more lucrative to irrigate or sell water to neighbors than evacuate power. For this, we should look at marginal returns from irrigation, not average returns. SPaRC's objective should NOT be to prevent irrigation altogether, the objective should be to prevent 'inefficient' or wasteful irrigation. We have explained this point in some detail in [url=https://www.epw.in/journal/2019/2/discussion/solar-irrigation-pumps-and-indias-energy.html]Verma et al. (2019)[/url]. Happy to discuss further. Finally, the 'economies of scale' claimed by large-scale solar plants need to be viewed in conjunction with significant energy wheeling costs (because energy generation is far from energy use).
Guest
Guest - Peder Hjorth on Sunday, 20 February 2022 19:45
Could work in some states

As Chris Perry remarks, an overhaul of the national energy system may be an essential prerequisite for acheiving the intended benefits from a national roll-out of PV-pumping. India is more of continent than a state. Thus, there are huge differences in culture and water availability between the Indian states. Thus, what works in one of these states may not work in the other. In my view, Gujarat is a state where the preconditions seem favourable. Still, I think that the PUAs (Power Users association) need to be carefully selected and trained, to make them function as intended. A PUA would actually be trusted to manage a common pool resource, as Ostrom has defined it. It would probably be devastating to embark on a rapidly scalable approach, as some states seem prone to do.The more you care about the first steps, the sooner you you will reach your goal. There will, however, most likely to be states where PUAs would be doomed to failure, no matter what.

1
As Chris Perry remarks, an overhaul of the national energy system may be an essential prerequisite for acheiving the intended benefits from a national roll-out of PV-pumping. India is more of continent than a state. Thus, there are huge differences in culture and water availability between the Indian states. Thus, what works in one of these states may not work in the other. In my view, Gujarat is a state where the preconditions seem favourable. Still, I think that the PUAs (Power Users association) need to be carefully selected and trained, to make them function as intended. A PUA would actually be trusted to manage a common pool resource, as Ostrom has defined it. It would probably be devastating to embark on a rapidly scalable approach, as some states seem prone to do.The more you care about the first steps, the sooner you you will reach your goal. There will, however, most likely to be states where PUAs would be doomed to failure, no matter what.
Shilp Verma on Tuesday, 22 February 2022 08:45
Absolutely

Dear Peder, thanks for your comments.

I completely agree with your first point. What works in Gujarat will not work everywhere in India - or elsewhere. There are similar, SPaRC-enabled experiments in Rajasthan, Andhra Pradesh, Karnataka - we need to carefully study how they shape up, specifically technical challenges in design and implementation; and farmers' response.

I also agree, the PUA - or what we called SPICE - Solar Pump Irrigators' Cooperative Enterprise - will need to be carefully crafted and trained. Gujarat has a long tradition of cooperatives (being home to numerous, very successful dairy cooperatives) but in other states, the solar farmers may need to be organized differently - possibly as Farmer Producer Companies or some other institutional form. As these PUAs mature, they may offer services that can help member farmers maximize their income and secure sustainability of their shared resource. This may include advisory services on crop choice, irrigation practices, pump selection; as well as liaison services with solar equipment companies and energy buyers. Miles to go...

0
Dear Peder, thanks for your comments. I completely agree with your first point. What works in Gujarat will not work everywhere in India - or elsewhere. There are similar, SPaRC-enabled experiments in Rajasthan, Andhra Pradesh, Karnataka - we need to carefully study how they shape up, specifically technical challenges in design and implementation; and farmers' response. I also agree, the PUA - or what we called SPICE - Solar Pump Irrigators' Cooperative Enterprise - will need to be carefully crafted and trained. Gujarat has a long tradition of cooperatives (being home to numerous, very successful dairy cooperatives) but in other states, the solar farmers may need to be organized differently - possibly as Farmer Producer Companies or some other institutional form. As these PUAs mature, they may offer services that can help member farmers maximize their income and secure sustainability of their shared resource. This may include advisory services on crop choice, irrigation practices, pump selection; as well as liaison services with solar equipment companies and energy buyers. Miles to go...
AM MULLER on Tuesday, 22 February 2022 12:38
Profitable for first movers but sustainable in long-term at scale ?!?

This is fascinating, exciting and very useful as we have come to expect from critical research in India's irrigation sector.

My concern is that the farmers are being incentivised with 25 year power purchase agreements to which my response would be, can I please sign on too!

The problem is that the value of energy delivered at peak solar potential times is likely to decline as installation and generation volumes grow. At some point, those values may even turn negative. Well before that point is reached, the users will be incentivised to pump enough water to compensate for their loss of electricity sales and probably, also, as the market matures, to repay the cost of their installations (and remember, while prices of panels may still fall further, that of control instrumentation, transmission and administration will not).

So there does appear to be a real risk of unintended consequences - have you done any modelling of what the respective regional energy markets might look like with the kind of numbers involved that would really make a systemic difference to groundwater depletion at scale?

(btw, I have similar concerns about other solar deployments which are being sold to communities with the incentive of high Feed In Tariffs from local utilities but without explanation of what the value of that peak solar energy is - unless of course, we all resort to airconditioners!)

1
This is fascinating, exciting and very useful as we have come to expect from critical research in India's irrigation sector. My concern is that the farmers are being incentivised with 25 year power purchase agreements to which my response would be, can I please sign on too! The problem is that the value of energy delivered at peak solar potential times is likely to decline as installation and generation volumes grow. At some point, those values may even turn negative. Well before that point is reached, the users will be incentivised to pump enough water to compensate for their loss of electricity sales and probably, also, as the market matures, to repay the cost of their installations (and remember, while prices of panels may still fall further, that of control instrumentation, transmission and administration will not). So there does appear to be a real risk of unintended consequences - have you done any modelling of what the respective regional energy markets might look like with the kind of numbers involved that would really make a systemic difference to groundwater depletion at scale? (btw, I have similar concerns about other solar deployments which are being sold to communities with the incentive of high Feed In Tariffs from local utilities but without explanation of what the value of that peak solar energy is - unless of course, we all resort to airconditioners!)
Shilp Verma on Wednesday, 23 February 2022 03:51
Yes, PPAs need to evolve...

Dear Muller, thanks for adding this interesting dimension to the discussion.

I don't understand energy markets well but 25-year Power Purchase Agreements are the industry norm - possibly to help investors recover the high capital investment required to set up solar plants. Over the last 10 years, solar feed-in-tariffs have reduced significantly and are now below the 'average power purchase cost' for most utilities. Also, India's energy demand is expected to grow over the next 2-3 decades as incomes rise but some 'power surplus' states are already less enthusiastic about adding RE. As unit prices of solar PV decline, it might be prudent to think of PPAs with shorter lock-in periods.

Eventually the tariff offered to solar farmers - especially in groundwater scarce regions - may be viewed as having two components. One will be the market-determined 'feed-in-tariff' for the kWh they sell to the utility or an end user; this will move with energy markets. A second component can be the 'groundwater conservation price' that the state pays farmers for maintaining healthy aquifers. This conservation price may vary depending on the condition of local aquifers. This is one way in which SPaRC can become an instrument for groundwater governance.

0
Dear Muller, thanks for adding this interesting dimension to the discussion. I don't understand energy markets well but 25-year Power Purchase Agreements are the industry norm - possibly to help investors recover the high capital investment required to set up solar plants. Over the last 10 years, solar feed-in-tariffs have reduced significantly and are now below the 'average power purchase cost' for most utilities. Also, India's energy demand is expected to grow over the next 2-3 decades as incomes rise but some 'power surplus' states are already less enthusiastic about adding RE. As unit prices of solar PV decline, it might be prudent to think of PPAs with shorter lock-in periods. Eventually the tariff offered to solar farmers - especially in groundwater scarce regions - may be viewed as having two components. One will be the market-determined 'feed-in-tariff' for the kWh they sell to the utility or an end user; this will move with energy markets. A second component can be the 'groundwater conservation price' that the state pays farmers for maintaining healthy aquifers. This conservation price may vary depending on the condition of local aquifers. This is one way in which SPaRC can become an instrument for groundwater governance.
Guest
Guest - mm on Wednesday, 23 February 2022 08:09
PPAs need to evolve - and the policy experiment must be expanded to consider evolving energy market dynamics

Thanks for that response and for the recognition that, as/when the FIT falls, there will be a need to supplement it with an additional 'conservation' payment. The question that raises is how that conservation payment/subsidy will be funded.

My concern is that there is heavy lobbying for solar generation and, while there will certainly be an expansion of that supply, its integration into larger systems will pose challenges that need to be addressed sooner rather than later.

Since groundwater pumping is a substantial component of electricity demand in some regions, the implications of market dynamics need to be considered.

From a water sector perspective, we should note that we offer substantial opportunities for energy through hydropower and pumped storage installations and these should be brought into the analysis.

But your efforts provide a valuable foundation!

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Thanks for that response and for the recognition that, as/when the FIT falls, there will be a need to supplement it with an additional 'conservation' payment. The question that raises is how that conservation payment/subsidy will be funded. My concern is that there is heavy lobbying for solar generation and, while there will certainly be an expansion of that supply, its integration into larger systems will pose challenges that need to be addressed sooner rather than later. Since groundwater pumping is a substantial component of electricity demand in some regions, the implications of market dynamics need to be considered. From a water sector perspective, we should note that we offer substantial opportunities for energy through hydropower and pumped storage installations and these should be brought into the analysis. But your efforts provide a valuable foundation!
Guest
Guest - amitra on Tuesday, 01 March 2022 13:29
.... provided supply hours are not increased simultaneously

Thanks for this very clear writing. I would just add that this can work, provided the electricity supply hour is not simultaneously increased from 8 hours. As far as I know it has been increased under SKY scheme, in that case, one cannot say that any FiT will necessaryly reduce water abstraction, because for some of the more productive farmers it will be beneficial to increase irrigation hours more than 8 hours. I am not sure how difficult it is to achieve technically, but if access to SIP means more pumping hours to farmers, then it might require a much larger FiT to reduce abstraction, which has financial implications for the government.

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Thanks for this very clear writing. I would just add that this can work, provided the electricity supply hour is not simultaneously increased from 8 hours. As far as I know it has been increased under SKY scheme, in that case, one cannot say that [b]any FiT[/b] [b]will necessaryly[/b] reduce water abstraction, because for some of the more productive farmers it will be beneficial to increase irrigation hours more than 8 hours. I am not sure how difficult it is to achieve technically, but if access to SIP means more pumping hours to farmers, then it might require a much larger FiT to reduce abstraction, which has financial implications for the government.
Shilp Verma on Wednesday, 02 March 2022 03:02
Yes, but...

Thanks, I agree that is very important. Yes, the FiT offered to farmers will have to be non-trivial to induce any change in pumping behavior. I think SKY offered longer hours of supply (from 8 to 12) to convince and induce more farmers to participate. This may dilute some of its impact on pumping behavior, though not completely. Even with the longer hours of grid access, SKY does impose a higher 'opportunity cost of pumping' on farmers. It remains to be seen whether the net effect will get completely cancelled out, or only marginally. There are also examples like the BLDC pilot in Andhra Pradesh - where farmers can only evacuate surplus power to the grid - but not draw any from it. This is closer to IWMI's Dhundi experiment where the PPA imposed a penalty tariff (twice the FiT) on any grid power withdrawal by farmers. We have discussed key lessons from SKY experience in Gujarat in a podcast that will be published soon. Will be happy to share a link here.

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Thanks, I agree that is very important. Yes, the FiT offered to farmers will have to be non-trivial to induce any change in pumping behavior. I think SKY offered longer hours of supply (from 8 to 12) to convince and induce more farmers to participate. This may dilute some of its impact on pumping behavior, though not completely. Even with the longer hours of grid access, SKY does impose a higher 'opportunity cost of pumping' on farmers. It remains to be seen whether the net effect will get completely cancelled out, or only marginally. There are also examples like the BLDC pilot in Andhra Pradesh - where farmers can only evacuate surplus power to the grid - but not draw any from it. This is closer to IWMI's Dhundi experiment where the PPA imposed a penalty tariff (twice the FiT) on [b]any[/b] grid power withdrawal by farmers. We have discussed key lessons from SKY experience in Gujarat in a podcast that will be published soon. Will be happy to share a link here.
Guest
Guest - dhaval on Wednesday, 02 March 2022 14:38
may resolve energy issues, but groundwater...

Based on my limited (and anecdotal) experience of talking to beneficiaries of CM Solar Pump Scheme in Osmanabad district of Maharashtra, following were the observations:
1. Farmers prefer off grid connection as this is sought as a panacea by them for the interrupted or un-dependable grid energy. Not sure this can be an impetus for those farmers who are already irrigated farmers and well part of the agricultural economy.
2. Farmers pump the water during the peak day time (as solar pumps work most efficiently then) which may lead to potential evapotranspiration issues. Not to say that they do not exist in traditional system but in this case, they may be higher as almost all pumping happens during day time. One farmer even complained about cloudy days as a bad day for solar irrigation- highlighting the strong connection.
3. Farmers have benefitted from the scheme and have used it to install on farm ponds wherein they conjunctively use energy- grid energy for pumping bore-wells into these ponds and then solar energy pumps to pump those ponds for irrigation.
4. In the first GR on CM Solar Scheme by GoM (dated 15 Nov 2018), they stated role of GSDA (state groundwater agency) in aiding Mahavitaran (state energy company) by providing groundwater prospect maps for identifying potential beneficiaries. In the subsequent GR two months later (dated 1 Jan 2019), they removed the clause, clearly indicating the challenges of linking the initiative to groundwater feasibility.
5. lastly, what does this mean for a set of diverse groundwater users in a region- those relying on shallow aquifers, those on deeper aquifers and those on both. Does Solar irrigation change tracks when groundwater dependency shifts gears? This is something that needs to be explored.
6. How many solar schemes by different states integrate groundwater boards/information as part of the process is an important question. I believe the design is oriented towards improving energy access, reducing load of energy subsidies and addressing poor energy supply.

Overall, I believe this is too early to pose SP as an initiative to tackle the horrors of groundwater demand management. This can definitely, for now, be poised as an initiative to address the challenges of power subsidies that the state faces and decarbonisation of agriculture.

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Based on my limited (and anecdotal) experience of talking to beneficiaries of CM Solar Pump Scheme in Osmanabad district of Maharashtra, following were the observations: 1. Farmers prefer off grid connection as this is sought as a panacea by them for the interrupted or un-dependable grid energy. Not sure this can be an impetus for those farmers who are already irrigated farmers and well part of the agricultural economy. 2. Farmers pump the water during the peak day time (as solar pumps work most efficiently then) which may lead to potential evapotranspiration issues. Not to say that they do not exist in traditional system but in this case, they may be higher as almost all pumping happens during day time. One farmer even complained about cloudy days as a bad day for solar irrigation- highlighting the strong connection. 3. Farmers have benefitted from the scheme and have used it to install on farm ponds wherein they conjunctively use energy- grid energy for pumping bore-wells into these ponds and then solar energy pumps to pump those ponds for irrigation. 4. In the first GR on CM Solar Scheme by GoM (dated 15 Nov 2018), they stated role of GSDA (state groundwater agency) in aiding Mahavitaran (state energy company) by providing groundwater prospect maps for identifying potential beneficiaries. In the subsequent GR two months later (dated 1 Jan 2019), they removed the clause, clearly indicating the challenges of linking the initiative to groundwater feasibility. 5. lastly, what does this mean for a set of diverse groundwater users in a region- those relying on shallow aquifers, those on deeper aquifers and those on both. Does Solar irrigation change tracks when groundwater dependency shifts gears? This is something that needs to be explored. 6. How many solar schemes by different states integrate groundwater boards/information as part of the process is an important question. I believe the design is oriented towards improving energy access, reducing load of energy subsidies and addressing poor energy supply. Overall, I believe this is too early to pose SP as an initiative to tackle the horrors of groundwater demand management. This can definitely, for now, be poised as an initiative to address the challenges of power subsidies that the state faces and decarbonisation of agriculture.
Shilp Verma on Friday, 04 March 2022 05:51
Interesting

Several interesting points Dhaval, thanks. My thoughts:

1. It might be too early to conclude that farmers prefer off-grid solar pumps since most of them might not even know that connecting solar pumps to the grid is an option. Of the 300,000 SIPs in India, probably only 5,000 are grid-connected at the moment. I agree most farmers are wary of unreliable farm power supply, which is why if they can use the solar energy generated on their farms to run their pumps - and evacuate to the grid only the surplus - they will have reliable energy for irrigation.

2. Most farmers - solar or grid-connected - prefer to irrigate during the day. Most farmers also despise nightly farm power supply. This is one of the key attractions for grid farmers to adopt solar pumps.

3. Yes, in some places in Rajasthan and Gujarat too, farmers use (off-grid) solar pumps as 'secondary pumps'. One reason for that is that subsidy was available only for small 2-3 kWp SIPs while their primary pumps were larger. But this leads to low utilization and is a wasteful way to spend public resources. Ideally, we should target SIPs to replace existing pumps, not to add even more.

4. I agree. Regulating solar (or any) pumps based on groundwater availability will have enforcement and political challenges; it will also be too costly. What SPaRC is trying is to incentivize efficient energy and water use.

5. Absolutely agree, SPaRC might work best in most parts of western and peninsular India where: [a] grid connectivity is relatively better; [b] more than 80% of irrigation pumps run on electricity; and [c] subsidized or free farm power has already caused severe groundwater depletion. In other contexts, we will need different implementation models. If groundwater situation changes, the feed-in-tariff / groundwater conservation bonus offered to farmers can be tweaked to reflect the new resource context.

6. At the moment, not many - but I there's a growing recognition of the linkages between agri solarization and groundwater sustainability - including at the highest level in PM-KUSUM. Hopefully, this understanding will spread and more solutions will follow.

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Several interesting points Dhaval, thanks. My thoughts: 1. It might be too early to conclude that farmers prefer off-grid solar pumps since most of them might not even know that connecting solar pumps to the grid is an option. Of the 300,000 SIPs in India, probably only 5,000 are grid-connected at the moment. I agree most farmers are wary of unreliable farm power supply, which is why if they can use the solar energy generated on their farms to run their pumps - and evacuate to the grid only the surplus - they will have reliable energy for irrigation. 2. Most farmers - solar or grid-connected - prefer to irrigate during the day. Most farmers also despise nightly farm power supply. This is one of the key attractions for grid farmers to adopt solar pumps. 3. Yes, in some places in Rajasthan and Gujarat too, farmers use (off-grid) solar pumps as 'secondary pumps'. One reason for that is that subsidy was available only for small 2-3 kWp SIPs while their primary pumps were larger. But this leads to low utilization and is a wasteful way to spend public resources. Ideally, we should target SIPs to replace existing pumps, not to add even more. 4. I agree. Regulating solar (or any) pumps based on groundwater availability will have enforcement and political challenges; it will also be too costly. What SPaRC is trying is to incentivize efficient energy and water use. 5. Absolutely agree, SPaRC might work best in most parts of western and peninsular India where: [a] grid connectivity is relatively better; [b] more than 80% of irrigation pumps run on electricity; and [c] subsidized or free farm power has already caused severe groundwater depletion. In other contexts, we will need different implementation models. If groundwater situation changes, the feed-in-tariff / groundwater conservation bonus offered to farmers can be tweaked to reflect the new resource context. 6. At the moment, not many - but I there's a growing recognition of the linkages between agri solarization and groundwater sustainability - including at the highest level in PM-KUSUM. Hopefully, this understanding will spread and more solutions will follow.
Guest
Guest - FMolle on Monday, 07 March 2022 17:16
Any water savings observed?

Just browsing the World Bank report it seems that the ideas are still debated rather than implemented?
Would you be able to actually point to cases with strong evidence, in particular of reduced groundwater abstraction after introduction of SPARC?

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Just browsing the World Bank report it seems that the ideas are still debated rather than implemented? Would you be able to actually point to cases with strong evidence, in particular of reduced groundwater abstraction after introduction of SPARC?
Shilp Verma on Wednesday, 09 March 2022 17:05
Evidence and Action

Thanks Francois. The idea has been implemented and is being scaled; but also continues to be debated. I doubt action will pause for evidence to build up. The evidence we have so far is for energy use as a surrogate for groundwater abstraction and/or water saved, presented by Shah and Rai. The impact on groundwater is less obvious / immediate also because a handful of solar farmers share the aquifer with thousands - if not millions - of grid-connected farmers. SPaRC adoption will have to significantly scale for aquifer-level impacts to become obvious. In Gujarat, IWMI has also initiated field measurements to quantify impact on abstraction in select SKY feeders, see here.

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Thanks Francois. The idea has been implemented and is being scaled; but also continues to be debated. I doubt action will pause for evidence to build up. The evidence we have so far is for energy use as a surrogate for groundwater abstraction and/or water saved, presented by [url=https://doi.org/10.21203/rs.3.rs-658617/v1]Shah and Rai[/url]. The impact on groundwater is less obvious / immediate also because a handful of solar farmers share the aquifer with thousands - if not millions - of grid-connected farmers. SPaRC adoption will have to significantly scale for aquifer-level impacts to become obvious. In Gujarat, IWMI has also initiated field measurements to quantify impact on abstraction in select SKY feeders, see [url=https://solar.iwmi.org/2022/02/15/solar-irrigation-a-boom-or-bane-for-groundwater/]here[/url].
Shilp Verma on Monday, 14 March 2022 18:26
Thank you, all

I want to thank all those who read and generously contributed to this discussion. Special thanks to Doug and Francois for inviting and encouraging me to write this and providing excellent suggestions on the draft.

The long-term impacts of SPaRC - on scaling of solar irrigation, on farmers' pumping behavior, in different groundwater regimes and among different groups of farmers - will be clearer as more data and evidence builds up; I'm glad that IWMI and others are already working on this. SPaRC has been a bold experiment that has highlighted the relationship between solarization of irrigation and groundwater governance. By imagining solar pumps as much more than just 'green pumping technologies', it has highlighted their potential impact on farmers' incentives, incomes and resilience while hypothesizing a role for SIPs in resource governance.

All the comments and suggestions shared here will help shape future work on this theme. Please feel free to reach out to me by writing to shilp.verma@cgiar.org

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I want to thank all those who read and generously contributed to this discussion. Special thanks to Doug and Francois for inviting and encouraging me to write this and providing excellent suggestions on the draft. The long-term impacts of SPaRC - on scaling of solar irrigation, on farmers' pumping behavior, in different groundwater regimes and among different groups of farmers - will be clearer as more data and evidence builds up; I'm glad that IWMI and others are already working on this. SPaRC has been a bold experiment that has highlighted the relationship between solarization of irrigation and groundwater governance. By imagining solar pumps as much more than just 'green pumping technologies', it has highlighted their potential impact on farmers' incentives, incomes and resilience while hypothesizing a role for SIPs in resource governance. All the comments and suggestions shared here will help shape future work on this theme. Please feel free to reach out to me by writing to [url=mailto:shilp.verma@cgiar.org]shilp.verma@cgiar.org[/url]