Water Sector Projects

At present, India spends over USD 6 billion on energy subsidies annually, and it is estimated that farmers pay only 13 percent of the true cost of electricity. Electricity subsidies have enabled farmers to access electricity at prices below the marginal cost of supply, thereby lowering the cost of irrigation and groundwater extraction. However, these benefits have come at an environmental cost through groundwater exploitation and a financial burden on distribution companies (DISCOMs). By connecting solar-powered irrigation pumps to the grid and incentivizing farmers to evacuate surplus solar power and sell it back to the utilities, farmers are incentivized to not only use a cleaner form of energy for pumping, but to use the power more efficiently. This will benefit utilities as well since many utilities are under financial stress. To allow farmers to feed in to the grid they must first abstain for a certain period of time from their right being connected to the grid, which would be financially beneficial for the DISCOMs as each farmer entails a significant annual farm power subsidy burden.