Experts are urging structural changes for the upcoming PM-KUSUM 2.0 scheme to improve project viability. While the first phase saw success in stand-alone solar pumps, decentralized grid-connected plants have lagged. With a proposed Rs 51,000 crore outlay, the focus is shifting toward grid readiness, payment security for developers, and sustainable water management through agrivoltaics.
The government is preparing to launch the second phase of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme. While the first phase achieved significant success in installing stand-alone solar pumps, reaching nearly 90 percent of its target, other components of the program have faced significant delays. Specifically, the decentralised grid-connected solar power plants component delivered only 2,400 megawatts against an original goal of 10,000 megawatts. This performance gap highlights the complexity of coordinating infrastructure projects across multiple state agencies and distribution companies.
Addressing Implementation and Payment Bottlenecks
Experts from the Centre for Science and Environment have pointed out that implementation hurdles, such as poor coordination between stakeholders and difficulties in land acquisition, have hampered progress. These delays often lead to cost overruns, which can discourage private investment. A critical concern for developers is the history of payment delays by state electricity distribution companies (discoms). In the power sector, payment security is vital for maintaining project viability and securing financing. Analysts suggest that for PM-KUSUM 2.0 to succeed, the program must incorporate ironclad billing timelines and credible payment-security arrangements to ensure developers receive timely revenue. Without these structural reforms, the long-term maintenance and operation of solar assets may remain a risk.
Shifting to Agrivoltaics for Sustainable Growth
Looking ahead to the next phase, the government is exploring a pivot toward agrivoltaics, a model where solar generation and crop cultivation occur on the same land. This approach is intended to provide farmers with dual income streams. However, this transition requires a shift in focus from simply tracking raw megawatt installation numbers to prioritizing tangible income outcomes for smallholder and tenant farmers. Integration with water management is also essential, as the increased use of solar-powered pumps carries a risk of accelerating groundwater depletion if not monitored carefully. As discussions around the proposed Rs 51,000 crore outlay continue, the final guidelines will be critical in shaping the program's efficiency.
Investors should monitor the final policy framework for any updates on payment security mechanisms and project readiness requirements. The success of PM-KUSUM 2.0 will likely depend on how effectively the government balances aggressive capacity targets with the operational realities of state-level distribution and land management. The ability of developers to navigate these logistical challenges while managing potential payment risks will be a key factor in the long-term sustainability of the sector.