The Union government has introduced a 10 GW agrivoltaics component to the upcoming PM-KUSUM 2.0 scheme, enabling farmers to generate solar power while cultivating crops. This dual-use land model opens new avenues for renewable energy infrastructure, though higher setup costs and regulatory hurdles remain key factors for investors to monitor.
The Union Ministry of New and Renewable Energy is set to incorporate a 10 GW agrivoltaics component into the upcoming phase of the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM) scheme. This strategic move aims to address land-use efficiency by allowing simultaneous crop cultivation and solar power generation. By installing elevated solar panels, the government intends to help farmers secure three distinct revenue streams: income from agricultural harvests, revenue from selling surplus electricity to distribution companies, and savings from reduced reliance on diesel for irrigation.
From a business and operational perspective, the transition to agrivoltaics marks a departure from traditional ground-mounted solar projects. While ground-mounted systems are standard, the elevated structures required for agrivoltaics involve significantly higher capital spending due to the specialized support systems needed to accommodate farm machinery and provide sufficient sunlight for crops beneath the panels. Investors and companies involved in solar engineering, procurement, and construction may need to factor in these increased costs when assessing project viability.
The success of this initiative is heavily dependent on technical optimization and policy support. Researchers in Pune are currently testing various solar panel configurations across different crop types to identify designs that minimize shading impacts and maximize yield. For the sector, the technical design of these structures is critical; if the installation design fails to account for regional climate or specific crop needs, the project could face performance challenges.
Investors should also be aware of several operational risks inherent in this model. Regulatory and land-use classification remains a major area of uncertainty. Because this involves combining agricultural land with energy infrastructure, inconsistent state-level guidelines could create hurdles for project execution. Furthermore, financing smaller projects led by Farmer Producer Organizations (FPOs) and cooperatives poses a challenge, as banks may remain hesitant about the long-term economic viability of these decentralized models without strong credit guarantees.
The financial success of these projects will largely depend on the policies set by State Electricity Regulatory Commissions. The development of differentiated tariff mechanisms—which determine how much farmers are paid for electricity—will be essential to make the projects profitable. As the government works toward its renewable capacity targets, the pace of tender releases and the final structure of power purchase agreements will be the most important monitorables for the sector.