The government is set to include agrivoltaics in the upcoming PM-KUSUM 2.0 program, potentially targeting 10 GW of capacity. This move aims to allow farmers to grow crops and generate electricity on the same land, creating dual income streams. Investors are watching for policy details, including subsidy frameworks and technical standards, which are expected to be unveiled later this month.
The Indian government is preparing to introduce a dedicated agrivoltaics component as part of the second phase of the PM-KUSUM program. This policy shift, expected to be formally detailed at the 7th Agrivoltaics World Conference in New Delhi from October 21–23, 2026, focuses on integrating solar power generation with traditional agricultural activities. By installing solar panels on elevated structures above farmland, the initiative aims to solve land scarcity issues while providing farmers with new revenue streams from electricity sales and savings on irrigation costs.
The Dual-Utility Model
Agrivoltaics involves placing solar panels 18 to 20 feet above the ground on raised pillars. This design allows heavy agricultural machinery to move underneath while permitting sunlight to reach crops. Pilot projects, including those by companies like Jain Irrigation, have demonstrated that this setup can work effectively for various crops, including fruit trees and vegetables. The government is now shifting from testing these concepts to establishing a formal incentive framework, with industry reports suggesting a potential target of 10 GW of capacity under this new component.
Economic Implications and Capital Costs
For businesses and farmers, the transition involves a trade-off between higher upfront costs and long-term income. Installing agrivoltaic systems currently requires about 30% more capital spending than standard ground-mounted solar parks due to the specialized elevated structures. However, the model offers a triple income potential for farmers: revenue from crop production, income from selling electricity to local distribution companies, and significant cost savings by reducing reliance on diesel-powered irrigation pumps.
For listed companies in the irrigation and renewable energy sectors, this policy could open a new market segment. However, the success of these business models will depend heavily on the government’s forthcoming subsidy structures and the standardization of contracts. Companies involved in this space will need to manage the complexity of site-specific designs, as the benefits of agrivoltaics are highly sensitive to the type of crop, local climate, and panel tilt.
Risks and Monitorables
While the policy aims to drive growth, investors should consider the operational risks. Unlike traditional solar parks, agrivoltaics require close coordination between energy developers and farmers. A poorly designed project could lead to reduced crop yields, negating the primary agricultural benefit. Furthermore, the industry is still in the early stages of creating standardized legal contracts to handle long-term usage rights and revenue sharing, which could create execution challenges in the near term.
Market participants are closely tracking the official policy launch for clarity on the quantum of incentives and the eligibility criteria for developers. The key factor to watch in the coming quarters will be how quickly companies can move from pilot projects to large-scale commercial execution under the new PM-KUSUM 2.0 guidelines.