On solar pumps, coal fields, and India's hunt for oil and gas - Issue #6
The Big Picture
In March 2019, the Indian government launched a potentially transformative programme.
Called PM Kusum, it aimed to take solar pumps to India’s farming hinterland and wean farmers off diesel pumps.
The logic was impeccable. By 2016, diesel pumps irrigated a third of India’s gross cropped area. The scheme looked like its time had come, with diesel consumption at over 100 litres for paddy and 83-84 litres for wheat per acre.
For the government, as Economic Times (ET) reported last week, even 1 million solar pumps would translate into 9.4 billion fewer litres of diesel burnt over the lifespan of these pumps. At current prices, a farmer with two acres -- planting rice and then wheat – spends over Rs 35,000 on diesel alone. A large number in a country where the average annual income of a farmer stands at Rs 1.2 lakh. For them, solar pumps represent vital savings.
And so, the Indian government set ambitious targets for the scheme – by FY23, it wanted to install 2.75 million solar pumps across India.
Given this backdrop, one would expect PM Kusum to be flying. But, as Prashant Mukherjee reported last week, the scheme is struggling. By February 2022, no more than 0.35 million pumps had been sanctioned. Of these, just 82,000 have been installed.
What we have, consequently, is a cautionary case study on energy transition. A solar pump costs anywhere between ₹2.4 lakh to ₹4.5 lakh (~$3000-$5,800), says the ET report. The scheme and the state government pay 30% of the tab each, and the farmer pays the rest -- on a ₹2.4 lakh pump, that works out to ₹96,000 (~$1,230). Bank loans have been made available for farmers to help finance this investment.
This design is boilerplate and misses deeper nuances. Fearing payment delays, says ET, pump-makers are working only with states which have received the subsidy. All have not. In this time of rancorous politics and fraught federalism, one wonders which states got the subsidy and which didn’t. Ours is also a time of competitive populism and so, will opposition states stump up 30% on a programme that credits the prime minister? Indeed, of the three states with the biggest PM Kusum rollouts, two are run by the BJP- the party in power at the Centre.
As for farmers, the option of borrowing notwithstanding, Rs 96,000 is still a large sum of money. Given dropping returns from farming, they will run their own RoCE calculations. If they have to borrow Rs 100,000, are they better off investing in their farm and livestock, or helping a family member set up a non-farm business, or something else?
One wonders what happens next. Diesel prices are rising. Will that spur a belated embrace of solar pumps? Or will that add to farming households’ eroding financial dependence on cultivation?
PS: Like a clutch of other government schemes, PM Kusum is an anagram. It stands for “Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahaabhiyan”. Or the “Prime Minister Farmer Energy Security and Upliftment Great Campaign”.
PS: The Pareto Principle applies to Indian journalism -- 20% of topics get 80% of coverage – and so, most of India’s climate reporting focuses on emissions, EVs, what have you. Even large schemes like PM Kusum don’t get much attention. The ET report fills a large gap in our understanding.
Heatwaves continue, so does the power crunch
India’s scramble to source more coal continued.
People in Jharkhand complained of power cuts despite their state being a coal producer.
At an e-auction conducted by Mahanadi Coalfields for industrial users of coal – everyone other than thermal power projects -- the bid price for coal rose 800% over the notified price. According to Economic Times, prices are so high that units are “drawing expensive power from the exchange while nearly idling their captive power plants, consequently increasing power demand and tariffs even further”.
Against this backdrop, preparing for further coal shortfalls, India cut the domestic coal supply target to utilities – and told them to import more. NTPC said it would boost coal production from its captive mines by 86% this year. Coal India announced it would open a giant new mine this year. Siarmal, in Eastern Odisha, will produce as much as 50 million tons annually after five to seven years. In the meantime, for the first time since 2015, Coal India will import coal.
Just two years ago, the government had announced plans to accelerate domestic coal mining – and stop coal imports. That policy now lies in ruins. As The Wire commented, the reasons run deeper than just the atypically high power demand due to the heatwave – and need to be understood.
The good news? Monsoon winds have reached Kerala.
News of the Week
Coal India is not alone.
India's oilcos are doubling down on production as well. Not only are firms like GAIL and ONGC Videsh in talks with Shell to pick up the latter's stake in the Sakhalin-2 LNG plant, but ONGC is also planning to invest ₹31,000 crores to intensify oil exploration.
In Coal, the power ministry wants the deadline for Flue Gas Desulphurization to be extended yet again. As ET reported: "India had initially set a 2017 deadline for thermal power plants to install FGD units. That was later changed to varying deadlines for different regions, ending in 2022, and further extended last year to a period ending 2025." The power ministry now wants the deadline to be extended to 2027.
Last year in Glasgow, Prime Minister Narendra Modi had made an ambitious commitment to get half of India's energy from renewables by 2030 – and to hit net zero by 2070. The country, however, is yet to submit its plan for cutting greenhouse emissions.
As DISCOM dues towards power generators remain sky-high, the Centre is considering kicking the can down the road once again. The Power Ministry is mulling another scheme to help discoms liquidate their past dues. This time around, they are being told to pay off their dues in "easy instalments" and being given a one-time exemption from further late payment surcharges.
This inaction is a problem. Rating agency Moody's has warned that Heatwaves and worsening climate risks will drag down India's economic growth and credit scores
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Even as the crack between the government’s words and actions widens into a chasm, the market is leading India’s energy transition. Even as PM Kusum awaits lift-off, high petrol prices are boosting electric two-wheeler sales – with predictable costs for dealers and ancillary firms. No such jump, however, for electric cars. They are still too costly – and so, buyers are shifting to CNG. Gas continues to be cheaper than petrol/diesel despite the recent hikes in price.
India’s energy map – of suppliers and consumers -- is changing as well. Karnataka signed a deal with Renew, where the latter will invest ₹50,000 crores (~$82.8 million) in the state, setting up solar, wind and hybrid projects as well as battery storage and green hydrogen plants. Andhra Pradesh signed three deals adding up to ₹124,000 crores (~$205.18 million) with Adani Green Energy, Greenko and Aurobindo Realty and Infrastructure to set up solar, wind and hydel projects.
Other news. Hindustan Motors, the makers of India’s venerable Ambassador, is foraying into EVs. Even the Ambassador will be relaunched – as an EV. One cannot wait.
Climate Long Reads
Meet RMI, the little-known thinktank advising Niti Aayog on clean-tech.
Can India’s EV Ecosystem Become Truly Self-Reliant Without Being A Li-ion Cell Manufacturer?
Behind Reports of Fishers’ Demands for Euthanasia in Porbandar: Caste, Class, Religion, Livelihoods
Book of the Week
As things stand, Vaishnavi Rathore's report on the fisherfolks of Porbander touches on a larger question: how do natural resource conflicts play out in the third world? In Porbander, the factors assailing the fisherfolks extend beyond overfishing by trawlers feeding global supply chains and climate change to include local caste, class and communal dimensions as well as a communalised administration (Gujarat has been a Hindutva laboratory for long).
And so, the article draws ecologist Kartik Shanker’s
From Soup to SuperStar: the story of sea turtle conservation along the Indian coast
to mind. What you see here, again, is the complexity of biodiversity conservation in a country like India. Large ports come up (another speculative bubble, as it were) and threaten turtles’ nesting sites. Commercial trawlers come up and snare turtles in their drift-nets. The local administration lacks funds for patrolling boats that can stop trawlers from coming close ashore. The caste-class differences between those artisanal fisherfolks and those who own trawlers. Rival worldviews on conservation. Some wanting exclusive zones for turtles – which alienated fishing communities -- while others felt allowing them in was a better way to stave off trawlers. One could go on.
A longer review here.