21 August 2015: A report from the Sustainable Energy for All (SE4All) initiative has proposed a scheme that could improve the cost-effectiveness of supplying power to agriculture in India. SE4All proposes incentivizing farmers to use electricity and groundwater more efficiently by letting them keep the benefits of their energy savings.

Noting that the Indian Government provides unmetered power supply for irrigation, the report, titled ‘Direct Delivery of Power Subsidy to Agriculture in India,’ points to the unintended consequences of this subsidy: groundwater depletion, poor farm productivity, deteriorating electricity services, diversion of power for non-farm use and bankrupt power utilities. The proposed scheme intends to boost the financial performance of utilities, allowing them to invest in better energy services and reduce farmers’ production risks.

The four key components of the proposal are: the segregation of electrical feeders for farmlands and villages, thus improving power supply for rural residential and commercial customers and better matching power to agricultural needs; a “minimum energy support” (MES) or annual electricity allocation based on land holding that allows the farmer to bank electricity savings at the regulated tariff; use of cost-effective smart metering technology, letting farmers control their power use and pump sets remotely by mobile phone; and performance-based incentives for power utility employees.

The scheme gives farmers a choice of the current system of limited hours of free or subsidized power supply, or a new system that denominates the subsidy in quantity of electricity used instead of hours of supply. The latter would also provide longer, more convenient hours at the same rate. [SE4All Press Release] [Publication: Direct Delivery of Power Subsidy to Agriculture in India]