PM-KUSUM Component-A (2026): The Ultimate Guide to Decentralized Solar Power Plants for Farmers, FPOs & Rural Entrepreneurs
1) Introduction: Why Component-A is a Game-Changer for Indian Agriculture
India’s farmers face three structural challenges: unreliable electricity, rising diesel costs, and unstable farm income. PM-KUSUM Component-A solves all three by turning farmland into a revenue-generating solar power asset. Under this component, farmers, FPOs, cooperatives, panchayats, and rural entrepreneurs can install 500 kW to 2 MW grid-connected solar plants on their land and sell electricity to the DISCOM under a long-term Power Purchase Agreement (PPA).
Unlike rooftop or pump-level schemes, Component-A is utility-scale, decentralized, and income-oriented. It is designed for barren land, fallow fields, or agrivoltaic (stilt-mounted) farms where crops and panels coexist. For 2026 and beyond, it is one of the most powerful rural solar business models in India.
2) What Exactly Is PM-KUSUM Component-A?
Component-A enables decentralized ground-mounted or stilt-mounted grid-connected solar power plants in the 500 kW to 2 MW range. These plants are connected to the nearest substation or feeder and supply power to the grid. The DISCOM purchases this power at a pre-agreed tariff under a long-term PPA.
Who can apply?
- Individual farmers and landowners
- Farmer Producer Organizations (FPOs)
- Cooperatives and water user associations
- Panchayats and local bodies
- Rural entrepreneurs (often in partnership with farmers)
Where can plants be installed?
- Barren or uncultivable land
- Fallow agricultural land
- Agrivoltaic (stilt) structures over active farmland
3) Why Governments and DISCOMs Love Component-A
Component-A is not just farmer-friendly; it is grid-friendly.
- Local generation near load centers reduces transmission losses.
- Daytime solar supports agricultural feeders and reduces peak-hour strain.
- DISCOMs get predictable, contracted renewable power without building large distant plants.
- States move closer to their Renewable Purchase Obligation (RPO) targets.
4) Plant Sizes, Land Requirements & Agrivoltaics
Capacity: 500 kW to 2 MW per project (states may cluster multiple projects).
Land requirement (indicative):
- Ground-mounted: ~4–5 acres per MW
- Stilt-mounted agrivoltaic: ~5–6 acres per MW (allows farming underneath)
Agrivoltaic advantage:
Panels are raised on GI or steel structures; sunlight filters through. Farmers can grow fodder, vegetables, pulses, or shade-tolerant crops, earning two incomes from the same land.
5) Subsidy, Incentives & Financing (How Projects Become Bankable)
While exact numbers vary by state and tender, Component-A typically combines Central Financial Assistance (CFA), state incentives, and PPA-backed bank loans. Banks are comfortable financing Component-A because the DISCOM PPA guarantees a revenue stream.
6) How the Business Model Works
- You install a 1 MW (or 500 kW–2 MW) solar plant on your land.
- The plant connects to the local grid.
- The DISCOM signs a PPA to buy your electricity for 20–25 years.
- You receive monthly payments based on energy exported.
- After loan repayment, most of the revenue becomes pure profit.
7) Deep ROI & Payback Analysis (Real-World Numbers)
Example: 1 MW Component-A Solar Plant
Assumptions:
- Capacity: 1 MW
- CUF: 18%–20%
- Annual generation: 15.77 to 17.52 lakh units
- Tariff: ₹2.8 to ₹3.5 per unit
- CAPEX: ₹3.6 to ₹4.6 crore per MW
- O&M: 1.5% of CAPEX per year
- Insurance: 0.2% of CAPEX per year
Annual Revenue:
- 18% CUF × ₹3.0 = ₹47.3 lakh
- 20% CUF × ₹3.5 = ₹61.3 lakh
Annual Operating Cost (₹4.0 cr CAPEX):
- O&M: ₹6.0 lakh
- Insurance: ₹0.8 lakh
- Total: ₹6.8 lakh
Net Cash:
- Conservative: ₹40.5 lakh
- Better case: ₹54.5 lakh
Simple Payback:
- ₹4.0 cr / ₹40.5L ≈ 9.9 years
- ₹4.0 cr / ₹54.5L ≈ 7.3 years
8) Step-by-Step: Land → Grid → PPA → Commissioning
Step 1: Select Eligible Land
Prefer barren or fallow land. If using farmland, plan stilt agrivoltaic structures. Keep Khasra/Khatauni and land documents ready.
Step 2: Check Grid Feasibility
Distance to substation or feeder matters.
Step 3: Register on the State Portal
Select PM-KUSUM → Component-A and upload documents.
Step 4: Technical Screening / LOA
Authorities verify grid capacity and land eligibility.
Step 5: Sign the PPA with DISCOM
This defines tariff, tenure, metering, and payment cycle.
Step 6: Arrange Financing
Self-funded or PPA-backed bank loan.
Step 7: EPC, Metering & Commissioning
Installation, grid synchronization, and COD.
Step 8: Monthly Billing
Units exported × tariff = monthly income.
9) State-Wise Registration Guidance (Including Uttar Pradesh)
Each state implements PM-KUSUM through its own agency.
- Uttar Pradesh: Implemented by UPNEDA
- Rajasthan: RREC portal
- Telangana: TGREDCO
- Maharashtra: MEDA
- Other states via their renewable agencies
Always choose Component-A during registration.
10) Farmer & FPO Use-Cases
Use-Case 1: Barren Land to Monthly Income
A farmer with 6 acres near a feeder installs a 1 MW plant. Income ranges from ₹40–55 lakh per year. Land value increases and irrigation improves due to better feeder support.
Use-Case 2: FPO Aggregation Model
10–20 farmers pool land through an FPO. The FPO signs the PPA and distributes revenue or pays lease to member farmers.
Use-Case 3: Agrivoltaic Farming
Vegetables, fodder, or pulses grow under raised panels, generating two incomes from the same land parcel.
Use-Case 4: Entrepreneur + Farmer Partnership
An entrepreneur invests and manages EPC while the farmer leases land and receives a revenue share.
11) Component-A vs Other PM-KUSUM Components
| Feature | Component-A | Component-B | Component-C |
|---|---|---|---|
| What | 500 kW–2 MW solar plants | Standalone solar pumps | Solarise grid pumps |
| Income | Power sales to DISCOM | Diesel savings | Savings + export |
| Best For | Landowners, FPOs | Small farmers | Grid pump owners |
| Scale | Utility scale | Individual | Pump clusters |
12) Risks & How to Mitigate Them
- Grid delays – choose land near substations
- Payment delays – ensure strong PPA clauses
- O&M issues – sign AMC with experienced EPCs
- Policy risk – lock tariffs in PPA
13) Why 2026 Is the Right Time
India is accelerating renewable targets and states are issuing Component-A tenders. Early landowners secure better grid locations, stronger PPAs, and higher project value.
14) Frequently Asked Questions
What is PM-KUSUM Component-A?
A scheme to set up 500 kW to 2 MW decentralized grid-connected solar plants on farmland and sell power to DISCOMs.
Can agricultural land be used?
Yes, especially with stilt or agrivoltaic structures.
How much income can I earn?
Typically ₹40–60 lakh per MW per year depending on CUF and tariff.
Do I need a PPA?
Yes, a DISCOM PPA is mandatory.
Is bank finance available?
Yes, Component-A projects are financed against the PPA.
What size plant should I choose?
500 kW for small landowners, 1 MW most common, up to 2 MW where feasible.
How long does approval take?
Usually 6–12 months depending on state and grid readiness.
Can multiple farmers apply together?
Yes, through FPOs, cooperatives, or joint proposals.
Is agrivoltaic allowed?
Yes, it is encouraged.
How long does the plant last?
About 25 years with proper maintenance.
15) Final Thoughts
PM-KUSUM Component-A is one of India’s most powerful farmer-centric renewable energy models. It converts underused land into a long-term income-generating solar asset, strengthens rural grids, and drives India’s clean energy future.
If you have land and grid access, Component-A can be your gateway to a 25-year solar annuity.
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