How Farmers Can Earn a Monthly Income from Solar Power? A Complete Guide to PM-KUSUM Scheme Component A
As India moves forward towards clean and renewable energy, solar power is becoming an all-time high priority, especially in rural areas. Agrarians and rural landowners who had depended upon seasonal farming till now will, through schemes like PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan), have the golden leap to enter the shoes of renewable energy producers.
Begin by stating, launched by the Ministry of New & Renewable Energy (MNRE), the scheme intends to reduce farmers’ dependence upon conventional energy sources like diesel and grid electricity and increase the income of farmers. Its main key elements, ‘Component A’, aim to use unused or semi-used land to generate solar power, feeding it back into the grid and offering a long-term revenue model for rural areas.
At India’s leading solar company, Grun Power, we believe that we bring rural India and renewable energy adoption together. Through this guide, we will break down Component A in layman’s language, its eligibility, installation process, financial models and more.
Whether you’re a landowner looking to lease your plot or a bunch of farmers looking to generate new sources of income, this guide will help you understand how to tap into solar potential and secure a cleaner, brighter future for your land, your family and the planet.
What is KUSUM Component A?
Under the PM-KUSUM Scheme (launched in March 2019), Component A helps farmers, cooperatives and other qualified groups to install grid-connected solar power plants of 500kW – 2MW capacity. Either on fallow or barren land, or agricultural productive land, using stilt-mounted panels.
Eligible Beneficiaries
Who Can Apply?
- Individual Farmers
- Group of Farmers
- Water User Associations
- Farmer Producer Organizations (FPOs)
- Primary Agriculture Credit Societies (PACS)
- Community/ Cluster-based Irrigation Systems
- Private Developers (on Leased Farm Land)
Where Can You Install?
- Barren/ Uncultivated Land
- Marshy/ Pasture Land
- Agricultural Land
Sites should ideally be within 5 km of a substation, though locations near 11 kV feeders may be acceptable too.
Benefits of Component A
- Earn revenue by selling power via a 25‑year PPA with the local DISCOM at a tariff set by the State Regulatory Commission (SERC)
- Lease income for landowners if developers install the plant.
- No penalty for under‑production, i.e., no financial loss for lower generation.
- Supports dual use of land (solar plus agriculture) and helps meet India’s renewable targets
Industries Commonly Using Turnkey:
- Commercial Real Estate
- Cold Storage Units
- Data Centres
- Complete Solar Farm Setups
Financial Details
- No direct capital subsidy to farmers or developers.
- DISCOMs receive a Procurement-Based Incentive (PBI): ₹0.40 / kWh or ₹6.6 lakh per MW/year (whichever is less), for the first five years after commissioning
- Project Cost: Estimated ₹4 Crore per MW.
- Financing available from public and private banks (up to 70% of cost), with loan tenors up to 15 years, including a grace period.
Implementation Timeline & Process
| Step | Description |
|---|---|
| Project Identification | DISCOM Identifies Capacity near Substations/ Invites EOIs. |
| Selection & LOA | Successful Applicants Receive a Letter of Award |
| PPA Signing | Must Sign PPA within Two Months of LOA |
| Installation | Commission within 12 Months of LOA |
| Operation | Begin Power Generation & Earnings Under the PPA. |
Multiple REPPs are permitted only if connected to different substations.
Why Grun Power Supports Component A?
Our India’s leading solar company empowers rural landowners and farmers to become energy entrepreneurs. By enabling the installation of solar plants on underused land, we help generate sustainable income, reduce diesel dependence, and contribute to India’s solar goals. Our team supports from project evaluation through bank financing and coordination with DISCOMs.
Key Takeaways
- Component a supports decentralized solar power plants (500 kw–2 mw).
- Open to a wide range of beneficiaries, including farmers and cooperatives.
- Encourages dual use of land via stilt-mounted solar and farming.
- Provides reliable income via ppa and leasing, with no subsidy to beneficiaries.
- Discoms receive incentives; farmers can leverage loans or lease models.
- Ideal for long‑term sustainable income and clean‑energy adoption.
For step‑by‑step help with application, financing, or project planning under Component A, feel free to reach out to Grun Power’s advisors.