IV. ECONOMIC CASH FLOW ANALYSIS Farmers’ and developers’ motivation to solarize will depend largely on expected financial returns. At a minimum, the method of solarization must meet their cost of capital (interest on debt and acceptable return on equity) in order to be considered viable. The following section details the estimated solar generation expected from solar feeders and solar pumps, and the financial value offered to the solar project developers and farmers who would need to invest in solarization. In all cases, value was determined via discounted cashflow analysis that considered capital and operating costs, revenues, and cost savings. Additionally, to evaluate solar pumps’ and solar feeders’ potential to relieve state and Discom financial burdens, the value of each to Discoms and GoR was also determined via discounted cashflow analysis.
KUSUM A Generation and Sizing Based on modeling by the research team, as currently scoped in the scheme’s guidelines, KUSUM A generates less than half the energy needed for irrigation. The amount of solar generation that is used to meet agricultural load is important, given that the benefits of KUSUM rely, in part, on the co-location of solar generation and agricultural load leading to reduced transmission and distribution losses. Based on the KUSUM A array sizes tendered for pump use, Figure 4 shows the solar electricity generated as well as the residual grid electricity that farmers need to power their pumps for a range of four, six, and eight midday hours. Across all Discoms, even the four-hour irrigation scenarios show that KUSUM A generation (blue bars) meets less than half of pump electricity demand, indicating that under the scheme as currently specified there is relatively low solarization of agricultural load. The grey bars in Figure 4 show the total PV generated in each of the Discoms, which imply that not all PV that is generated goes to pumps given the difference between the blue bars (PV used by pumps) and the grey bar. This may be an artefact partially of the assumed mid-day operating hours for the pumps.
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