Metering the Power Supply for Nothing

Nitin Bassi

An opinion piece in the Times of India ‘Measure free power to manage it: Build transparent subsidy regime and meter all electricity consumption in agriculture’, dated 29th April 2021 has called for metering of farm wells, direct transfer of electricity subsidy benefits to farmers, and installation of dedicated solar power plants for supply to agriculture users, as a strategy to manage energy and groundwater use in agriculture.

While the suggestion on metering of farm wells has been ongoing for a long, but without a fixed groundwater quota (or groundwater rights) and metered tariff, it will not make much difference in the way farmers make use of electricity and groundwater. Surely, the metering of farm wells will provide an estimate on the actual energy use by the farmers during an agriculture season and bring in more transparency and accountability, but it will not deter farmers from making excessive use of groundwater. Nor, will it provide them with any incentive to opt for low water consuming crops.

Perhaps the author of the opinion piece is unaware of the vast amount of empirical research on managing groundwater energy nexus in India. There were several pilot experiments and research studies attempted in India intending to find conditions that can lead to judicious use of energy and groundwater by the farmers. For instance, power supply feeder separation was tried in Gujarat and Andhra Pradesh, and a direct energy subsidy benefit transfer model was attempted in Punjab to incentivize farmers to conserve groundwater. However, such pilots did not produce the intended outcomes as shown by the analysis by the Institute for Resource Analysis and Policy. Several of its research articles were published in respected journals.

The studies showed that energy use increased ( and so is the groundwater use) after power supply feeder separation in Gujarat, while electricity theft by farmers in rural areas became rampant (Kumar and Perry, 2019). The pilot experiment in Punjab on direct benefit transfer was so flawed that instead of incentivizing farmers to use groundwater efficiently, the model actually benefitted the large farmers to allowing them to continue pumping more groundwater, while claiming the subsidy benefits (Kumar et al., 2021). Conversely, several of the research studies undertaken by the Institute for Resource Analysis and Policy (IRAP) demonstrated empirically that establishing a system of functional groundwater rights (with provision for trading) and a consumption-based pricing of electricity for agriculture use are the best options when it comes to addressing the groundwater energy nexus (Kumar, 2005; Kumar et al., 2011; Bassi, 2014).  

Further, several other studies have assessed the technical and economic suitability of solar irrigation pumps (SIP) and energy saving achieved through net metering (charges user for the energy that is utilized over transfer to the grid) (Bassi, 2015; Bassi, 2018; Sahasranaman et al., 2018; Sahasranaman et al., 2021). Such studies point out that the welfare benefit (generation of clean power in this case) from the adoption of solar irrigation pumps is too little in comparison to the private capital subsidy benefit offered on them. Till recently, the subsidy offered was about INR 100,000 per kWp solar irrigation pump. In fact, many solar irrigation pump adopters in Gujarat (a state which is promoted by some as a successful model for SIP) were found to be selling groundwater to the neighboring farmers (earning INR 10/kWh) rather than evacuating surplus solar power to the grid (power utility can provide a maximum of INR 7/kWh, even this is high considering the cost of producing electricity through conventional sources) as it provides them with much higher profit. Thus, solar pumps and net metering achieve little when it comes to saving groundwater.

Not so long ago, even metering of farm wells was seen by some as something impractical and having serious political ramifications. However, some states such as Andhra Pradesh, Gujarat, Punjab, West Bengal, and Uttarakhand have challenged such moribund argument and taken lead in the metering of farm wells. But, metering is the first step towards better management of farm power supply. It has been observed that metering along with metered tariff has led to the improvement in the quality of power supply for farm use, thus creating a win-win situation for both farmers and the power supply utilities. Nevertheless, there have been reservations on whether farmers would be able to afford electricity prices and still earn profit. Research has shown that not only such pricing structure is possible, it also makes them use electricity and groundwater more judiciously as they prefer crops that are less water-consuming or use water more efficiently for the existing crops to manage the input costs so that the net income does not reduce (refer Kumar, 2005; Kumar et al., 2011).

If the metered tariff system is combined with tradable property  rights in groundwater, it can allow farmers not only to make judicious use of groundwater but also allow them to earn revenue through the sale of their unutilized groundwater quota. One way of implementing this is through the pre-paid meters that come with a pre-defined energy quota which is also a proxy for the groundwater quota. Such a system of groundwater rights has been tried in the water scarce river basins of Australia, Spain, and South Africa and there is no reason why they won’t work in India. However, both political will and administrative interest are required to undertake such reforms that in the short run might look counterproductive to the politicians but can change the way energy and groundwater are used in Indian agriculture.

Farmers in India do not need a free or subsidized poor quality power supply. What they need is reliable and good quality electricity that can make their farming remunerative. The politics of freebies should soon become the story of the past. The idea of metering electricity in the agricultural sector is innocuous. Whereas ideas such as electricity supply rationing (through schemes like Gujarat’s Jyotigram Yojna) and direct benefit transfer (the way they are designed) will do more harm to groundwater and the electricity utility. If we want to make a difference in the way electricity and groundwater are used in agriculture, the establishment of tradable water rights and the adoption of pro-rata pricing of electricity are the ways forward. No doubt, the metering of farm wells is an essential component to achieve this.  

References

Bassi, N. (2014). Assessing potential of water rights and energy pricing in making groundwater use for irrigation sustainable in India. Water Policy, 16(3), 442-453.

Bassi, N. (2015). Irrigation and energy nexus: solar pumps are not viable. Economic and Political Weekly, 50(10), 63-66.

Bassi, N. (2018). Solarizing groundwater irrigation in India: a growing debate. International Journal of Water Resources Development, 34(1), 132-145.

Kumar, M. D. (2005). Impact of electricity prices and volumetric water allocation on energy and groundwater demand management: analysis from Western India. Energy Policy, 33(1), 39-51.

Kumar, M. D., & Perry, C. J. (2019). What can explain groundwater rejuvenation in Gujarat in recent years?. International Journal of Water Resources Development, 35(5), 891-906.

Kumar, M. D., Bassi, N., & Verma, M. S. (2021). Direct delivery of electricity subsidy to farmers in Punjab: will it help conserve groundwater?. International Journal of Water Resources Development, 1-16. https://doi.org/10.1080/07900627.2021.1899900

Kumar, M. D., Scott, C. A., & Singh, O. P. (2011). Inducing the shift from flat-rate or free agricultural power to metered supply: Implications for groundwater depletion and power sector viability in India. Journal of Hydrology, 409(1-2), 382-394.

Sahasranaman, M., Kumar, M. D., Bassi, N., Singh, M., & Ganguly, A. (2018). Solar irrigation cooperatives: creating the Frankenstein’s monster for India’s groundwater. Economic & Political Weekly, 53(21), 65-68.

Sahasranaman, M., Kumar, M. D., Verma, M. S., Perry, C. J., Bassi, N., & Sivamohan, M. V. K. (2021). Managing groundwater–energy nexus in India: what will solar pumps achieve? Economic & Political Weekly, 56(11), 22-25.

Nitin Bassi is a Principal Researcher with the Institute for Resource Analysis and Policy (IRAP). Views expressed in this article are personal.

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