PM-KUSUM Component A Gains Momentum as PPAs and Tariff Benchmarks Strengthen Project Viability

New Delhi | 15 January 2026 | 8:00 AM IST — India’s Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PM-KUSUM), particularly Component A, is witnessing renewed momentum as state utilities accelerate Power Purchase Agreement (PPA) execution and electricity regulators reaffirm benchmark tariffs for decentralized solar power plants.

Component A focuses on setting up grid-connected decentralized solar power plants ranging from 500 kW to 2 MW, primarily on barren or agricultural land (including stilt-mounted systems), enabling farmers and rural landowners to earn stable income through long-term electricity sales to DISCOMs.

Growing Traction in PPA Signings

Several states have reported increased activity in PPA execution under PM-KUSUM Component A. In Gujarat, multiple decentralized solar projects have moved into execution phase following the signing of long-term PPAs with state distribution companies.

Recent project allocations and agreements indicate rising confidence among developers, EPC companies, and farmer groups, supported by improved grid connectivity norms and clearer procurement frameworks at the state level.

These PPAs are typically structured for a tenure of 25 years, offering predictable revenue streams that make Component A projects bankable for both farmers and private investors.

Latest Official Tariff Benchmarks

While tariffs under PM-KUSUM Component A may vary across states and procurement modes, electricity regulators have issued benchmark or ceiling tariffs to guide DISCOM procurement:

• Gujarat: Approved benchmark tariff of approximately ₹2.95 per kWh for decentralized solar projects under Component A.
• Rajasthan: Benchmark tariff of around ₹3.04 per kWh, continuing as a reference for decentralized solar procurement.

Across recent tenders, discovered tariffs generally range between ₹2.75 to ₹3.10 per kWh, depending on location, substation proximity, and evacuation infrastructure.

Eligibility and Project Structure

Eligible participants under PM-KUSUM Component A include:

• Individual farmers and landowners
• Farmer Producer Organizations (FPOs)
• Cooperatives and panchayats
• Private developers through lease or revenue-sharing models

Projects are required to be located near substations to reduce grid costs. MNRE-issued model PPAs define commercial, technical, and payment security provisions.

Impact on Farmers and Rural Economy

Component A is emerging as a long-term income diversification solution for farmers, allowing land monetization without disrupting agriculture, especially through elevated (stilt-mounted) solar structures.

For DISCOMs, decentralized solar helps reduce transmission losses and improves daytime agricultural power availability.

Outlook: Toward PM-KUSUM 2.0

As the current PM-KUSUM phase progresses toward its March 2026 timeline, policymakers are evaluating enhancements under a proposed PM-KUSUM 2.0, with greater emphasis on feeder-level solarisation and decentralized generation.

Experts believe that faster PPA execution, consistent tariff visibility, and streamlined approvals are key to achieving the 10 GW Component A target.

Published by SolSetu | Author: Girish