PM KUSUM 2.0: Should You Build a Solar Plant, Lease Land or Earn Rent from Your Farm?
Updated: 23 October 2026 Can you install a solar power plant on your agricultural land and sell electricity? Can a developer take farmland on lease? And if you do not want to invest in a plant, can you earn rental income by leasing your land? These are three different opportunities—and each has different investment requirements, risks and returns. PM-KUSUM 2.0 is the proposed next phase of India’s agricultural solar programme, with an announced focus on agrivoltaics: combining farming and solar generation on the same land. However, a policy announcement does not establish final subsidy eligibility, electricity tariffs or an open application window. For farmers and developers, the practical starting point is to assess the land, grid connectivity, available procurement opportunity and financial viability before committing money. What Is PM-KUSUM 2.0? Latest Official Position PM-KUSUM stands for Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan. The programme has supported decentralised renewable power plants, standalone solar irrigation pumps and solarisation of grid-connected agricultural pumps, including feeder-level solarisation. At the Agrivoltaics World Conference on 21 October 2026, the government announced that the next phase of PM-KUSUM would include a major agrivoltaics programme. It also acknowledged that elevated and tilted structures could make agrivoltaic installations approximately 25–30% more expensive than conventional ground-mounted plants, and stated its intention to help bridge that cost gap. Official PIB announcement. What remains important: the official material reviewed for this article does not establish a final nationwide PM-KUSUM 2.0 subsidy percentage, universal tariff, application deadline or assured return. Consequently: Do not treat a proposed incentive as an approved subsidy. Do not assume older Component-A conditions automatically become PM-KUSUM 2.0 rules. Verify the applicable notification and state procurement documents before investing. Three Ways Farmers and Developers Can Participate Model Who invests in the solar plant? Who receives electricity-sale income? How the landowner benefits Farmer develops a plant on owned land Farmer, individually or through an eligible structure Project owner Operating cash flow after expenses and financing Developer installs a plant on leased land Developer/project company Developer/project company Agreed land rent Agrivoltaics with defined farming rights Depends on the project arrangement Project owner Rent or project income, plus farming income where contractually retained and technically feasible The earlier PM-KUSUM Component-A framework allowed farmers to develop projects or lease land to developers on mutually agreed terms. Rajasthan’s official FAQ describes plants generally ranging from 500 kW to 2 MW and a 25-year power purchase agreement from commercial operation. These are references to the earlier framework, not confirmed universal conditions for the next phase. Rajasthan official PM-KUSUM FAQs. 1. Farmer-Owned Solar Plant This model suits a farmer or farmer group that can arrange capital, obtain finance and manage a long-term power-generation business. Potential benefits include: Retaining the project’s electricity-sale income. Using suitable owned land without paying rent to another landowner. Building an income stream alongside other activities. However, ownership also means responsibility for construction, loan repayments, maintenance, insurance, generation performance and payment collection. Owning land reduces one expense; it does not make the solar plant free or risk-free. 2. Developer Taking Land on Lease A developer can secure suitable land without purchasing it outright, subject to the applicable project and land-use requirements. The developer must assess: Whether a valid power-procurement opportunity exists. Available evacuation capacity and connection costs. Lease duration, rent escalation and lender acceptability. Construction costs, financing and operating expenses. Whether the expected tariff supports the complete project cost. Cheap land can become an expensive project if it requires a long evacuation line, difficult right-of-way arrangements or extensive civil work. 3. Farmer Leasing Land to a Solar Developer A landowner may prefer rental income over investing several crores in a solar plant. This can reduce exposure to plant-construction and electricity-price risks. However, the farmer remains exposed to the developer’s ability to pay, the quality of the lease and the long-term condition of the land. A promise of rent is only as reliable as the agreement, payment security and counterparty behind it. Is There a Guaranteed PM-KUSUM 2.0 Subsidy? A fixed subsidy should not be assumed until the applicable rules are notified and the project qualifies. There is also an important distinction between the earlier scheme components: Component A: the government’s March 2026 statement specifies no Central Financial Assistance for the plant under this component; a procurement-based incentive was provided to DISCOMs. Solar pumps and individual pump solarisation: separate assistance provisions applied. Feeder-level solarisation: had a different assistance framework. A subsidy available for a solar pump cannot automatically be applied to a 1 MW power plant. Official component-wise financial assistance. Likewise, a statement about bridging an agrivoltaic project’s additional cost is not the same as an approved 25% subsidy on the entire project. The financial examples below therefore assume zero subsidy. How Much Land Is Required for a 1 MW Solar Plant? There is no single acreage figure that works for every project. For the calculations below, we assume five acres for an illustrative 1 MW conventional solar project. This is a modelling assumption, not an official eligibility requirement or a design commitment. Actual requirements depend on: Installed DC capacity and permitted AC export capacity. Module efficiency, orientation and row spacing. Terrain, drainage, access roads and setbacks. Transformer, inverter and evacuation arrangements. Whether continued cultivation and machinery movement are required. Agrivoltaics needs a separate layout assessment. A design that leaves sufficient sunlight and access for crops may require different spacing, structural height and land area. In Rajasthan, record land area in verified acres, hectares or square metres. Do not rely on an assumed bigha conversion. 1 MW Solar Plant Cost, Income and Payback: An Illustrative Calculation The following example explains the economics. It is not an EPC quotation, bank sanction or notified PM-KUSUM 2.0 tariff. Base-Case Assumptions Input Assumption Project size 1 MW, with final AC/DC configuration to be engineered Initial project investment ₹3.50 crore Land purchase cost Excluded Land used in lease calculation 5 acres First-year electricity sold at the billing meter 17.50 lakh units Electricity-sale tariff ₹3.30 per unit Annual operating expenses excluding land rent ₹7.00 lakh Annual land rent ₹35,000 per acre Total first-year land rent ₹1.75 lakh Subsidy Nil The investment assumption includes a provisional allowance for EPC, ordinary civil works, connection costs and development expenses. A real estimate must separately price taxes, actual evacuation works, financing during construction, contingencies, bank guarantees and working capital. The generation assumption must be replaced by a site-specific assessment of billable electricity after losses, availability and expected grid restrictions. Annual Electricity Revenue 17,50,000 units × ₹3.30 = ₹57,75,000 That is ₹57.75 lakh in first-year gross revenue. It is not net profit. Operating Cash Flow Before Finance and Tax Item First-year amount Electricity revenue ₹57.75 lakh Operating expenses excluding rent −₹7.00 lakh Land rent −₹1.75 lakh Operating cash flow before finance and tax ₹49.00 lakh Simple Project Payback ₹350 lakh ÷ ₹49 lakh = approximately 7.1 years This is a simplified, unlevered payback calculation using first-year cash flow. It assumes that cash flow remains constant. A complete model must account for module degradation, expense escalation, inverter replacement, taxes, payment delays, downtime and the time value of money. Consequently, 7.1 years is an illustration—not a promised recovery period. What Changes When the Farmer Owns the Land? If the same project pays no external land rent: ₹57.75 lakh revenue − ₹7 lakh operating expenses = ₹50.75 lakh Simplified payback becomes: ₹350 lakh ÷ ₹50.75 lakh = approximately 6.9 years However, the land still has an economic cost. The farmer should compare the solar project with the net agricultural income or lease income forgone. A comparison that assigns zero value to owned land can overstate the benefit of developing the plant. How Much Cash Remains After Paying the Bank? Consider the leased-land project financed as follows: Financing assumption Amount Project cost ₹350 lakh Debt: 70% ₹245 lakh Equity: 30% ₹105 lakh Interest rate 9.5% annually Repayment period 15 years Repayment method Equal annual instalments; no moratorium Under these assumptions, annual principal-plus-interest repayment is approximately ₹31.30 lakh. Therefore: ₹49 lakh operating cash flow − ₹31.30 lakh debt service = ₹17.70 lakh This leaves approximately ₹17.70 lakh in the first year before tax, reserve funding, additional capital expenditure and working-capital changes. It does not mean ₹57.75 lakh is available to the investor. The simplified debt-service coverage ratio is: ₹49 lakh ÷ ₹31.30 lakh = 1.57 Banks may calculate cash available for debt service differently and impose their own lending conditions. Actual repayment frequency, interest resets and moratorium terms will also change the result. How Sensitive Are Returns to Tariff and Generation? Using the same ₹3.50 crore investment and ₹8.75 lakh first-year operating expenses, including rent: Scenario Electricity sold Tariff Gross revenue Cash before finance and tax Simple payback Lower-tariff case 17.50 lakh units ₹3.00 ₹52.50 lakh ₹43.75 lakh 8.0 years Base case 17.50 lakh units ₹3.30 ₹57.75 lakh ₹49.00 lakh 7.1 years Higher-tariff case 17.50 lakh units ₹3.50 ₹61.25 lakh ₹52.50 lakh 6.7 years Combined downside 15.00 lakh units ₹3.00 ₹45.00 lakh ₹36.25 lakh 9.7 years In the combined downside case, the same ₹31.30 lakh annual loan repayment leaves only about ₹4.95 lakh before tax and other adjustments. The simplified debt-service coverage falls to approximately 1.16. This demonstrates why a project should be tested under lower generation and less favourable commercial assumptions before the land is committed or equipment ordered. Payment delays create another challenge: at base-case revenue, three months of unpaid electricity bills represent approximately ₹14.44 lakh of receivables, even though loan repayments and operating costs may continue. How Much Can a Farmer Earn by Leasing Land for Solar? There is no universal PM-KUSUM 2.0 land-rent rate established by the sources reviewed for this article. Rent depends on location, grid connectivity, land quality, competing uses, procurement terms and negotiation. Example: Five Acres Leased at ₹35,000 per Acre Annually Item Calculation Land area 5 acres Assumed annual rent per acre ₹35,000 First-year annual rent ₹1,75,000 Monthly equivalent Approximately ₹14,583 Assumed annual escalation 3% Illustrative lease duration 25 years With a 3% increase every year, total nominal rent over 25 years would be approximately ₹63.80 lakh, assuming every payment is made. Without escalation, total rent would be ₹43.75 lakh. These totals are not present values or tax-free profit. They exclude deductions, transaction costs and the value of alternative land uses. The monthly equivalent also does not mean the agreement pays rent monthly. For an existing landowner making no plant investment, a solar-project payback calculation is usually the wrong measure. The better comparison is: Reliable net rent versus forgone net farming income, adjusted for restrictions, inflation and risk. Can Farmers Earn from Both Crops and Solar? Agrivoltaics is intended to enable agricultural activity and solar generation on the same site. However, two income streams are not automatic. The arrangement must establish: Who has the right to cultivate. Who pays for seeds, labour, irrigation and crop protection. Who receives crop-sale income. Who receives electricity revenue. Whether the farmer also receives rent. Who bears crop damage or yield-reduction risk. Crop suitability, shading, equipment access and drainage must be evaluated together. A solar layout should not be labelled agrivoltaic merely because a small strip of land remains unused. Illustrative Agrivoltaic Cost Comparison Suppose the conventional project’s ₹3.50 crore cost increases by an assumed 25%: ₹3.50 crore × 1.25 = ₹4.375 crore If operating cash flow stayed at ₹49 lakh, simplified payback would be: ₹437.5 lakh ÷ ₹49 lakh = approximately 8.9 years This isolates the effect of higher capital cost. It is not an agrivoltaic feasibility estimate: generation, acreage, operating costs and crop income may all change. Do not add crop income to the developer’s return unless the developer actually receives it under the agreement. What Should a Farmer Check Before Signing a Solar Land Lease? Have the proposed arrangement reviewed for the specific land and state. The agreement should clearly address: Land and ownership: surveyed boundaries, title, co-owners, existing mortgages and access rights. Rent commencement: whether payment starts at possession, construction or commissioning. Development deadline: what happens if the developer holds the land but never builds. Escalation and payment security: increase formula, due dates, security deposit or other protection, and default remedies. Farming rights: permitted crops, access, water arrangements and crop-damage responsibilities. Financing and transfer: assignment, lender rights and limits on use of the landowner’s title. Exit and restoration: equipment removal, soil restoration and funding responsibility. A farmer should not be left waiting indefinitely for rent while the developer waits for connectivity, finance or a PPA. What Should Developers Check Before Taking Land on Lease? Start with the commercial opportunity and electrical infrastructure, then finalise land commitments. A developer’s assessment should cover: The current tender or procurement route and eligibility. Available substation capacity and written connectivity requirements. Evacuation-line route, right of way and responsibility for upgrades. PPA tariff, billing terms, payment security and treatment of curtailed generation. Lease costs and escalation over the entire operating period. EPC scope, performance obligations, warranties and applicable equipment requirements. Debt terms and cash flow under downside scenarios. Under the earlier central Component-A guidelines, projects were preferably located within a five-kilometre radius of substations. Proximity was intended to reduce connection costs and losses; it did not itself guarantee available capacity or project approval. Earlier MNRE guidelines. For EPC contractors, clear payment milestones and a fully defined evacuation scope are also essential. A commercially weak project can become a contractor-payment problem even when the equipment performs correctly. How Can Farmers and Developers Prepare for PM-KUSUM 2.0? Prepare the project information now, while checking the latest official notifications before applying. A useful initial information pack includes: Village, tehsil, district and GPS location. Verified land area, ownership records and co-owner details. Current cultivation and net agricultural income. Nearest substation and approximate distance. Road access, drainage and water availability. Preferred model: own investment, developer lease or agrivoltaics. Available equity or expected lease rent. Check the official PM-KUSUM portal and the relevant state implementing agency or DISCOM for applicable opportunities. A solar-pump application, a land-registration expression of interest and a power-project allocation are different things. Registration alone should not be treated as a subsidy sanction, connectivity approval or PPA. Frequently Asked Questions Is PM-KUSUM 2.0 open for applications? The official announcements reviewed establish the proposed next-phase direction. They do not establish a universal application window. Check the applicable state notice and final guidelines. Can I give my land on lease instead of investing in a solar plant? Land leasing was permitted under the earlier Component-A framework. For a new project, verify the applicable procurement conditions and use a properly reviewed agreement. Is ₹35,000 per acre the government-fixed rent? No. It is an assumption used in this article’s example, not a government rate or guaranteed market offer. How much does a 1 MW solar plant earn? In this article’s example, 17.50 lakh billable units at ₹3.30 per unit generate ₹57.75 lakh annually. After assumed operating costs and rent, ₹49 lakh remains before finance and tax. Actual results depend on the project. Is solar-plant payback guaranteed within seven years? No. Seven years is approximately the simplified result under one set of assumptions. Higher costs, lower output, debt terms and payment delays can materially alter recovery. Should I develop my land or lease it? Development offers greater participation in project earnings but requires capital and exposes you to operating and financing risks. Leasing generally requires less capital from the landowner, but payment security and land protection remain essential. Planning a Solar Plant or Offering Land on Lease? Wattscore can help you assess the technical and commercial questions behind a proposed solar project, including site suitability, project development, EPC scope and financial assumptions. Whether you are a farmer considering your own plant, a developer seeking suitable land or a landowner exploring lease income, share your location, land area, nearest substation and preferred participation model. Discuss your solar project or land-leasing requirement with Wattscore. Financial figures are illustrative assumptions, not quotations, approved tariffs, financing offers or guaranteed returns. Scheme eligibility, incentives, land requirements and procurement conditions must be checked against the applicable official documents. Obtain a site-specific technical, financial and legal assessment before committing funds or land.
Updated: 23 October 2026 Can you install a solar power plant on your agricultural land and sell electricity? Can a developer take farmland on lease? And if you do not want to invest in a plant, can you earn rental income by leasing your land? These are three different opportunities—and each has different investment requirements, risks and returns. PM-KUSUM 2.0 is the proposed next phase of India’s agricultural solar programme, with an announced focus on agrivoltaics: combining farming and solar generation on the same land. However, a policy announcement does not establish final subsidy eligibility, electricity tariffs or an open application window. For farmers and developers, the practical starting point is to assess the land, grid connectivity, available procurement opportunity and financial viability before committing money. What Is PM-KUSUM 2.0? Latest Official Position PM-KUSUM stands for Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyaan. The programme has supported decentralised renewable power plants, standalone solar irrigation pumps and solarisation of grid-connected agricultural pumps, including feeder-level solarisation. At the Agrivoltaics World Conference on 21 October 2026, the government announced that the next phase of PM-KUSUM would include a major agrivoltaics programme. It also acknowledged that elevated and tilted structures could make agrivoltaic installations approximately 25–30% more expensive than conventional ground-mounted plants, and stated its intention to help bridge that cost gap. Official PIB announcement. What remains important: the official material reviewed for this article does not establish a final nationwide PM-KUSUM 2.0 subsidy percentage, universal tariff, application deadline or assured return. Consequently: Do not treat a proposed incentive as an approved subsidy. Do not assume older Component-A conditions automatically become PM-KUSUM 2.0 rules. Verify the applicable notification and state procurement documents before investing. Three Ways Farmers and Developers Can Participate Model Who invests in the solar plant? Who receives electricity-sale income? How the landowner benefits Farmer develops a plant on owned land Farmer, individually or through an eligible structure Project owner Operating cash flow after expenses and financing Developer installs a plant on leased land Developer/project company Developer/project company Agreed land rent Agrivoltaics with defined farming rights Depends on the project arrangement Project owner Rent or project income, plus farming income where contractually retained and technically feasible The earlier PM-KUSUM Component-A framework allowed farmers to develop projects or lease land to developers on mutually agreed terms. Rajasthan’s official FAQ describes plants generally ranging from 500 kW to 2 MW and a 25-year power purchase agreement from commercial operation. These are references to the earlier framework, not confirmed universal conditions for the next phase. Rajasthan official PM-KUSUM FAQs. 1. Farmer-Owned Solar Plant This model suits a farmer or farmer group that can arrange capital, obtain finance and manage a long-term power-generation business. Potential benefits include: Retaining the project’s electricity-sale income. Using suitable owned land without paying rent to another landowner. Building an income stream alongside other activities. However, ownership also means responsibility for construction, loan repayments, maintenance, insurance, generation performance and payment collection. Owning land reduces one expense; it does not make the solar plant free or risk-free. 2. Developer Taking Land on Lease A developer can secure suitable land without purchasing it outright, subject to the applicable project and land-use requirements. The developer must assess: Whether a valid power-procurement opportunity exists. Available evacuation capacity and connection costs. Lease duration, rent escalation and lender acceptability. Construction costs, financing and operating expenses. Whether the expected tariff supports the complete project cost. Cheap land can become an expensive project if it requires a long evacuation line, difficult right-of-way arrangements or extensive civil work. 3. Farmer Leasing Land to a Solar Developer A landowner may prefer rental income over investing several crores in a solar plant. This can reduce exposure to plant-construction and electricity-price risks. However, the farmer remains exposed to the developer’s ability to pay, the quality of the lease and the long-term condition of the land. A promise of rent is only as reliable as the agreement, payment security and counterparty behind it. Is There a Guaranteed PM-KUSUM 2.0 Subsidy? A fixed subsidy should not be assumed until the applicable rules are notified and the project qualifies. There is also an important distinction between the earlier scheme components: Component A: the government’s March 2026 statement specifies no Central Financial Assistance for the plant under this component; a procurement-based incentive was provided to DISCOMs. Solar pumps and individual pump solarisation: separate assistance provisions applied. Feeder-level solarisation: had a different assistance framework. A subsidy available for a solar pump cannot automatically be applied to a 1 MW power plant. Official component-wise financial assistance. Likewise, a statement about bridging an agrivoltaic project’s additional cost is not the same as an approved 25% subsidy on the entire project. The financial examples below therefore assume zero subsidy. How Much Land Is Required for a 1 MW Solar Plant? There is no single acreage figure that works for every project. For the calculations below, we assume five acres for an illustrative 1 MW conventional solar project. This is a modelling assumption, not an official eligibility requirement or a design commitment. Actual requirements depend on: Installed DC capacity and permitted AC export capacity. Module efficiency, orientation and row spacing. Terrain, drainage, access roads and setbacks. Transformer, inverter and evacuation arrangements. Whether continued cultivation and machinery movement are required. Agrivoltaics needs a separate layout assessment. A design that leaves sufficient sunlight and access for crops may require different spacing, structural height and land area. In Rajasthan, record land area in verified acres, hectares or square metres. Do not rely on an assumed bigha conversion. 1 MW Solar Plant Cost, Income and Payback: An Illustrative Calculation The following example explains the economics. It is not an EPC quotation, bank sanction or notified PM-KUSUM 2.0 tariff. Base-Case Assumptions Input Assumption Project size 1 MW, with final AC/DC configuration to be engineered Initial project investment ₹3.50 crore Land purchase cost Excluded Land used in lease calculation 5 acres First-year electricity sold at the billing meter 17.50 lakh units Electricity-sale tariff ₹3.30 per unit Annual operating expenses excluding land rent ₹7.00 lakh Annual land rent ₹35,000 per acre Total first-year land rent ₹1.75 lakh Subsidy Nil The investment assumption includes a provisional allowance for EPC, ordinary civil works, connection costs and development expenses. A real estimate must separately price taxes, actual evacuation works, financing during construction, contingencies, bank guarantees and working capital. The generation assumption must be replaced by a site-specific assessment of billable electricity after losses, availability and expected grid restrictions. Annual Electricity Revenue 17,50,000 units × ₹3.30 = ₹57,75,000 That is ₹57.75 lakh in first-year gross revenue. It is not net profit. Operating Cash Flow Before Finance and Tax Item First-year amount Electricity revenue ₹57.75 lakh Operating expenses excluding rent −₹7.00 lakh Land rent −₹1.75 lakh Operating cash flow before finance and tax ₹49.00 lakh Simple Project Payback ₹350 lakh ÷ ₹49 lakh = approximately 7.1 years This is a simplified, unlevered payback calculation using first-year cash flow. It assumes that cash flow remains constant. A complete model must account for module degradation, expense escalation, inverter replacement, taxes, payment delays, downtime and the time value of money. Consequently, 7.1 years is an illustration—not a promised recovery period. What Changes When the Farmer Owns the Land? If the same project pays no external land rent: ₹57.75 lakh revenue − ₹7 lakh operating expenses = ₹50.75 lakh Simplified payback becomes: ₹350 lakh ÷ ₹50.75 lakh = approximately 6.9 years However, the land still has an economic cost. The farmer should compare the solar project with the net agricultural income or lease income forgone. A comparison that assigns zero value to owned land can overstate the benefit of developing the plant. How Much Cash Remains After Paying the Bank? Consider the leased-land project financed as follows: Financing assumption Amount Project cost ₹350 lakh Debt: 70% ₹245 lakh Equity: 30% ₹105 lakh Interest rate 9.5% annually Repayment period 15 years Repayment method Equal annual instalments; no moratorium Under these assumptions, annual principal-plus-interest repayment is approximately ₹31.30 lakh. Therefore: ₹49 lakh operating cash flow − ₹31.30 lakh debt service = ₹17.70 lakh This leaves approximately ₹17.70 lakh in the first year before tax, reserve funding, additional capital expenditure and working-capital changes. It does not mean ₹57.75 lakh is available to the investor. The simplified debt-service coverage ratio is: ₹49 lakh ÷ ₹31.30 lakh = 1.57 Banks may calculate cash available for debt service differently and impose their own lending conditions. Actual repayment frequency, interest resets and moratorium terms will also change the result. How Sensitive Are Returns to Tariff and Generation? Using the same ₹3.50 crore investment and ₹8.75 lakh first-year operating expenses, including rent: Scenario Electricity sold Tariff Gross revenue Cash before finance and tax Simple payback Lower-tariff case 17.50 lakh units ₹3.00 ₹52.50 lakh ₹43.75 lakh 8.0 years Base case 17.50 lakh units ₹3.30 ₹57.75 lakh ₹49.00 lakh 7.1 years Higher-tariff case 17.50 lakh units ₹3.50 ₹61.25 lakh ₹52.50 lakh 6.7 years Combined downside 15.00 lakh units ₹3.00 ₹45.00 lakh ₹36.25 lakh 9.7 years In the combined downside case, the same ₹31.30 lakh annual loan repayment leaves only about ₹4.95 lakh before tax and other adjustments. The simplified debt-service coverage falls to approximately 1.16. This demonstrates why a project should be tested under lower generation and less favourable commercial assumptions before the land is committed or equipment ordered. Payment delays create another challenge: at base-case revenue, three months of unpaid electricity bills represent approximately ₹14.44 lakh of receivables, even though loan repayments and operating costs may continue. How Much Can a Farmer Earn by Leasing Land for Solar? There is no universal PM-KUSUM 2.0 land-rent rate established by the sources reviewed for this article. Rent depends on location, grid connectivity, land quality, competing uses, procurement terms and negotiation. Example: Five Acres Leased at ₹35,000 per Acre Annually Item Calculation Land area 5 acres Assumed annual rent per acre ₹35,000 First-year annual rent ₹1,75,000 Monthly equivalent Approximately ₹14,583 Assumed annual escalation 3% Illustrative lease duration 25 years With a 3% increase every year, total nominal rent over 25 years would be approximately ₹63.80 lakh, assuming every payment is made. Without escalation, total rent would be ₹43.75 lakh. These totals are not present values or tax-free profit. They exclude deductions, transaction costs and the value of alternative land uses. The monthly equivalent also does not mean the agreement pays rent monthly. For an existing landowner making no plant investment, a solar-project payback calculation is usually the wrong measure. The better comparison is: Reliable net rent versus forgone net farming income, adjusted for restrictions, inflation and risk. Can Farmers Earn from Both Crops and Solar? Agrivoltaics is intended to enable agricultural activity and solar generation on the same site. However, two income streams are not automatic. The arrangement must establish: Who has the right to cultivate. Who pays for seeds, labour, irrigation and crop protection. Who receives crop-sale income. Who receives electricity revenue. Whether the farmer also receives rent. Who bears crop damage or yield-reduction risk. Crop suitability, shading, equipment access and drainage must be evaluated together. A solar layout should not be labelled agrivoltaic merely because a small strip of land remains unused. Illustrative Agrivoltaic Cost Comparison Suppose the conventional project’s ₹3.50 crore cost increases by an assumed 25%: ₹3.50 crore × 1.25 = ₹4.375 crore If operating cash flow stayed at ₹49 lakh, simplified payback would be: ₹437.5 lakh ÷ ₹49 lakh = approximately 8.9 years This isolates the effect of higher capital cost. It is not an agrivoltaic feasibility estimate: generation, acreage, operating costs and crop income may all change. Do not add crop income to the developer’s return unless the developer actually receives it under the agreement. What Should a Farmer Check Before Signing a Solar Land Lease? Have the proposed arrangement reviewed for the specific land and state. The agreement should clearly address: Land and ownership: surveyed boundaries, title, co-owners, existing mortgages and access rights. Rent commencement: whether payment starts at possession, construction or commissioning. Development deadline: what happens if the developer holds the land but never builds. Escalation and payment security: increase formula, due dates, security deposit or other protection, and default remedies. Farming rights: permitted crops, access, water arrangements and crop-damage responsibilities. Financing and transfer: assignment, lender rights and limits on use of the landowner’s title. Exit and restoration: equipment removal, soil restoration and funding responsibility. A farmer should not be left waiting indefinitely for rent while the developer waits for connectivity, finance or a PPA. What Should Developers Check Before Taking Land on Lease? Start with the commercial opportunity and electrical infrastructure, then finalise land commitments. A developer’s assessment should cover: The current tender or procurement route and eligibility. Available substation capacity and written connectivity requirements. Evacuation-line route, right of way and responsibility for upgrades. PPA tariff, billing terms, payment security and treatment of curtailed generation. Lease costs and escalation over the entire operating period. EPC scope, performance obligations, warranties and applicable equipment requirements. Debt terms and cash flow under downside scenarios. Under the earlier central Component-A guidelines, projects were preferably located within a five-kilometre radius of substations. Proximity was intended to reduce connection costs and losses; it did not itself guarantee available capacity or project approval. Earlier MNRE guidelines. For EPC contractors, clear payment milestones and a fully defined evacuation scope are also essential. A commercially weak project can become a contractor-payment problem even when the equipment performs correctly. How Can Farmers and Developers Prepare for PM-KUSUM 2.0? Prepare the project information now, while checking the latest official notifications before applying. A useful initial information pack includes: Village, tehsil, district and GPS location. Verified land area, ownership records and co-owner details. Current cultivation and net agricultural income. Nearest substation and approximate distance. Road access, drainage and water availability. Preferred model: own investment, developer lease or agrivoltaics. Available equity or expected lease rent. Check the official PM-KUSUM portal and the relevant state implementing agency or DISCOM for applicable opportunities. A solar-pump application, a land-registration expression of interest and a power-project allocation are different things. Registration alone should not be treated as a subsidy sanction, connectivity approval or PPA. Frequently Asked Questions Is PM-KUSUM 2.0 open for applications? The official announcements reviewed establish the proposed next-phase direction. They do not establish a universal application window. Check the applicable state notice and final guidelines. Can I give my land on lease instead of investing in a solar plant? Land leasing was permitted under the earlier Component-A framework. For a new project, verify the applicable procurement conditions and use a properly reviewed agreement. Is ₹35,000 per acre the government-fixed rent? No. It is an assumption used in this article’s example, not a government rate or guaranteed market offer. How much does a 1 MW solar plant earn? In this article’s example, 17.50 lakh billable units at ₹3.30 per unit generate ₹57.75 lakh annually. After assumed operating costs and rent, ₹49 lakh remains before finance and tax. Actual results depend on the project. Is solar-plant payback guaranteed within seven years? No. Seven years is approximately the simplified result under one set of assumptions. Higher costs, lower output, debt terms and payment delays can materially alter recovery. Should I develop my land or lease it? Development offers greater participation in project earnings but requires capital and exposes you to operating and financing risks. Leasing generally requires less capital from the landowner, but payment security and land protection remain essential. Planning a Solar Plant or Offering Land on Lease? Wattscore can help you assess the technical and commercial questions behind a proposed solar project, including site suitability, project development, EPC scope and financial assumptions. Whether you are a farmer considering your own plant, a developer seeking suitable land or a landowner exploring lease income, share your location, land area, nearest substation and preferred participation model. Discuss your solar project or land-leasing requirement with Wattscore. Financial figures are illustrative assumptions, not quotations, approved tariffs, financing offers or guaranteed returns. Scheme eligibility, incentives, land requirements and procurement conditions must be checked against the applicable official documents. Obtain a site-specific technical, financial and legal assessment before committing funds or land.