Press Information Bureau
Government of India
Ministry of Power
09-October-2015 16:31 IST
Fact Sheet on Agriculture Demand Side Management (AgDSM)


Agriculture sector is one of the most important sector of Indian economy. Agriculture plays a significant role in the overall socio-economic development of India. There are about 20 million pump sets presently energized in India and annual addition of 0.25 to 0.5 million pump sets are realized in this sector. Agriculture sector consumes 20-22% of total electricity consumption. Managing agricultural load is increasingly becoming a challenge for electricity utility in India. Subsidized tariff generate a perception of zero marginal cost of electricity use and consequently, efficiency in consumption is disregarded.



Upgrading of existing pumping systems presents an immediate need and an unprecedented opportunity. Implementation of this program is crucial as energy bills for agricultural pump sets are being paid by Govt. in the form of subsidy. Low or free electricity coupled with high inefficiencies contributes to adoption of local made inefficient & unreliable pump sets, results in massive water wastage & higher energy consumption. The average efficiency of existing in-efficient pump sets is in the range of 20% - 30% whereas efficiency range of new star rated Energy Efficient Pump sets (EEPS) is 40% - 50%. Therefore, there is a need to tap the huge energy savings potential promised in agriculture pumping sector




In Energy Sector and Power sector, Agricultural Demand-side Management (AgDSM) consists of those activities, methodologies, awareness, policy and technologies that influence consumer (farmers) behavior and Changes their (farmers) consumption patterns. The objective of the AgDSM programme is to reduce peak demand, shift the time during which electricity is consumed to off-peak hours and to reduce the total quantum of consumption. The AgDSM proposition is very simple i.e. replacement of inefficient agricultural pump sets with BEE star rated and high efficiency pump sets to reduce the amount of electricity needed to pump water in agriculture sector. By doing so, electricity usage can be reduced. If the savings from the reduction in electricity usage can be sustained and the total cost of the electricity saved exceeds the total installed cost of the pump sets over its useful life, there will be a net economic gain. The electricity consumption in the agricultural sector has rapidly increased over the years. It has increased from around 10% of the total electricity consumption in 1970 to around 18% of the total electricity consumption in 2011-12. The rapid increase in electricity consumption of the agricultural sector is attributed to growth of rural electrification coupled with policy of below cost electricity supply to farmers. However, from a revenue perspective, the electricity sales to this sector amounts to no more than 5-10% of the state electricity board’s revenues. The reason for this perverse state of financial affairs is the adoption of flat rate pricing for agricultural power.




Framework of AgDSM

Under the system, when a farmer pays a fixed price per horse power per month for electricity, or what is termed as a flat-rate system, the marginal cost of pumping water is zero. This leads to energy wastages, over pumping and inefficient selection of pump. The fact that electricity prices for agriculture are low or non-existent, there is a complete absence of incentives for farmers to invest in the efficiency. The burden of paying for sub-optimal agricultural energy pricing rests with the state government. The subsidy bill is already a significant proportion of the state GDP and therefore, there is a strong incentive for the state to facilitate investment in efficient agricultural pump sets and reduce consumption.




First AgDSM Project


First AgDSM Project in India Bureau of Energy Efficiency (BEE) has facilitated and initiated the implementation of first Ag DSM pilot project in Solapur circle of Maharashtra where 2209 old inefficient pump were replaced with star rated Energy Efficient Pump sets (EEPS) and provided free operation and maintenance for installed pump sets till project duration. The intervention would lead to lower energy supply on the feeder, and hence, could result in lower subsidy to be paid by the State Government. In order to accelerate and implementation of BEE AgDSM scheme, Energy Efficiency Services Limited (EESL) had taken a step forward for implementation of AgDSM project in all over India. EESL has conducted the survey & study for implementation of AgDSM. Replacement of old in-efficient 590 nos. of agriculture pumps with new star rated energy efficient pumps in phase one in Nippani and Byadgi circles of HSECOM, has been completed successfully. Energy savings of 37% has been achieved in the 590 nos. of pump sets replaced.


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