PM Kusum Yojana: A practical guide for solar investors
- Posted by Infisol Energy
- December 02, 2025
PM Kusum Yojana has opened a new way to build megawatt-scale solar projects that are directly linked to India’s agriculture and rural power network. For investors and developers, it is a chance to own long-term PPA-backed solar assets while farmers lease land and DISCOMs buy the power.
This guide is written for C&I owners, HNIs, infra companies and IPPs who want clear, numbers-driven answers on how PM Kusum megawatt projects actually work. Infisol Energy appears here as your EPC partner that can design, build and support these plants end to end.
PM Kusum Yojana: What smart investors should look at first
PM Kusum Yojana is a central scheme that supports solar projects in the agriculture ecosystem through three components covering grid connected plants, standalone pumps and feeder level solarisation. It aims to cut diesel use, reduce DISCOM losses and create extra income opportunities around rural land and power infrastructure.
For investors, the main interest is in megawatt-scale projects where you own the plant, farmers lease land and the local DISCOM signs a long-term PPA for the power. These plants typically feed into 11 kV or 33 kV substations serving agricultural loads, which allows decentralised generation closer to demand.
Components of PM Kusum Yojana explained
PM Kusum is split into three components, but not all are equally relevant to investors looking at MW projects.
Component A focuses on grid connected renewable energy plants up to a certain MW capacity per site, often structured as individual projects for local substations.
Component B deals with standalone solar pumps for individual farmers, usually in kilowatt sizes rather than megawatt plants.
Component C supports feeder level solarisation, where solar plants feed entire agricultural feeders and help DISCOMs reduce losses.
Most megawatt-scale investment opportunities sit in Component A or feeder-linked models that look similar to it in practice, with PPAs signed by the DISCOM and power injected at the substation.
How PM Kusum megawatt projects work for investors
At a high level, the structure is simple: you own the plant, farmers lease the land and the DISCOM buys the power under a long term PPA. The scheme rules and state guidelines decide exact capacities, timelines and responsibilities, but the financial logic stays similar.
Typical project sizes start from 1 MW per location, and larger investors often group multiple sites. The plant is usually located within a defined distance from the substation to keep line losses and evacuation costs under control.
Infisol Energy steps in as the EPC partner handling detailed design, procurement, construction, grid connection and commissioning as per scheme and DISCOM norms. Investors focus on capital, approvals and long term strategy, while Infisol owns the technical and on ground execution.
Key numbers: tariff, cost and ROI
Tariff and PPA structure
Under many PM Kusum tenders, solar power is sold to the local DISCOM in the range of about ₹2.75–₹3.10 per kWh, depending on state and year. In some cases tariffs are discovered through competitive bidding around a ceiling price set by the regulator or state agency.
PPAs are generally long term, often 25 years, similar to other utility scale solar projects, which supports stable revenue planning over the life of the asset. Payment security mechanisms and surcharge provisions vary by state, so they need to be read carefully before you bid or sign.
How much does a 1 MW PM Kusum plant cost?
For a ground mount 1 MW solar plant under PM Kusum style projects, many investors plan for a capex in the approximate range of ₹3.5–₹4.5 crore, but this can vary by state, market cycle and project specifics. The final cost depends on land development needs, evacuation distance, structure design, choice of modules and inverters, and any extra substation or bay work required by the DISCOM.
Project cost, CUF and generation
For ground mount megawatt plants in India, typical capex often falls in the ₹3.5–₹4.5 crore per MW range, depending on land conditions, design, components and state specific costs. In PM Kusum style projects, evacuation and substation work can influence the final number, especially if extra line length or bay works are needed.
Many utility style plants of this size are designed for a capacity utilisation factor around 18–22 percent in good sites, which translates roughly into 15–19 lakh kWh per MW per year. Exact generation depends on irradiation, DC/AC ratio, design choices and O&M quality, so realistic modelling at pre bid stage is important.
What ROI can you expect from a 1 MW plant?
With tariffs often around ₹2.75–₹3.10 per kWh and generation roughly 15–19 lakh kWh a year per MW, many 1 MW plants may see annual revenue in the ₹45–₹65 lakh range before O&M and financing costs, but these figures can vary by state, tender and plant design. On that base, investors typically aim for a pre tax IRR of about 12–16 percent and a simple payback of roughly 6–9 years, which can also change depending on actual capex, financing terms and DISCOM payment behaviour.
ROI, IRR and payback period
Putting tariff and capex together, many investors target a pre tax IRR in the 12–16 percent range on well executed projects, although the actual number will depend on each project. Simple payback for such plants often sits around 6–9 years, with the remaining PPA period delivering free cash flow subject to O&M and replacement costs, which may also vary.
Business tax treatment and accelerated depreciation on solar assets can further improve effective post tax returns for eligible entities. However, actual ROI will vary by state, specific tariff, financing terms and how well the plant is designed, built and operated over 25 years.
Risks you should evaluate before investing
Like any infrastructure project, PM Kusum megawatt plants carry policy, commercial and technical risks that need to be understood upfront. A realistic view on these points is essential before you commit crores of capital to a new asset.
Policy and tender related risks include changes in scheme guidelines, delays in tender timelines and state level adjustments to capacity or eligibility criteria. DISCOM creditworthiness and payment behaviour also matter, since delayed payments can stretch working capital even if the plant performs technically.
On the ground, land title clarity, right of way for lines, transformer capacity at the substation and grid availability can affect project timelines and uptime. Technical risks like poor design, substandard components or weak O&M practices can reduce generation and erode the IRR you expected on paper.
Exit and liquidity options for PM Kusum projects
PM Kusum megawatt plants are usually planned as 25 year assets, yet investors are not always locked in for the full PPA term if the structure allows share or asset sale. Common options may include holding the plant long term for cash yield, selling equity in the SPV to another investor after a few stable operating years, or refinancing with lenders to release some capital, and the right route will depend on your risk appetite, returns so far and market demand for operating solar assets.
How Infisol Energy adds value as your solar EPC partner
A specialised EPC partner does more than build the plant; it helps protect your numbers by improving performance and reducing avoidable problems. Infisol Energy’s role starts from feasibility and runs through the full life of the project.
During development, Infisol can support with site assessment, layout optimisation, basic yield estimates and technical inputs for bids or PPAs. This helps align plant design with tariff, cost expectations and local grid conditions, rather than treating EPC as an isolated line item.
In execution, Infisol manages detailed engineering, bankable procurement, quality control, civil and electrical works, grid interfacing and commissioning as per DISCOM and scheme requirements. After commissioning, structured O&M, monitoring and preventive maintenance keep generation closer to design targets, supporting the ROI you planned at investment stage.
Who is the right kind of investor for PM Kusum Yojana?
PM Kusum megawatt projects are not a quick trade; they suit investors comfortable with infrastructure-style assets and multi-year horizons. Typical profiles include C&I owners, infra companies, HNIs, IPPs and family offices who want a mix of predictable cash flows and long-term ESG-aligned exposure.
You are usually a good fit if you have clarity on capital range per project, can tolerate some policy and payment risk, and are ready to work with an EPC partner for 25 year assets instead of one time capex only. If you prefer very short paybacks or zero execution risk, other financial products may be a better match than PM Kusum plants.
FAQs on PM Kusum Yojana megawatt projects
Who can invest in PM Kusum megawatt projects?
Private developers, companies, cooperatives and other entities can participate as project developers, often in partnership with eligible farmers or land owning entities, subject to state guidelines and tender conditions.
What tariff can I expect when selling power to the DISCOM?
Many recent PM Kusum style tenders have discovered tariffs in the approximate range of ₹2.75–₹3.10 per kWh, but the exact figure depends on the state, bid process and year.
What is the usual minimum project size?
Components and state rules vary, but many opportunities for individual plants start from 1 MW near a designated substation.
How long are PPAs typically signed for?
PPAs for grid-connected solar under PM Kusum and similar schemes are often signed for around 25 years, aligning with the designed life of the plant.
Take the next step with Infisol Energy
If you are evaluating PM Kusum Yojana megawatt projects and want numbers, risks and timelines explained without jargon, a short discussion can save weeks of guesswork. Infisol Energy can walk you through realistic tariffs, capex ranges, land and grid checks, and an EPC plan matched to your return expectations.
Reach out to Infisol Energy for a free PM Kusum project discussion, and use that call to decide whether this model truly fits your investment strategy before you commit capital.
Start Your Society’s Virtual Net Metering Journey
Virtual net metering is making solar energy accessible and practical for housing societies across India. It removes the complexity of individual installations, spreads the benefits fairly, and gives your society a clear path to lower electricity bills and a cleaner future.
If you are in Maharashtra, the rules are especially clear and supportive. For a detailed guide on MERC’s virtual net metering regulations, do not miss our step-by-step article linked above.
Have questions or ready to take the next step? Reach out to us. We are here to make solar simple for your society.