Volume 65

Tariff Design and Revenue Optimization for Agrivoltaics Projects under the PM-KUSUM Scheme: A Financial Viability Analysis for Madhya Pradesh, India Suhas Sathyakiran, Sheikh Madiha Syed, Sarita Vijayvargiya, Saptak Ghosh

Abstract

Agrivoltaics co-locates solar photovoltaic power generation with agricultural crop cultivation on the same land, optimizing land use and providing dual income streams for farmers. This paper investigates tariff design and revenue optimization for agrivoltaic systems under the Indian PM-KUSUM scheme, for the state of Madhya Pradesh. Using a financial comparison framework, the study analyzes different business models: farmer-owned with and without Agriculture Infra Fund (AIF) loans, and developer-owned with leased land. Despite 20% higher capital costs due to elevated solar structures, agrivoltaics generate additional revenue from crop production, exemplified by Aloe Vera cultivation, which significantly improves financial returns. The analysis indicates that an increase of USD 0.0082 to 0.011 per kWh above current tariffs is required for project viability, highlighting the need for differentiated tariff mechanisms. Sensitivity analysis across tariff rates ranging from USD 0.03 to 0.049 per kWh highlights that tariff differentiation enhances internal rate of return (IRR), return on equity (ROE), cumulative revenue, and shortens payback periods, making the technology financially viable. High-income crop selection such as Aloe Vera can dramatically improve cash flows and investment attractiveness by boosting agrivoltaics’ revenue potential. These results underscore the necessity for policy frameworks that incorporate tariff mechanisms recognizing the unique cost and revenue characteristics of agrivoltaics, thus enabling scalable adoption of sustainable energy in agriculture. This study provides actionable insights for policymakers and stakeholders to optimize tariff structures and revenue models to support India’s renewable energy transition and agrarian growth.

Keywords Agrivoltaics, tariff design, revenue optimization, PM-KUSUM scheme, return on equity, payback period