PM KUSUM Scheme 2026: How Farmers Can Earn ₹40,000/Acre Yearly by Leasing Land for Solar

🗓️ September 7, 2026 ⏱️ 6 Min Read 🏷️ Agricultural Solar & PM KUSUM ✍️ Editorial Team

Indian farmer in green crop field with solar water pump and solar panel structure

For decades, rural farmers across India have battled unreliable agricultural electricity, night-time power cuts for tubewells, and soaring diesel pump expenses. The PM KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan) scheme has revolutionized the rural economy by turning farmers from mere power consumers into "Urjadata" (power producers).

In 2026, expanded budget allocations and streamlined state nodal agency (SNA) portals make it easier than ever for agricultural landowners to achieve two goals: earn ₹35,000 to ₹55,000 per acre in guaranteed annual lease rent, or install solar water pumps with up to 90% government subsidy. Here is your complete guide.

1. The 3 Components of PM KUSUM Explained

The Ministry of New and Renewable Energy (MNRE) designed PM KUSUM across three distinct models to cater to different agricultural landholders:

Component A: Grid-Connected Solar Plants on Farmland (0.5 MW to 2 MW)

Farmers, farmer producer organisations (FPOs), or cooperatives can set up small ground-mounted solar plants (500 kW to 2,000 kW) on barren, uncultivable, or fallow land. If farmers lack capital, they can lease their land to private solar developers who invest 100% of the capex and pay the farmer guaranteed annual rent for 25 years.

Component B: Standalone Solar Agricultural Pumps (Up to 90% Subsidy)

Designed for farmers in off-grid rural regions without electricity connections. Replaces diesel-powered pumps with 3 HP, 5 HP, or 7.5 HP standalone DC/AC solar submersible pumps.

Component C: Solarisation of Grid-Connected Agricultural Pumps

For farmers who already have an electric tubewell connection. A solar array is installed to power the pump during daylight hours, and any surplus units generated when irrigation is not required are exported back to the DISCOM grid for extra revenue.

2. Component A Land Lease: Real Earnings Breakdown for Landowners

Under Component A, setting up a 1 MW solar plant requires approximately 4 to 5 acres of contiguous land. Because solar power plants carry 25-year long-term Power Purchase Agreements (PPAs) with state power utilities (like MSEDCL, RUVNL, UPPCL, or PSPCL), developers offer ironclad lease agreements:

Land Parcel Size	Solar Plant Capacity	Yearly Lease Rental (@ ₹40,000/acre)	25-Year Cumulative Passive Income
2.5 Acres	0.5 MW (500 kW)	₹1,00,000 / year	₹35 – ₹42 Lakhs (with 5% escalation)
5.0 Acres	1.0 MW (1,000 kW)	₹2,00,000 / year	₹70 – ₹85 Lakhs (with 5% escalation)
10.0 Acres	2.0 MW (2,000 kW)	₹4,00,000 / year	₹1.4 – ₹1.7 Crore (with 5% escalation)

        📍 Proximity Rule to Substation: To minimize high-voltage transmission line costs, DISCOMs prioritize farmland located within 5 kilometres of an existing 33/11 kV rural electrical substation. If your land is near a substation, your application has a 90%+ feasibility approval rate!
    

3. Component B Solar Pump Subsidy: 90% Government Support

If you need irrigation water without high diesel or electricity bills, Component B provides unprecedented financial assistance:

Central Government Share (CFA): 30% of benchmark cost
State Government Subsidy: 30% to 60% (depending on state — states like Rajasthan, Haryana, and Gujarat offer up to 60%)
Farmer Contribution: Only 10% to 40% (can be funded via Kisan Credit Card or NABARD agriculture loans)

4. Agrivoltaics: Dual Farming Under Elevated Panels

You do not have to sacrifice crop cultivation to host solar panels! Under the Agrivoltaics model, solar panel mounting structures are elevated to 8 to 10 feet with wide 6-meter inter-row spacing.

Crops that thrive under partial shade — such as turmeric, ginger, tomatoes, spinach, cabbage, and pulses — flourish beneath the panels, while solar arrays protect crops from scorching summer heatwaves and hail.

Related Agricultural Solar Tools

Solar Water Pump Calculator → Dairy Farm Solar Sizing → Poultry Farm Solar Sizing → Cold Storage Solar Sizing → Get Verified Installer Quotes →

5. How to Apply Online: Step-by-Step Guide

Visit your State Nodal Agency website (e.g., mahaurja.com in Maharashtra, energy.rajasthan.gov.in in Rajasthan, hauda.gov.in in Haryana, or upneda.org.in in UP).
Submit your land revenue documents: 7/12 extract, Jamabandi, or Khasra/Khatauni verification.
Select whether you wish to develop the plant yourself or lease your land to an empanelled solar developer.
Pay the nominal application fee online (typically ₹5,000 to ₹10,000 per MW).
DISCOM engineers conduct the feasibility survey and sign the tripartite PPA and lease agreement.

Frequently Asked Questions

How much money can a farmer earn by leasing land under PM KUSUM Component-A?

Under PM KUSUM Component-A, farmers can lease barren, fallow, or pasture land to solar developers for 25 years. Typical lease rentals range between ₹35,000 and ₹55,000 per acre per year, with a built-in 5% to 6% annual escalation clause. A 5-acre parcel can generate over ₹2 lakh to ₹2.75 lakh in guaranteed passive annual income.

What is the subsidy percentage on solar water pumps under PM KUSUM Component-B?

Farmers receive up to 90% total subsidy for standalone solar agricultural pumps (3 HP to 10 HP). The Central Government provides 30% CFA, State Governments contribute 30% to 60%, leaving the farmer to pay only 10% to 40% of the total pump cost, often financeable via low-interest agricultural loans.

What is Agrivoltaics under the PM KUSUM scheme?

Agrivoltaics involves mounting solar panels on elevated structures (at a height of 8 to 10 feet) so that tractors and farming machinery can move underneath. Farmers can grow shade-tolerant crops (like pulses, spices, leafy vegetables, or ginger) while simultaneously generating solar power overhead.

What are the eligibility criteria to apply for PM KUSUM in 2026?

Individual farmers, farmer groups, FPOs, and cooperatives with land ownership documents (7/12 extract or Jamabandi) are eligible. For Component-A, the land must ideally be located within 5 kilometers of a rural 33/11 kV DISCOM electrical substation to keep grid connection transmission line costs low.