Selling Sunlight or Using It to Pump Groundwater: Causal Evidence from Gujarat’s Grid-Connected Solar Irrigation Program

This study evaluates the causal impact of Gujarat’s Suryashakti Kisan Yojana (SKY), a solar irrigation scheme that enables farmers to sell surplus electricity to the grid through a feed-in tariff (FIT) and an evacuation-based incentive. Focusing on western Gujarat—one of the driest parts of India, with a long history of irrigated agriculture—we used panel data from 2017 to 2021 and a quasi-experimental design with staggered Difference-in-Differences (DID) and dynamic treatment effects to examine how farmers respond to the dual-use opportunity: using solar energy for irrigation or selling it to the grid. We found that SKY significantly reduced energy consumption for groundwater extraction by up to 14% annually. While the scheme does not lead to significant changes in cropping patterns or gross cropped area, it results in a notable reduction in irrigation hours per unit of land, suggesting that farmers improved irrigation efficiency rather than altering their cropping patterns. By estimating crop-specific production functions, we identified the trade-offs farmers face: the marginal productivity of irrigation energy varies significantly across crops—high for cotton, low for wheat—shaping energy allocation decisions. These findings provide critical insights into how clean energy transitions can be implemented in intensively groundwater irrigated and productive agricultural regions without compromising food production, farmer livelihoods, or exacerbating groundwater depletion, and therefore, offer practical pathways for achieving just transitions in the agriculture sector under climate change. These findings also provide critical insights into the energy-water-agriculture nexus and support the expansion of decentralized solar irrigation. They offer important implications for national programs like PM-KUSUM (Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan), indicating that even a FIT only framework can encourage farmers to reallocate energy away from irrigation, thereby promoting more efficient groundwater use.