Solar Pumps: Driving Growth and Sustainability in Modern Agriculture
Kotak Insights | Date 29/06/2024
The recent tariffs levied on various Chinese goods (including solar panels) will have global repercussions.
There has been a noticeable shift in the way investors are treating the solar industry.
The sector continues to increase its odds despite many companies in it making losses.
It is getting clear that solar is here to stay. You can talk all about loss-making companies and how their valuations have shot up but you cannot ignore them.
While all this is happening, one specific industry is gaining much traction—the solar pump sector.
As the auto sector’s growth propels to the ancillaries, solar's first multiplier effect is on the solar pump sector.
What are solar pumps?
As the name suggests, solar pumps are a specialised application within the solar industry that harnesses solar energy to power water pumping systems.
These systems typically consist of solar panels, a controller, and a pump.
As the solar sector expands, the cost of solar technology will drop, making solar pumps more affordable and accessible for irrigation and water supply use.
Growth in the solar industry encourages innovations in solar-powered devices, leading to more efficient and reliable solar pumps.
Strong growth prospects
Not many know this, but India is one of the biggest exporters of pumps in the world.
Back home, government initiatives in irrigation, sanitation, drinking water, and housing are spurring pump demand in the water sector.
Rising industrialisation and increased capital expenditure in various industries are boosting demand further.
With pump demand surging across all market segments, the momentum propels the Indian pump industry's growth.
With India now making serious efforts, the biggest growth could come from the solar pump segment.
The PM-KUSUM is one of the biggest schemes that has given the solar pump industry a leg up. Under the scheme, India will set up 10,000 MW of decentralised grid-connected renewable energy power plants on barren land.
The scheme then says all this would require the installation of 14 lakh standalone solar agriculture pumps.
Meanwhile, the third component of the scheme is the solarisation of 35 lakh grid-connected agriculture pumps.
All of this is set to ignite a green revolution. This initiative paints a future where sustainable farming becomes mainstream, dramatically reducing the agricultural sector's carbon footprint.
This scheme could also encourage the large-scale adoption of the solar pump industry and set a global benchmark, turning India into a powerhouse of eco-friendly agriculture.
Key players in the industry
Currently, there are not many listed pure-play ‘solar pump’ stocks.
Apart from the big players in the industry (highlighted below), other pump companies are currently involved in specific pumps that do not cater to the solar segment.
Here are some of the pump companies that manufacture solar pumps:
Shakti Pumps: Shakti Pumps is India's leading manufacturer and exporter of solar pumps and holds about 30% of the market. It benefits greatly from the PM KUSUM scheme, which supports the installation of solar pumps. The company produces various pumps, motors, and controllers and offers over 1,200 SKUs for agriculture, construction, energy, oil and gas, and mining.
KSB: KSB is a globally leading pump manufacturer. It leads in producing pumps, valves, systems, and control valves. KSB offers a variety of solar pumps, including centrifugal and vertical turbine pumps, as well as water-cooled submersible motors.
WPIL: This is another good player in the industry that covers the entire value chain, from centrifugal pumps to vertical pumps and submersible pumps. The company will likely be among the beneficiaries of government schemes like the Jal Jeevan Mission and Atal URBAN Renewal Mission.
Other than these big players, companies like Dynamatic Technologies, Ingersoll Rand, Latteys Industries, Jyoti, and Bright Solar are also linked to the solar pump industry.
In conclusion
India’s 2030 vision is a patchwork of dominance in renewable energy and strongly emphasises solar energy to combat climate change.
The Indian solar industry is expected to grow as costs decline, companies build enhanced energy storage solutions, and solar grid advancements take centre stage.
This, in turn, is expected to bode well for the entire pump industry, especially the pump stocks that manufacture solar pumps.
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