Green Energy: India notifies rules to lease out seabed for offshore wind

Offshore wind

The government of India has notified the Offshore Wind Energy Lease Rules, 2023, as a first step to develop this new form of renewable energy source in the country.

This is a significant move, as currently there are no offshore wind projects in India. The country only has land-based wind farms as of now, totalling a capacity of 44,089.68 MW.

The rules, notified on December 19 and made public on December 20, state that the area covered under a lease shall ordinarily be 25 square kilometres to 500 square kilometres, which would vary depending on the size of the project.

However, since it is the first time that India will be venturing into offshore wind and to avoid any security risks, the rules mandate that each seabed that would be leased out will require clearances from the Ministry of Defence, Ministry of Home Affairs, Ministry of External Affairs, Ministry of Environment, Forest and Climate Change, Department of Space, and Ministry of Ports, Shipping and Waterways. These clearances will have to be obtained before the lease is granted.

Offshore wind power is a type of renewable energy that harnesses the wind's force at sea to generate electricity. The electricity is then transmitted to the grid or onshore network through undersea cables buried in the seafloor.

"The area covered by the lease shall be specified, and the lease shall be valid for three years for resource measurement and related study/survey activities, further extendable for adequate reasons by an additional two years. Post expiry of the five years, the lease shall expire, and all clearances to the lessee shall be withdrawn, and the lessee shall have to deposit the study or survey data with the National Institute of

Wind Energy, unless the lessee has started work to set up wind energy capacity as per the terms of the lease," read the rules notified by the Ministry of New and Renewable Energy (MNRE).

For the construction and operation of an offshore wind energy project, the lease shall be extended for 35 years, which can be extended further on a case-to-case basis subject to the functional viability and safety of the project.

The MNRE also made it clear that if a related study, survey, or offshore wind project is not commenced within six months from the effective date of the lease, the Central Government may cancel the lease and forfeit the security deposit. Besides, no royalty shall be applicable for the development of offshore wind energy projects.

As for the cost, the applicant will have to pay a lease fee of Rs 1 lakh per square kilometre or part thereof per year in advance. The fee is required to be deposited within one month of the issue of the letter of demand by the Lease Issuing Authority, it stated.

On September 28, the government floated the country's first-ever tender to allocate seabed sites along the coast of Tamil Nadu for developing offshore wind projects. MNRE will allocate the seabed sites through auction and waive off inter-state transmission system (ISTS) charges for developers or generators who commission their offshore wind projects on or before December 31, 2032.

Senior MNRE officials said that, given that studies on offshore wind projects will take a maximum of five years, an operational project is likely to come up only after 2030.

To make offshore wind more attractive and tradable, the government is planning to offer renewable energy credits with multipliers and carbon credit benefits as well. The developer will be able to distribute the renewable power generated by offshore wind through the open access mode, third-party sales, or sales through power exchanges. The renewable energy generated can even be used for captive consumption.