India's first offshore wind projects to come up across Tamil Nadu coast

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

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 first tender, floated on September 28, has seven sites on auction spreading 1,443 square kilometres, that have been divided into three zones - B, E and G. The total scope of installed offshore wind capacity in these seven sites is 7,215 MW. While bid for zone B, having four of the seven seabed sites, will be issued in February, 2024, zone E and G having a total of three sites will be bid sometime in FY25.

"The leasing of the seabed area to the developer will initially be for the period of 5 years extendable by further 1 year on case-to-case basis. The developer has to commission the offshore wind energy project(s) including conducting required studies and surveys within this time period," read the tender document.

The grid evacuation infrastructure up to the offshore substation (including the offshore substation) shall be provided as part of the ISTS network by a Central Transmission Utility (CTU) such as Power Grid Corporation of India Limited (PGCIL).

The government has made the National Institute of Wind Energy (NIWE) the nodal agency for offshore wind projects. The tender allows the developer to exit from the project development during the 5 years of lease
period subject to - submission of the study/survey data to NIWE; and forfeiture of the submitted bank guarantee of $1 million for each site.

"The site allocation fee paid by the developer up to commissioning of the project over and above the floor price would partially be returned to the developer, if the developer commissions the project within the scheduled commissioning date," it said.

Also, post commissioning of the project, the lease will be extended for the operational life of the project and decommissioning period. The project developer shall pay the seabed lease floor price at Rs 1 Lakh per sq km per year (lease rentals) for the remaining operation period from the date of commissioning, the tender document stated.

The government is likely to announce a viability gap funding (VGF) of around Rs 6,800 crore to promote offshore wind projects in India. The VGF will be provided to projects with a total capacity of 1 gigawatt (GW).

The Union government's push to increase wind energy capacity aligns with India's commitment to combat climate change and reduce global warming, aiming to achieve 500 GW of renewable energy by 2030, with wind energy contributing approximately 140 GW.

Despite possessing a 7,600 km coastline and significant offshore wind energy potential, India has been slow in developing offshore wind projects.

But now, the government plans to tap into offshore wind projects totalling 70 GW along the coasts of Tamil Nadu and Gujarat. Seabed lease tenders for a trajectory of 37 GW are scheduled to be issued by 2030.

Both the Tamil Nadu and Gujarat governments have already expressed interest in procuring offshore wind power at a competitive tariff rate of Rs 4 per unit for initial projects.