The government is likely to announce a viability gap funding (VGF) of around Rs 6,800 crore to promote offshore wind projects in India, according to three officials familiar with the matter who spoke to Moneycontrol.
The VGF will be provided to offshore wind projects with a total capacity of 1 gigawatt (GW). Initially, the Ministry of New and Renewable Energy (MNRE) had proposed VGF for projects totaling 3 GW, but the finance ministry has given provisional approval for 1 GW capacity and funding of approximately Rs 6,800 crore, one senior official said on condition of anonymity.
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.
"Yes, the VGF will be around Rs 6,800 crore. It now needs to be approved by the Expenditure Finance Committee (EFC). MNRE will first invite bids for offshore wind projects with the VGF to provide visibility to the sector. The bidding process is expected to commence in two to three months. Following that, another tender for offshore wind projects without the VGF will be issued, but that will take some time," said a second official familiar with the development.
This move 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. Currently, there are no operational offshore wind projects in the country.
The focus has primarily been on onshore wind energy, but the government now aims to shift towards offshore wind due to challenges related to land availability and frequent regulatory changes at the state level.
In total, the government plans to tap into offshore wind projects totaling 70 GW along the coasts of Tamil Nadu and Gujarat. Seabed lease tenders for a trajectory of 37 GW by 2030 are scheduled to be issued.
Both the Tamil Nadu and Gujarat governments have expressed interest in procuring offshore wind power at a competitive tariff rate of Rs 4 per unit for initial projects.
The government's renewable energy project bidding trajectories specifically mention wind energy, requiring power sector PSUs such as NTPC Ltd, Solar Energy Corporation Of India (SECI) Ltd, NHPC Ltd, and SJVN Ltd to collectively invite bids for 50 GW of renewable energy projects each year, including 10 GW exclusively from wind energy.
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