India’s Offshore Wind Energy: New Financial Push
India is making significant strides towards establishing a robust offshore wind energy program. Following an unsuccessful tender in Gujarat, the government is now focusing on enhancing financial support to make these projects more attractive to investors. The proposed increase in viability gap funding (VGF) aims to bridge the financial gap that currently hinders investment in this capital-intensive sector.
The Ministry of New and Renewable Energy (MNRE) has initiated discussions with the World Bank to assess the financial needs and risk mitigation strategies essential for attracting private investments. Additionally, consultancy firm KPMG is providing insights, and the recently launched India-UK Offshore Wind Taskforce is expected to contribute valuable expertise as it collaborates with representatives from Denmark, a leader in offshore wind energy.
India's vast coastline of over 11,000 kilometers holds immense potential for harnessing wind energy. Despite the challenges of high initial costs and complex seabed infrastructure, offshore wind energy generation is crucial for reducing greenhouse gas emissions. The government aims to achieve a goal of 500 GW of non-fossil energy capacity by 2030, with offshore wind expected to play a pivotal role in reaching this target.
The urgency for offshore projects is underscored by the slow pace of onshore wind expansion, primarily due to land acquisition issues. As onshore wind projects face hurdles, India's focus shifts towards leveraging its offshore capabilities. The current VGF of ₹7,453 crore may need revision to align with global standards, as European offshore wind projects demonstrate much lower tariffs per unit.
With the Union Cabinet's approval for the VGF in June 2024, the Solar Energy Corporation of India (SECI) has initiated a 500 MW tender for a project in the Gulf of Khambhat, Gujarat. However, no interest was shown for this tender, prompting a shift in focus to Tamil Nadu, where the coastline offers better capacity utilization factors.
Experts emphasize that for offshore wind to thrive in India, a cohesive strategy is necessary. Timelines must be flexible, aligning with global benchmarks, and long-term visibility is essential to encourage investment from large developers. The government should consider implementing a trajectory of 10-20 GW of offshore projects to signal a substantial market opportunity.
Previous successful offshore wind initiatives in countries like China and Denmark highlight the importance of government support through incentives and subsidies. India must showcase viable pilot projects to demonstrate the feasibility of offshore wind, paving the way for public-private partnerships to attract investments.
As India works towards its ambitious renewable energy goals, offshore wind projects will be critical in diversifying energy sources, fostering job creation, and promoting sustainable development in the energy sector.
