Cabinet Approves Viability Gap Funding For Offshore Wind

TotalEnergies Wins 1.5 GW North Sea Offshore Wind ProjectProjects

The Indian Union Cabinet chaired by Prime Minister Narendra Modi recently approved the Viability Gap Funding (VGF) scheme for offshore wind energy projects. The total outlay of the scheme stood at Rs 7,453 crore. The fund included an outlay of Rs 6,853 crore for the installation and commissioning of 1 GW of offshore wind energy projects (500 MW each off the coast of Gujarat and Tamil Nadu). It also includes a grant of Rs 600 crore for the upgradation of two ports to meet logistics requirements for offshore wind energy projects.

The VGF scheme is a major step towards implementation of the National Offshore Wind Energy Policy notified in 2015 to exploit the vast offshore wind energy potential that exists within the exclusive economic zone of India. The VGF support from the government can help to reduce the cost of power from offshore wind projects and make them viable for purchase by discoms. While the projects will be established by private developers selected through a transparent bidding process, the power excavation infrastructure, including the offshore substations, is to be constructed by Power Grid Corporation of India Ltd (PGCIL). Ministry of New and Renewable Energy, as the nodal ministry, in coordination with various Ministries/Departments to ensure the successful implementation of the scheme.

Construction of offshore wind energy projects and their operations also require specific port infrastructure, which can handle storage and movement of heavy and large dimension equipment. Under the scheme, two ports in the country will be supported by the Ministry of Ports, Shipping, and Waterways to meet the requirements of offshore wind development.

Offshore wind is a source of renewable energy that offers several advantages over onshore wind and solar projects, such as higher adequacy & reliability, lower storage requirement, and higher employment potential. Development of the offshore wind sector can lead to economy-wide benefits by attracting investments, development of indigenous manufacturing capabilities, creation of employment opportunities across the value chain, and technology development for offshore wind in the country. This can also contribute towards achieving India’s energy transition targets.

The successful commissioning of 1 GW offshore wind projects can produce renewable electricity of about 3.72 billion units annually, which is expected to result in an annual reduction of 2.98 million tons of CO2 equivalent emission for 25 years. Further, this scheme can not only kick start the offshore wind energy development in India but also lead to the creation of the required ecosystem in the country to supplement its ocean-based economic activities. This ecosystem will support the development of an initial 37 GW of offshore wind energy at an investment of about Rs.4,50,000 crore.