MNRE Releases Revised Strategy for Establishment of Offshore Wind Energy Projects

The revised strategy for establishment of offshore wind energy projects has been chalked out and released recently by the MNRE (Ministry of New & Renewable Energy).

Preliminary studies carried out by NIWE across the coastline of India indicate good potential both off the southern tip of the country and the West coast for offshore wind farm development in India. The offshore wind potential was assessed by the FOWIND (Facilitating Offshore Wind in India) consortium with NIWE as a knowledge partner.

Based on a multi-criteria approach involving assessment of various parameters such as wind resource, bathymetry etc., eight zones each off the coast of Gujarat and Tamil Nadu were identified as potential offshore wind energy zones.

Three Models for Offshore Wind Farm Development 

Keeping in view the requirement of the holistic development of offshore wind farms in the country and to fast-track the process, three models are proposed.

Considering the three models of development, and to fast track the process to achieve the offshore wind energy target, an indicative auction trajectory has been designed as well.

Model A

This model of offshore wind project development shall be applicable to the offshore wind zones for which MNRE/NIWE have already carried out or proposed to carry out sufficient studies/ surveys that will enable developers to bid and commence the development of offshore wind projects.

Offshore wind development process under Model-A
For the development of this project, a single bid two stage process followed by an eReverse Auction (e-RA) will be adopted. The bidding will be carried out by SECI. The e-RA will be based either on the tariff or the VGF amount required for making the project viable with a pre-determined tariff.

MNRE/designated agency will float a bid for 0.5 GW capacity each in the part of demarcated sites off the coast of Gujarat (MNRE or its designated agency will enter into the ‘Lease Agreement’ for 35 years with the successful bidders (offshore Wind Power Developer (OWPD)) in accordance with ‘lease rules’ to be notified) and Tamil Nadu (a site with an equivalent capacity of 1.0 GW has been identified for the proposed first project. NIWE will carry out the necessary study/survey within the identified site and the bid for a 500 MW project would be floated within this site after carrying out required study/survey by NIWE) wherein the stage-1 clearances have already been accorded.

Model B

Under Model-B, there will be allocation of offshore wind sites under a lease with site exclusivity over seabed during study/survey period and project development without any VGF support) This model envisages offshore wind project development for sale of power under open access/captive/third party sale without any VGF assistance from Govt. of India.

Bidding Process Under Model B

For bidding under Model B, the initial potential sites for 14 GW equivalent offshore wind capacity that is proposed to be
offered under Model-B have been provided. Out of these 14 GW, the first bid for 4.0 GW capacity is tentatively planned to be floated on December 1, 2023 and the second bid is planned to be floated for 3 GW in the financial year 2024-25.

Model-C

This model will be followed for the sites identified by the developers within the Exclusive Economic Zone (EEZ) of the country excluding the sites already identified under Model-A and Model-B, for which studies/surveys are completed, in progress or yet to be commenced by developer.

Bidding Process Under Model-C

The bidding may include any one of the following methods;
* Bidding on lease/allocation fee or revenue sharing in case of projects for captive consumption/third party sale/sale through exchange under open access mechanism.
* Tariff based competitive bidding in case of power procurement by DISCOMs or Central Govt. or State Govts.
* Any other transparent bidding mechanism identified by the Government

Initiatives Towards Offshore Wind Development

The MNRE has been continuously announcing initiatives with a view to give momentum to offshore wind development in India.

Back in May, the Ministry of Power, in its notification, had allowed a 25-year waiver of Inter-State Transmission System (ISTS) charges for early starters of offshore wind power projects. As per the notification, all the offshore projects commissioned on or before December 31, 2032, would be eligible for the long-term waiver. On the other hand, the ministry also announced different slabs of ISTS charges for such projects starting after January 1, 2033, in a graded manner. While the ministry has planned to levy 25 percent of the ISTS charges for projects beginning in 2033, it has proposed increased charges with the passing years. The notification said all such projects starting from January 1, 2036, would see 100 percent ISTS charges.

The announcement came close on its second amendment in their Green Energy Open Access Rules 2022 and extended the benefits of surcharge exemption under open access for offshore wind projects commissioned on or before December 31, 2032. 

Around the same time, it was revealed that the first phase of offshore wind projects were expected to come up along the coasts of Tamil Nadu and Gujarat.

Last year, MNRE Minister RK Singh said that bids for 2,000 MW offshore wind energy projects in India could be invited soon as he requested global investors to participate and invest in the offshore wind projects. He said that bids for 1,000 MW in Gujarat and 1,000 MW in Tamil Nadu were being considered.