The Wind Picks Up For Offshore Energy In India, R.K Singh Leads Key Decisions On Tendering, Transmission

In one of the most decisive steps for India’s offshore wind energy ambitions, R.K Singh, Union Minister for Power and New & Renewable Energy held a meeting yesterday on transmission planning for offshore wind energy projects in India. Alok Kumar, Secretary, Power and Indu Shekhar Chaturvedi, Secretary, Ministry of New & Renewable Energy were also present in the meeting.

During the meeting, transmission and evacuation infrastructure required for offshore wind projects of total capacity 10 GW off the coasts of Gujarat and Tamil Nadu, was discussed. A presentation on this was made to the Minister by the Central Transmission Utility (CTU).

After a detailed review, it was decided to bid out offshore wind energy blocks as per the following trajectory:

• Bids equivalent to a project capacity of 4.0 GW per year for a period of three years starting with the current FY 22-23 for development off the coast of Tamil Nadu and Gujarat for sale of power through open access / captive / bi-lateral third party sale / merchant sale
• Subsequently a project capacity of 5 GW will be bid out every year for a period of five years i.e. up till FY 29-30.

The project capacity of 8 GW bid out in the first two years beginning FY 22-23 will also be able to avail of the benefits of green attributes like carbon credits.

The bidding for the first 12 GW will be conducted on a single stage two envelope model wherein the bidders will be evaluated based on their techno-commercial capabilities and only the technically qualified bidders will proceed to financial evaluation. The financial evaluation will be based on quoted lease fee per sq km of sea bed area. The bidder offering the highest lease fee per sq km of sea bed area would be declared as the winner for allocation of the project.

Evacuation and transmission of power from offshore pooling Substation (PSS) to onshore transmission will be provided free of cost for all offshore wind capacities that will be bid out up to FY 29-30.

The Ministry of New & Renewable Energy through its implementing agency will issue the first bid in the next three – four months for leasing out offshore wind energy blocks equivalent to 4.0 GW capacity off the coast of Tamil Nadu.

The pick up in pace for Offshore wind is welcome as it fills a gap in India’s energy mix, even as power demand in the country continues to scale new highs thanks to the rising temperatures seen in the past two decades across the country.

The focus on transmission, and the sanction of eligibility for green credits are important measures to provide confidence and extra incentives respectively to bidders. A 38 GW target for 2030 is also a ramp up on the proginal 25 GW target. More importantly, with a clear timeline of tenders for the first 4 GW this year, the performance of those will be watched very keenly to decide the trajectory of future bids and rules. Though more expensive than solar or even onshore wind currently (offshore wind can cost twice as high in initial capital costs per MW), Offshore wind energy today promises far higher capacity turbines and overall CUF, than the former two.

Movement on schedule from here on will be welcomed by European and American manufacturers in the space, as they will feel they have an advantage over the Chinese firms trying to make an impact globally. India’s annual  4-5 GW market will be a very key market in that context.