India unveils multi-model approach for Offshore Wind Energy Expansion

01 Aug 2023

The Ministry of New and Renewable Energy (MNRE) has designed three models to promote the development of offshore wind energy projects, focusing particularly on the southern and western coastlines of the country.

Additionally, the Ministry has called for proposals to conduct surveys on identified offshore wind project sites using these newly formulated models.

In line with the National Offshore Wind Energy Policy of 2015, the National Institute of Wind Energy (NIWE) was tasked with leading offshore wind project development in India.

NIWE conducted a thorough study and pinpointed eight zones off the coasts of Tamil Nadu and Gujarat that are suitable for offshore wind projects.

Model A (VGF Model)

This approach applies to designated offshore wind zones that have undergone comprehensive assessments by MNRE and NIWE. The initial phase of this model focuses on a section of the identified Zone B3, covering 365 square kilometres with a capacity of 500 MW off the coast of Gujarat, and another 500 MW off the coast of Tamil Nadu.

MNRE, in collaboration with implementing agencies, will invite bids to procure offshore wind power capacity under this framework. To ensure a predetermined power tariff, essential central financial assistance (CFA) will be provided in the form of Viability Gap Funding (VGF).

In Gujarat, MNRE will establish lease agreements for 35 years with successful bidders, who will pay an annual base lease fee of Rs 100,000 (~$1,203) per square kilometre for the duration of the lease. Successful bidders will be expected to provide necessary information for Stage II clearances, required for setting up and operationalising the offshore wind farm and associated transmission infrastructure.

In Tamil Nadu, a site with a 1 GW capacity has been identified, and NIWE will conduct surveys within this site. A bid for a 500 MW project will be floated for this site, following a similar project development process as in Gujarat.

Model B (Non-VGF Model with Exclusivity over Seabed)

This approach pertains to locations identified by NIWE. Offshore wind sites within designated zones will be demarcated and leased to developers for a defined duration. Project development in these sites will be carried out by developers without Central Financial Assistance (CFA). The generated electricity can be consumed internally under open access arrangements, sold through bilateral power purchase agreements (PPAs), or traded on power exchanges. The government might also issue bids to procure power for DISCOMs based on tariffs after two years.

Through competitive selection, MNRE will allocate specific offshore wind energy sites to potential developers. The allocation will involve an exclusive lease for two years to facilitate preliminary survey activities. Seabed allocation will be determined through competitive bidding.

The total offshore wind energy capacity, initially estimated at 14 GW, will be unveiled in stages. The first bid for 4 GW is scheduled to commence on December 1, 2023, followed by a subsequent bid for 3 GW expected in the financial year 2024-25.

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