Economy

India's first offshore wind farm tender awaits Finance Ministry nod

M Ramesh | Updated on: Apr 29, 2022

Bidding can happen this year if the Ministry sanctions the viability gap funding, says MNRE official

India's much-touted tender calling for developers to set up 1,000 MW of offshore wind capacity off the Gujarat coast, is awaiting viability gap funding (VGF) sanction from the Ministry of Finance. Offshore wind is inherently costly; it'd cost at least ₹8 a kWhr at today's prices. As such, it cannot come up unless the government provides VGF support.

Speaking at Windergy 2022, a conference-cum-exhibition event of the wind industry currently underway here, Prabir Kumar Dash, an official in the Ministry of New and Renewable Energy (MNRE), said that if the Ministry of Finance sanctions the VGF now, the bidding can happen this year.

He later told BusinessLine that MNRE has asked for ₹15,000 crore for VGF, not counting the funding needed for building the grid, for evacuating the power.

Tapping vast potential

The opening up of India's offshore wind segment is being eagerly awaited by the global energy industry. With a coastline of 7,600 km, the potential is estimated to be 1,95,000 MW (1,12,000 MW fixed and 83,000 MW floating), according to a report by the World Bank.

As long ago as October 2015, the government of India notified a National Offshore Wind Energy Policy, which envisioned 5,000 MW of installations by 2022 and 30,000 MW by 2030.

In 2018, a senior official of MNRE had told this correspondent that the bidding was waiting for "just one clearance". This delay was raised at the conference. But Dash denied any undue delay saying that offshore wind was complicated and time-consuming, pointing out that even the US, after 13 years of deliberations, had only seven offshore turbines.

Other speakers pointed out that India's grand ambition of building 5,00,000 MW of renewable energy capacity by 2030, involved 1,40,000 MW of wind. Today, the country has a little over 40,000 MW, but half of it, having completed its life, would need to be scrapped by 2030.

This means that India should build 1,20,000 MW of wind power capacity in the next eight years. This cannot be done without a substantial contribution from offshore wind.

Published on April 29, 2022
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