At last, offshore wind sees some action

M Ramesh | Updated on: Jul 11, 2022

The Ministry’s ‘Strategy Paper for Establishment of Offshore Wind Energy Projects’ demonstrates the government’s growing seriousness about offshore

In October 2017, a senior official of the Ministry of New and Renewable Energy told the REINVEST conference that a roll-out of auctions for the country’s first offshore wind capacity was awaiting just one clearance. There was palpable excitement about India’s offshore wind, particularly among the overseas wind developers. 

Yet, for nearly five years, nothing happened.

Many experts have frequently observed to this writer that offshore wind is not easy. Aspects like data about wind speeds, various clearances and port and evacuation infrastructure take time to figure out, not to speak of the big issue of the cost of offshore wind energy and – who will buy the power at high prices. 

Return of foreign investors

But now, things have begun moving. The decibel level of buzz around offshore wind has increased. Foreign investors have turned their sights back on this sector. One German developed, who has requested not to be named, has installed a metmast at Kanyakumari to measure wind speeds, and is quite keen on putting up offshore capacities.  

On Friday, the Ministry came out with its much awaited ‘Strategy Paper for Establishment of Offshore Wind Energy Projects’. The paper is not rich in specifics; it gives a broad overview of the government’s thinking, but it certainly demonstrates growing seriousness about offshore.

In essence, the strategy paper speaks of three models of offshore development. First, bids for areas where the government’s National Institute of Wind Energy (NIWE) has carried out studies and has data; the first of such areas is a 365 sq km block in Gulf of Khambhat, enough to accommodate 1 GW of capacity. Second, blocks where developers would do their own studies. This is further divided into two sub-models—with government’s viability gap funding (2GW) and with evacuation support, waiver of some charges and renewable energy certificates or carbon credits. Under the third model, NIWE would auction large offshore blocks, a la oil industry, that are not covered by the first two models and let developers do their own studies, put up capacities and sell the energy to third parties. 

The ‘auction trajectory’ mentioned in the paper, between now and 2030, across the three models, is a mouth-watering 37GW. Eight wind zones have been identified in the Gulf of Mannar and five in the Gulf of Khambhat.  

Ambitious timelines

While this would no doubt be discussed and refined, the big signal is that offshore wind is, at last, happening. The timelines given in the paper are ambitious—the first bid is slated to happen in September, but even if one allows for some delays, it is heartening progress. 

However, there are quite a few points to be ironed out. For example, the applicability of the recently-announced ‘Electricity (Promoting Renewable Energy Through Green Energy Open Access) Rules, 2022, to offshore wind needs to be explicitly mentioned. The ‘green open access rules’ also do not freely allow banking and waive cross-subsidy charges—presumably because the framers of the rules did not have offshore wind energy in mind when they made the rules.

But offshore wind is already costly—not less than ₹8 per kWhr; costs will come down with scale, but that will take time. Unless support is given in the form of easy banking and full waiver of cross subsidy and other charges, it is going to attract developers. This is particularly important because one hears that the first model to be rolled out is likely to be the one that envisages merchant capacities with open access sales of power.

Chasm between ministries

The nub of the issue, often heard in whispers, is the chasm between the Ministry of New and Renewable Energy and the Ministry of Power—the former feels that it is the job of the latter to look into waivers.  

Furthermore, the strategy paper appears to leave the responsibility of getting various clearances to the developers—particularly for the Stage-II (final) clearance for open access projects (model 2B). This can be time consuming. 

Another issue pointed out by industry insiders is that of the machines. Unless India-specific machines are developed, offshore will be less attractive. European turbines just won’t do. One does not hear of turbine manufacturers developing machines tailored for Indian offshore.  

The first to take off might be the 1GW envisaged under ‘Model 1’ in the Gulf of Khambhat, if only for the reason that NIWE has two years’ worth of wind data, as well as data related to soil, oceanography and environmental impact. This kind of fast-tracks the process. But there is a caveat—the data pertaining to soil, oceanography and environmental impact “will be shared after the concurrence of the Ministry of Defence”. 

As such, there are a lot of if’s and but’s. Still, the point is that there is some action. Every long journey begins with baby steps. 

Published on July 10, 2022
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