Offshore wind energy: India set to harness coastal breezes

On October 6, 2015, India unveiled the National Offshore Wind Energy Policy, designed to stimulate the expansion of offshore wind energy within the nation. The policy established a regulatory structure for offshore wind energy growth, spanning up to 200 nautical miles from the coastline and encompassing the country’s Exclusive Economic Zone (EEZ).

The country recently unveiled a multi-model approach to offshore wind energy expansion. The Union Ministry of New and Renewable Energy (MNRE) has assumed the role of the nodal ministry, while the National Institute of Wind Energy (NIWE) will serve as the nodal agency, responsible for supervising the advancement of offshore wind energy initiatives in India.

Despite the formulation of a dedicated policy just eight years ago, the offshore wind sector has not seen significant progress over the past three decades. This marks a significant step forward, albeit one that took time to materialise.

Identifying offshore wind zones

A multi-criteria approach was undertaken to pinpoint regions with the highest potential for offshore wind energy. Parameters such as light detection and ranging (LiDAR)-based wind resources and bathymetry (the measurement of depth of water in oceans, seas, or lakes) were meticulously assessed. 

Preliminary studies, led by NIWE, unveiled the southern tip and the west coast as promising areas for offshore wind farm development. The assessment was conducted in collaboration with the Facilitating Offshore Wind in India consortium.

Based on this evaluation, eight zones off the coasts of Gujarat and Tamil Nadu were identified as potential offshore wind energy zones. These zones were demarcated as illustrated in these figures.

Demarcated Offshore Wind Energy Zones at Tamil Nadu

Demarcated Offshore Wind Energy Zones at Gujarat

Government agencies behind it

The MNRE and NIWE are central to the execution of the National Offshore Wind Energy. They are tasked with conducting extensive studies and surveys to determine potential offshore wind energy zones. 

Furthermore, these agencies are responsible for crafting policies and regulations that facilitate the growth of offshore wind power projects in India. They also play a pivotal role in implementing financial incentives and other measures to stimulate private sector investments in offshore wind power projects.

India has set forth ambitious plans to auction 37 gigawatts of offshore site leases over the next seven years, spanning until fiscal year 2030 (FY 2030). The first phase will commence with 4.5 GW of offshore wind tenders in the current fiscal year (FY 2024), followed by 3.5 GW in FY 2025. 

Subsequently, there will be two years (FY 2026 and FY 2027) of seven GW auctions and three years (FY 2028, FY 2029 and FY 2030) of five GW auctions each year.

Models for developing projects

The strategy paper for the establishment of offshore wind energy projects outlines three distinct models for offshore wind development.

Model A: This 1 GW model involves a Power Purchase Agreement (PPA) award tender supported by Viability Gap Funding (VGF). The developer will bid for a PPA with SECI to construct projects at two sites, each with a capacity of 0.5 GW, in Gujarat and Tamil Nadu, respectively.

A four-year construction and commissioning period is allotted, extendable by a year. Developers are required to pay a floor lease fee of Rs 1 lakh per square kilometres per year.

Model B: This 14 GW model is non-VGF and has exclusivity over seabed during the study/survey period. The developer will participate in site lease allocation through competitive bidding, based on the proposed seabed lease fee. 

There are two scheduled tenders, one for FY 2024 (December 2023) and another for FY 2025. 

In FY24, the allocation will encompass four GW in Tamil Nadu Zone B, including sites 1, 2, 3, and 4, with a potential capacity ranging from 3.7 to five GW. Meanwhile, in FY 2025, three GW will be allocated in Tamil Nadu Zones E and G, specifically sites 5, 6, and 8, with an estimated potential capacity of four to 6.6 GW.

The survey period spans two years,and construction must be finalised within three years from the date of receiving stage II clearance and / or the signing of the concession agreement. There is no provision for extending these timelines, as outlined in the strategy paper.

Throughout the project’s development, the developer is obligated to pay the quoted lease fee until the Commercial Operation Date is achieved. Subsequently, a floor sea-lease fee will be applicable.

Model C: This 22 GW is non-VGF and does not have exclusivity over seabed during the study/survey period. Developers will bid for project development or seabed allocation, provided they have completed the necessary survey. 

The government will grant survey consent on a first-come-first-served basis, ensuring a minimum separation of a km between developers’ designated sites. 

Tendering for such projects is scheduled to commence from FY 2026 onwards for locations within India’s EEZ, except for those outlined in Model A and Model B.

The survey duration is set at three years, while the specific timeframe for project development is not defined. However, it is imperative that the project is commissioned within four years from the date of obtaining stage II clearance and/or signing the concession agreement. 

The requirement for whether stage II clearance and a consent letter from NIWE are prerequisites before conducting surveys or commencing the project remains unclear.

Indicative auction trajectory for offshore wind 

Incentives and scope

Model A benefits from central financial assistance (CFA) in the form of VGF, while Models B and C do not receive CFA support. All three models include incentives such as power evacuation infrastructure, waiver of transmission charges, Renewable Energy Credits with Multipliers, Carbon Credit benefits, subject to government determinations.

In terms of scope, central transmission utility (CTU) or Power Grid Corporation of India manages offshore pooling stations, export cables, and onshore pooling substations. Developers are responsible for constructing array cables and delivering them at specified voltage levels to the CTU offshore pooling station.

The revised strategy paper for offshore wind issued by MNRE presents some significant challenges, according to Swarnim Srivastava, the project manager at MEC Intelligence, a strategic advisory and market consulting firm.

These challenges include a mismatch in the timelines allowed for surveys in Model A, Model B, and Model C. Model A and Model C provide a construction period of 4 years for developers, while Model B stipulates a three-year construction period, Srivastava said. 

Additionally, Model C has been granted a three-year survey period, whereas Model B only allows for two years, she added.

Another issue is the lack of clarity regarding when the construction duration begins, either from Stage II clearance or the signing of the concession period. It is imperative to establish whether obtaining Stage II clearances aligns with the concession agreement or if there are interim steps in between, Srivastava further said. 

Furthermore, there is a lack of clarity regarding the timeline for Tamil Nadu LiDAR installation and its impact on Model A bid timelines, she pointed out.

Model A outlines 0.5 GW bids for Tamil Nadu, but uncertainties remain regarding the timeline for LiDAR installation and site readiness, especially when compared to Gujarat Site B. Developers typically require at least 12-24 months of LiDAR data before bidding, making it challenging for bidding in FY 2025.

Lastly, there is uncertainty about the availability of grid transmission infrastructure support from CTU for non-government procurement. While the document mentions government support in the form of taking over offshore substation scopes, export cables, and onshore substations through PowerGrid, it is unclear whether this support is exclusively for projects selected through government procurement bidding or if it extends to offshore Wind projects in general.

EEZ of the country to be developed under Model C

India has consistently demonstrated its commitment to adopting emerging technologies for its energy needs over the past two decades. A recent exemplar of this proactive approach is the establishment of a comprehensive ecosystem for hydrogen production and consumption, among other initiatives. 

The country’s history is replete with instances of fearlessly adopting new technologies, such as solar energy, even when their initial costs were prohibitively high, eventually achieving cost parity with conventional sources.

In a similar vein, India has taken a step towards harnessing the immense potential of offshore wind energy, a sector often associated with higher generation and delivery costs. This exemplifies its embrace of science and technology for development, with a promise of future returns as any endeavour aiming to accelerate the inclusion of science and technology into the growth story of a country pays off sooner or later.  

One might argue, drawing parallels with India’s renowned space missions, that it need not produce such expensive power given its surplus energy generation in light of the country’s limited resources, which otherwise can be directed towards achieving other development objectives.

Nevertheless, offshore wind energy development need not be viewed in isolation but rather strategically integrated into the broader blue economy framework it can drive.

Offshore wind power generation, although a technology understood to some extent in India without any footprint whatsoever, offers an opportunity for developing indigenous technology or the choice of relying on other countries for technology know-how such as countries in Europe where offshore wind power generation is prevalent. 

Simultaneously, there is a need to comprehend the challenges and gaps in this emerging sector. Most importantly, comprehensive resource mapping covering the total length of 7,000-km-long coastline as against the current understanding of potential for limited sites.  

And, as we progress, we will undoubtedly learn from initial efforts, making necessary course corrections in technology, enablers and the entire value chain.

A technical report by Delhi-based think tank Centre for Science and Environment further explores the development of offshore wind energy in India. 

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