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Business News/ Industry / Energy/  Centre sets the ball rolling for offshore wind projects
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Centre sets the ball rolling for offshore wind projects

Government plans to bid out projects of 4GW capacity on 1 December, 3GW more in FY25

Although the government notified the national offshore wind energy policy in 2015, the sector has not taken off as anticipated. (Bloomberg)Premium
Although the government notified the national offshore wind energy policy in 2015, the sector has not taken off as anticipated. (Bloomberg)

The Union ministry of new and renewable energy has sought bids to survey sites identified for offshore wind power projects in Tamil Nadu.

A notification released by the ministry showed that the government plans to bid out projects of 4GW capacity on 1 December. Further, in the next financial year, it plans to bid out projects with a total capacity of 3GW.

The government will bid out sites for offshore wind power projects through two models. In one model, the government will provide viability gap funding, and in the other, identified offshore wind sites will be leased out under competitive bidding for carrying out studies and surveys and subsequent project development without any central financial assistance.

The bids for the study of the sites have been called for the second model where financial support is not available.

Under this model, sites are proposed to be allocated for a period of two years to carry out the survey. The development of offshore wind energy projects shall be taken up by the selected offshore wind power developer (OWPD) after the survey period, and the power offtake will be the responsibility of the OWPD, either used for captive consumption under the open access mechanism or sold to any entity through a bilateral power purchase agreement (PPA) or sold through power exchanges.

The government may also call for bids for procurement of power for distribution companies based on tariffs after two years, the notification said.

“Proposals from interested developers are solicited to carry out study/survey in identified sites (without any exclusivity on the seabed) in order to have preparedness for participating in the bids," it said.

Despite a 7,600km coastline, India does not have any offshore energy projects, prompting a major government focus on the segment to move away from thermal power and achieve the target of 500GW of installed renewable energy capacity.

Although the government notified the national offshore wind energy policy in 2015, and efforts have been on to establish the sector in the country, the sector has not taken off as anticipated.

The wind resources assessment carried out by the National Institute of Wind Energy shows India’s total wind energy potential at 302GW at 100m and 695.50GW at 120m hub height. Out of the total estimated potential, more than 95% of commercially exploitable wind resources are concentrated in seven states—Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan and Tamil Nadu.

According to the government, offshore wind power offers a plausible alternative in such a scenario. The absence of any obstruction in the sea offers a much better quality of wind and its conversion to electrical energy. Offshore wind turbines are much larger in size, in the range of 5-10MW per turbine as against 2-3MW of an onshore wind turbine. However, the high cost of offshore wind energy is a major obstacle to its development and adoption.

To boost investments in this space, the Union power ministry in May announced a waiver of Inter-State Transmission System (ISTS) charges on the transmission of electricity generated via offshore wind sources.

Offshore wind power projects commissioned on or before 31 December 2032, through PPAs or on a merchant basis will be exempt from ISTS charges for 25 years from the date of project commissioning. Projects commissioned after this deadline will be subject to ISTS charges, the ministry said.

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Published: 18 Aug 2023, 11:06 PM IST
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