India boosts support for offshore wind projects by raising ₹7,453 crore viability gap funding to attract investors after initial tender setbacks, aiming to tap 70 GW coastal potential and meet 500 GW non-fossil energy target.

Breaking News: India Raises Viability Gap Funding to Jumpstart Offshore Wind Projects

India is accelerating its offshore wind ambitions by increasing the ₹7,453 crore viability gap funding (VGF) after its first offshore wind tender in Gujarat failed to attract bids. The government aims to unlock the country's vast 70 GW offshore wind potential along its 11,098 km coastline and bolster its non-fossil energy capacity to 500 GW by 2030.

Renewed Financial Push for Offshore Wind

India’s Ministry of New and Renewable Energy (MNRE) is spearheading a comprehensive financial strategy to incentivize investment in the capital-intensive offshore wind sector. The current ₹7,453 crore VGF is being reassessed and likely raised to bridge the gap between high upfront costs and market revenue.

“The VGF currently allocated for offshore may not be adequate. To bring the tariff closer to ₹5 per unit, a higher VGF will be essential,” shared a senior government insider involved in the planning.

• The ₹7,453 crore VGF is under review.
• Target tariff aim is ₹5/unit, competitive with onshore power.

What’s your take on this government-led financial support revamp?

Strategic Global Collaborations Amplify Efforts

The newly formed India-UK Offshore Wind Taskforce, joined by expertise from Denmark, is meeting to strategize risk mitigation and policy frameworks that attract private investors. Additionally, the World Bank has been engaged to assess additional financial needs and constraints.

“International collaboration brings critical expertise to help unlock private sector investment,” said an MNRE spokesperson.

• India-UK Offshore Wind Taskforce launched in early 2024.
• World Bank conducting financial and risk assessments.

How do you view the impact of international partnerships on India’s energy goals?

Overcoming Infrastructure and Cost Hurdles

Despite generating higher energy output than onshore projects, offshore wind requires significant capital expenditure for seabed installations and electricity evacuation. These challenges, coupled with tariff competitiveness, have delayed progress.

The government sees offshore wind as essential amid land acquisition challenges limiting onshore wind expansion, positioning it as a diversification strategy to meet green targets.

• Offshore wind capacity potential: 70 GW.
• Current tariff levels in Europe: ~₹10/unit, target India tariff: ₹5/unit.

What are your thoughts on India tackling high upfront costs to meet renewable targets?

Tender and Project Timelines

Following the Union Cabinet’s June 2024 approval of the VGF scheme, the Solar Energy Corporation of India (SECI) initiated a 500 MW offshore wind tender in September 2024 under build-own-operate models with 25-year power purchase agreements. The completion target is within 48 months.

• 500 MW tender launched September 2024.
• Project completion timeline: 48 months.

Do you believe these timelines are realistic for offshore wind deployment?

Key Takeaways

• India’s offshore wind financing boosted with raised ₹7,453 crore VGF.
• Strategic collaborations with UK, Denmark, and World Bank support risk mitigation.
• 70 GW offshore potential pivotal to India’s 500 GW non-fossil energy goal by 2030.
• High upfront costs and infrastructure remain challenges.
• SECI launched 500 MW tender in September 2024 with 48-month completion.

An offshore wind farm illustrates India's ambitious plan to scale up renewable energy with raised viability gap funding support to attract investment – Source: MNRE

What We Know

• India’s first offshore wind tender in Gujarat attracted no bids.
• Viability gap funding is a key government financial incentive for investment.
• Offshore wind can eventually supply power to 70 million households.
• International taskforces and consultancy firms are engaged.
• Tariff targets aim to make offshore wind competitive with other sources.

This major policy change indicates India's commitment to scaling renewable energy quickly while managing financial and technical risks. What do you think about India’s path to expanding offshore wind? Share your views.

For readers interested in India's broader renewable energy landscape and capacity expansion strategies, keep an eye out for upcoming analyses on wind power initiatives and offshore infrastructure development.

ai_overview

• India increases viability gap funding to boost offshore wind investment.
• First tender in Gujarat failed, prompting policy revision.
• Collaboration with UK, Denmark, and World Bank enhances strategy.
• Goal: Unlock 70 GW offshore potential, achieve 500 GW non-fossil capacity by 2030.
• SECI initiates 500 MW tender with 48-month deadline.