In a significant move to boost renewable energy, the Union Cabinet led by Prime Minister Narendra Modi sanctioned a substantial Viability Gap Funding (VGF) scheme for offshore wind energy projects.
The total approved outlay stands at Rs 7,453 crore, which includes Rs 6,853 crore allocated for the installation and commissioning of 1 GW of offshore wind energy projects. These projects will see 500 MW each developed off the coasts of Gujarat and Tamil Nadu. Additionally, Rs 600 crore has been earmarked for the upgradation of two ports to support the logistics requirements essential for offshore wind energy projects.
This VGF scheme represents a crucial step in implementing the National Offshore Wind Energy Policy, which was notified in 2015. The policy aims to harness the extensive offshore wind energy potential within India's exclusive economic zone. Government-backed VGF support is expected to reduce the cost of power generated from offshore wind projects, making it viable for purchase by Distribution Companies (DISCOMs).
Private developers, selected through a transparent bidding process, will establish these projects, while the Power Grid Corporation of India Ltd (PGCIL) will be responsible for constructing the power evacuation infrastructure, including offshore substations. The Ministry of New and Renewable Energy, acting as the nodal ministry, will coordinate with various other Ministries and Departments to ensure the scheme's successful implementation.
Given the specific port infrastructure required for the construction and operation of offshore wind energy projects, the scheme will see the Ministry of Ports, Shipping and Waterways supporting two ports to meet these demands. These ports will handle the storage and movement of large, heavy equipment crucial for offshore wind development.
Offshore wind energy boasts several advantages over onshore wind and solar projects, including higher adequacy and reliability, lower storage requirements, and greater employment potential. The development of the offshore wind sector is expected to bring economy-wide benefits, attracting investments, fostering indigenous manufacturing capabilities, creating employment opportunities across the value chain, and advancing technology development within the country.
The commissioning of the 1 GW offshore wind projects is anticipated to generate approximately 3.72 billion units of renewable electricity annually. This will lead to a reduction of 2.98 million tons of CO2 equivalent emissions each year for the next 25 years. Furthermore, this initiative will not only catalyze offshore wind energy development in India but also establish a necessary ecosystem to bolster the nation's ocean-based economic activities. This ecosystem is projected to support the initial development of 37 GW of offshore wind energy, requiring an investment of around Rs 4,50,000 crore.
The Cabinet's approval marks a pivotal moment in India's renewable energy landscape, underscoring the government's commitment to achieving its energy transition targets and fostering sustainable development.
