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In a significant move toward harnessing renewable energy, India’s Ministry of New & Renewable Energy has revealed its intention to auction offshore wind sites off the coast of Tamil Nadu. The project is set to be administered through the National Institute of Wind Energy (NIWE) and aims to boost offshore wind energy development in the region.
As part of the initiative, NIWE will facilitate the required Stage-I and Stage-II clearances following the National Offshore Wind Energy Policy of 2015. Furthermore, the grid evacuation infrastructure, extending up to the offshore substation, will be provided as part of the Interstate Transmission System (ISTS) network by the Central Transmission Utility (CTU) and Power Grid Corporation of India Ltd. (PGCIL).
One of the key incentives for offshore wind power projects is that those commissioned on or before December 31, 2032, will be eligible for a waiver of ISTS charges and Additional Surcharge. Additionally, the government is proposing concessional custom duties on the import of critical components for offshore wind turbine manufacturing, similar to the benefits currently available for onshore wind turbines. Renewable Energy Credits with Multipliers and Carbon Credit benefits are also in the pipeline for offshore wind projects.
Key Features of the Proposed Bidding Process
The allocation of offshore wind sites will follow a single-stage, two-envelope bidding process. In the first envelope, bidders will submit their techno-commercial bids, while the second envelope will contain the financial bids. Bidders will be required to quote a site lease rental with a minimum floor price of ₹1 Lakh/sq km/year.
Initially, the seabed area will be leased to the developer for five years, with the possibility of a one-year extension on a case-by-case basis. Developers must commission their offshore wind energy projects, including conducting the necessary studies and surveys, within this timeframe.
Developers may exit the project during the lease period, subject to conditions such as the submission of study/survey data to NIWE and forfeiture of the submitted Bank Guarantee, which will be USD 1 million for each site.
NIWE will closely monitor the progress of project development during the initial lease period. The site allocation fee paid by the developer, above the floor price, will be partially refunded if the project is commissioned within the scheduled timeframe. Following commissioning, the lease will be extended for the operational life of the project, including the decommissioning period.
Throughout the operational phase, the project developer will be responsible for paying the seabed lease floor price at the rate of ₹1 Lakh/sq km/year (lease rentals).
To encourage participation in the bidding process, interested developers are encouraged to conduct their own required studies and surveys on the designated sites after notifying NIWE. NIWE will extend full support to facilitate these study and survey activities in line with the Guidelines for Wind Power Assessment, Studies, and Surveys.
This initiative marks a significant step forward in India’s commitment to expanding its renewable energy portfolio, fostering sustainability, and meeting its clean energy goals. With a well-structured bidding process and incentives in place, the future looks promising for the growth of offshore wind energy in Tamil Nadu and beyond.
The identified sites for bidding are detailed on the accompanying map, please view the document below.