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The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Viability Gap Funding (VGF) scheme for the implementation of offshore wind energy projects in India. This decision marks a significant step towards harnessing the vast offshore wind energy potential within the country’s exclusive economic zone. The total financial outlay for this scheme is ₹7,453 crore.
The VGF scheme includes ₹6,853 crore allocated for the installation and commissioning of 1 GW of offshore wind energy projects, divided into two projects of 500 MW each off the coasts of Gujarat and Tamil Nadu. Additionally, ₹600 crore has been earmarked for the upgrading of two ports to support the logistics requirements for these projects.
The introduction of this scheme is a crucial move towards the realization of the National Offshore Wind Energy Policy, which was announced in 2015. The primary objective of this policy is to exploit the offshore wind energy resources available in India’s exclusive economic zone. The VGF support from the government aims to make the cost of power from offshore wind projects more viable, ensuring that it becomes an attractive option for purchase by Distribution Companies (DISCOMs).
Private developers, selected through a transparent bidding process, will be responsible for establishing these offshore wind projects. However, the construction of power evacuation infrastructure, including offshore substations, will be managed by the Power Grid Corporation of India Ltd (PGCIL). The Ministry of New and Renewable Energy will act as the nodal ministry, coordinating with various other ministries and departments to ensure the smooth implementation of the scheme.
One of the critical requirements for the construction and operation of offshore wind energy projects is specific port infrastructure. This infrastructure needs to handle the storage and movement of heavy and large dimension equipment. To meet these needs, the Ministry of Ports, Shipping, and Waterways will support two ports in the country under this scheme. This support will ensure the necessary logistics for offshore wind development are in place.
Offshore wind energy offers several advantages over onshore wind and solar projects. These benefits include higher adequacy and reliability, a lower requirement for storage, and a greater potential for job creation. The development of the offshore wind sector is expected to bring widespread economic benefits. It will attract investments, foster the development of indigenous manufacturing capabilities, create employment opportunities across the value chain, and promote technology development in offshore wind energy in India.
The successful commissioning of the 1 GW offshore wind projects is projected to generate approximately 3.72 billion units of renewable electricity annually. This generation will lead to an annual reduction of about 2.98 million tons of CO2 equivalent emissions over a period of 25 years. Moreover, this scheme will not only initiate the development of offshore wind energy in India but also help establish the necessary ecosystem to support the country’s ocean-based economic activities.
This newly developed ecosystem will play a crucial role in the development of an initial 37 GW of offshore wind energy, with an estimated investment of around ₹4,50,000 crore. The VGF scheme thus represents a comprehensive approach to kick-starting offshore wind energy development in India, contributing significantly to the country’s energy transition targets and overall economic growth.
