ONGC-NTPC Green JV Seeks Offshore Wind Projects On Nomination After VGF Disappoints

ONGC NTPC Green Pvt., the 50:50 joint venture between the two state-owned energy firms, can take up offshore wind projects if government nominates them on cost-plus basis or provides the funding for the projects, two people close to the matter told NDTV Profit. 

Under nomination method, ONGC NTPC Green can be allocated acreages on cost-plus basis to setup some demonstration projects to attract investors. Alternatively, in the competitive bidding where bidder with lowest viability gap funding would win the project as prescribed under the offshore wind guidelines.

ONGC NTPC Green Pvt., the 50:50 joint venture between the two state-owned energy firms, can take up offshore wind projects if government nominates them on cost-plus basis or provides the funding for the projects, two people close to the matter told NDTV Profit. 

Under nomination method, ONGC NTPC Green can be allocated acreages on cost-plus basis to setup some demonstration projects to attract investors. Alternatively, in the competitive bidding where bidder with lowest viability gap funding would win the project as prescribed under the offshore wind guidelines.

ONGC has the experience of setting up offshore oil and gas platforms that can be used for setting up offshore wind projects, while NTPC can use the experience in power generation and evacuation, the people said. 

Ministry of New and Renewable Energy (MNRE) in June this year announced the viability gap funding scheme of Rs 6,853 crore for two offshore wind projects of total 1,000 MW capacity. Guidelines were issued in September, but it has failed to generate enough interest among the developers, both domestic and international, said people that NDTV Profit spoke to. 

An official from the Solar Energy Corporation of India, the implementing agency of the offshore wind projects, said, they have received the developers comments which will now be sent to the MNRE for further evaluation. However, the official declined to comment on the timeline for the competitive bidding. 

The cost of setting up a 1,000 MW (500MWx2) project comes to Rs 20,000–25,000 crore. That is too high for any developer, if they are not sure of the wind speed, efficiency and return on investments, the people quoted above said. 

The cost per MW for offshore turbines are typically higher because of stronger structures and foundations needed, high corrosion and the negative impact on marine biodiversity as well, the people said.

The cost of onshore wind projects is Rs 6 crore per MW while that of an offshore wind project is around Rs 20–25 crore per MW, making it unviable for developers, the people quoted said. Even foreign players with operational projects are not finding it lucrative, they said.

As per the guidelines issued by MNRE for the Viability Grant Funding for the two projects, the first instalment of VGF will only be released after the developer submits an equal amount of equity and debt, or both for the project.

If the government handholds developers with funding even on no-profit-no-loss basis, they are ready to go ahead full throttle with site and sea bed surveys and undertake the projects, the people said.