India Announces Plan To Conduct Offshore Wind Auctions In 3-4 Months

Despite having a policy on offshore wind power plants in place for seven years, India has not sanctioned a single project yet.

<div class="paragraphs"><p>An offshore wind farm. (Source: Pixabay)</p></div>
An offshore wind farm. (Source: Pixabay)

The Indian government will auction offshore wind energy capacities this year as it looks to augment the country's renewable ambitions.

The government will first accept bids for project capacity of 4 gigawatt per annum, for a period of three years starting FY23, according to a statement by the Ministry of New and Renewable Energy. This auction will be for development and sale of power through various means.

According to the statement, the first bid will be issued in 3-4 months. Subsequently, the government plans to auction off a project capacity of 5 GW per year, for a period of five years, up till FY30.

Despite having a policy on offshore wind in place for seven years, not a single project has been sanctioned yet.

BQ Prime had earlier reported on how high capital costs, lack of viability gap funding, and uncertainty on tariffs had kept private players away from the sector.

The snail's pace of progress is despite massive potential in India for harnessing of offshore wind power. According to the central government's own estimates, the 7,600-kilometre-long coastline can generate 140 GW of power by 2050. That's more than half of the country's 201 GW peak power demand.

Prime Minister Narendra Modi's administration has set a target of having 30 GW of offshore capacity by 2030. And while industry officials, that BQ Prime had spoken to earlier, consider it an ambitious figure, they expect tenders to start flowing in once the first project takes off.

According to the statement, the bids for the first 12 GW will be conducted in a two-envelope model. Bidders will be first evaluated on their technical ability to execute offshore projects. Only then will their financial quote be considered.

To incentivise bidders to come forward, the government will waive all costs for transmission of power from offshore to onshore for all capacities that will be bid up to FY30, it said.

Without elaborating further, the ministry said that for a project capacity of 8 GW that will be bid out in the first two years, developers will be able to avail benefits of "green attributes" like carbon credits. The statement also does not mention the viability gap funding available for these projects.

The decision was taken at a meeting that included Minister of Power and New & Renewable Energy RK Singh, Power Secretary Alok Kumar, and Renewable Secretary Indu Shekhar Chaturvedi.