Wind Energy Firms Set To Gain From Rs 7,453 Crore Government Funding For Offshore Projects—Here's How

Wind energy firms stand to benefit significantly from the Rs 7,453-crore government funding scheme recently approved by the Union Cabinet, led by Prime Minister Narendra Modi.

This viability gap funding aims to support the development of India's offshore wind energy projects, addressing the high costs associated with offshore wind farms and enhancing power generation capacities.

Offshore wind turbines, typically larger than onshore ones, can harness higher wind speeds and uninterrupted wind flow, leading to increased power generation efficiency.

Here's how wind energy companies stand to benefit from the scheme.

Addressing High Costs

Indian companies like Inox Wind Ltd. and Suzlon Energy Ltd. have highlighted the high costs of offshore wind farms, which are 2.5 times more expensive than onshore projects. Construction, maintenance, and energy production costs are major hurdles. The lack of guaranteed power purchase agreements under current policies has also been a concern for companies like Suzlon.

Viability Gap Funding Impact

The viability gap funding scheme includes Rs 6,853 crore for installing and commissioning 1 gigawatt of offshore wind energy projects and Rs 600 crore for upgrading two ports to support logistics. This funding aims to reduce the cost of power from offshore wind projects, making it viable for purchase by distribution companies. The target is to provide electricity at Rs 4.5 per unit in Gujarat and Rs 4 per unit in Tamil Nadu.

The scheme will also support the creation of initial common infrastructure needed to bring offshore wind energy to port. This initiative is expected to make offshore wind projects financially viable and attractive for investment, addressing the economic challenges faced by the industry.