The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Viability Gap Funding (VGF) scheme for offshore wind energy projects with a total outlay of Rs 7,453 crore. The scheme aims to set up the first ever offshore wind energy projects in India.
This includes Rs 6,853 crore for the installation and commissioning of 1 GW of offshore wind energy projects, divided into 500 MW each off the coasts of Gujarat and Tamil Nadu, and an additional Rs 600 crore for upgrading two ports to meet the logistics requirements of these projects.
The VGF scheme is a significant step toward implementing the National Offshore Wind Energy Policy, notified in 2015, which aims to harness the vast offshore wind energy potential within India’s exclusive economic zone. The government’s VGF support will reduce the cost of power from these offshore wind projects, making them viable for purchase by DISCOMs.
Private developers, selected through a transparent bidding process, will establish these projects, while the Power Grid Corporation of India Ltd (PGCIL) will construct the power evacuation infrastructure, including offshore substations. The Ministry of New and Renewable Energy will coordinate with various ministries and departments to ensure the scheme’s successful implementation.
Specific port infrastructure is essential for the construction and operation of offshore wind energy projects, as it must handle the storage and movement of heavy and large-dimension equipment. Under the scheme, two ports will receive support from the Ministry of Ports, Shipping and Waterways to meet the needs of offshore wind development.
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Offshore wind energy offers several advantages over onshore wind and solar projects, including higher adequacy and reliability, lower storage requirements, and higher employment potential.
Developing the offshore wind sector will bring economy-wide benefits by attracting investments, fostering indigenous manufacturing capabilities, creating employment opportunities across the value chain, and advancing technology development in India. This development aligns with India’s energy transition targets.
The successful commissioning of 1 GW offshore wind projects will generate approximately 3.72 billion units of renewable electricity annually, reducing CO2 equivalent emissions by 2.98 million tons annually over a 25-year period. Furthermore, this scheme will initiate offshore wind energy development in India and create the necessary ecosystem to support the country’s ocean-based economic activities. This ecosystem will facilitate the development of an initial 37 GW of offshore wind energy, with an investment of around Rs. 4,50,000 crore.
