Cabinet approves 1 GW offshore wind energy projects in Gujarat, Tamil Nadu

New Delhi: The Union Cabinet on Wednesday approved a viability gap funding (VGF) scheme with a total outlay of Rs 7,453 crore for one GW offshore wind energy projects in Gujarat and Tamil Nadu.

The VGF scheme aims to set up first-ever offshore wind energy projects in India, said I&B Minister Ashwini Vaishnaw, while briefing media about the decisions at the Cabinet meeting chaired by Prime Minister Narendra Modi.

The VGF scheme for offshore wind energy projects also includes an outlay of Rs 6,853 crore for installation and commissioning of wind energy projects (500 MW each off the coast of Gujarat and Tamil Nadu), and grant of Rs 600 crore for upgradation of two ports to meet logistics requirements for offshore wind energy projects.

The successful commissioning of 1 GW offshore wind projects will produce renewable electricity of about 3.72 billion units annually, which will result in annual reduction of 2.98 million ton of CO2 equivalent emission for a period of 25 years, an official release said.

Further, the scheme will not only kick start the offshore wind energy development in India but also lead to the creation of required ecosystems in the country to supplement its ocean-based economic activities, it added.

This ecosystem will support the development of 37 GW of offshore wind energy initially at an investment of about Rs 4,50,000 crore, the release said.

The VGF scheme is a major step towards implementation of the National Offshore Wind Energy Policy notified in 2015, with an aim to exploit the vast offshore wind energy potential that exists within the exclusive economic zone of India.

The VGF support from the government will reduce the cost of power from offshore wind projects and make them viable for purchase by DISCOMs, the release said.

While the projects will be established by private developers selected through a transparent bidding process, the power excavation infrastructure, including the offshore substations, will be constructed by Power Grid Corporation of India Ltd (PGCIL).

The Ministry of New and Renewable Energy, as the nodal ministry, will coordinate with various Ministries/Departments to ensure successful implementation of the scheme.

Construction of offshore wind energy projects and its operations also require specific port infrastructure, which can handle storage and movement of heavy and large dimension equipment.

Under the scheme, two ports in the country will be supported by the Ministry of Ports, Shipping and Waterways to meet the requirements of offshore wind development.

Offshore wind is a source of renewable energy which offers several advantages over onshore wind and solar projects, such as higher adequacy and reliability, lower storage requirement and higher employment potential.

Development of the offshore wind sector will lead to economy-wide benefits by attracting investments, development of indigenous manufacturing capabilities, creation of employment opportunities across the value chain and technology development for offshore wind in the country, the release said.

This will also contribute towards achieving India's energy transition targets.