The Union Cabinet approves a Rs 7,453 crore VGF scheme to support offshore wind energy projects, aiming to boost initial capacity and reduce power costs.
The Union Cabinet has greenlit a significant initiative to bolster India’s renewable energy portfolio with a Rs 7,453 crore viability gap funding (VGF) scheme for offshore wind projects. This comprehensive funding package earmarks Rs 6,853 crore specifically for installing and commissioning 1 gigawatt (GW) of offshore wind energy capacity. These installations, strategically located off the coasts of Gujarat and Tamil Nadu, are set to maximise the potential of these regions for renewable energy production.
This allocation includes a crucial Rs 600 crore grant for upgrading two ports. These enhancements are essential to meet the logistical demands associated with offshore wind energy ventures. Earlier reports indicated that the bidding process for this 1 GW capacity could commence within the first 100 days of the new government’s term.
The VGF scheme aligns with the National Offshore Wind Energy Policy introduced in 2015, aiming to fully harness the vast potential within India’s exclusive economic zone.
Once operational, these offshore projects are expected to generate approximately 3.72 billion units of renewable electricity annually.
Moreover, they will establish a supportive ecosystem conducive to expanding ocean-based economic activities across the region.
The government envisions this initiative as a catalyst for further development, with plans to scale up to 37 GW of offshore wind energy. Such an ambitious expansion will require an estimated investment of Rs 4,50,000 crore.
This scale of investment underscores the strategic importance and long-term economic viability anticipated from offshore wind energy projects.
Financial support from the VGF scheme is anticipated to significantly reduce the cost of offshore wind power, rendering it financially viable for procurement by power distribution companies. To execute the projects, private developers will be selected through a competitive bidding process. At the same time, the critical transmission infrastructure, including offshore substations, will be overseen by the state-owned Power Grid Corporation of India Ltd.
Coordination efforts led by the Ministry of New and Renewable Energy will ensure seamless implementation of the scheme, involving collaboration with various ministries and departments. The construction and operation of offshore wind projects necessitate specialised port infrastructure to handle heavy equipment efficiently. Accordingly, the Ministry of Ports, Shipping and Waterways will support the development of these capabilities at two designated ports under the scheme.
Advantages highlighted by the government include the superior reliability and adequacy of offshore wind energy compared to onshore wind and solar projects. Additionally, offshore wind energy projects are not only expected to significantly contribute to India’s renewable energy goals, but also to create a substantial number of local employment opportunities, fostering economic growth and sustainability.
