New Delhi: Under the Viability Gap Funding (VGF) scheme, offshore wind projects of 500 MW will come along the Tamil Nadu coast and 500 MW will come along the Gujarat coast, totalling 1 GW, said Minister for Power and New and Renewable Energy RK Singh on Friday. A VGF scheme to develop offshore wind projects was announced by Finance Minister Nirmala Sitharaman in her interim Budget 2024 speech on February 1.
The minister said that since India does not manufacture the equipment required for offshore wind energy generation, it will have to be imported, hence, the cost of offshore wind power will be high. “Initially, the cost of offshore wind power is expected to be Rs 5.5 to 6 per unit. Whereas the average cost of power procurement for discoms is Rs 4-4.5 per unit. Therefore, to make offshore wind energy affordable for discoms, a VGF is necessary,” said Singh.
The government is pursuing offshore wind energy capacity development through two models — VGF scheme and open access. The Ministry of New and Renewable Energy (MNRE), through Solar Energy Corporation of India (SECI) invited bids for the development of 4 GW of open access offshore wind capacity projects off Tamil Nadu coast on Friday.
Under this arrangement, the developers who win the bid will set up offshore wind energy capacity and sell electricity directly to consumers under the open access regime. No VGF is given under the open access bids, and the Renewable Energy generated will be sold to entities such as industries which are currently in the high-tariff band or to third parties (including on merchant basis) or to the power exchange. It may also be consumed in captive mode.