Showing Promise

Indian offshore wind segment takes small steps forward

India is amongst the fastest growing economies in the world and has a rising energy demand. Endowed with a vast coastline, the country has been taking steps to harness its huge offshore wind power potential, with the coasts of Gujarat and Tamil Nadu witnessing major developments in particular.

India has set a target to install 5,000 MW of offshore wind power capacity by 2022. However, the path to achieving this is riddled with significant challenges. These include high capital costs, delays due to regulatory requirements and a lack of supporting infrastructure. The government can play an important role in helping the offshore wind segment overcome these barriers and enhancing its implementation capabilities.

Development chronology

The Indian peninsula has a coastline of 7,600 km that gives it an estimated offshore wind power potential of about 350 GW, spread mostly off the coasts of Tamil Nadu, Gujarat and Maharashtra. As per estimates, Gujarat has an offshore wind potential of around 106 GW while Tamil Nadu has a potential of 60 GW. In 2010, India began planning to tap this  vast potential.

In 2013, responding to a project proposal call under the Indo-European Cooperation on Renewable Energy programme, the FOWIND project was implemented with the objective of promoting offshore wind power development in India by a consortium led by global wind energy council (GWEC). Other consortium partners include the Centre for Study of Science, Technology and Policy, DNV GL, Gujarat Power Corporation Limited (GPCL) and the World Institute of Sustainable Energy. The National Institute of Wind Energy (NIWE) joined the consortium as a knowledge partner in June 2015. FOWIND also works in close association with the Ministry of New and Renewable Energy (MNRE) and the state governments.

The project primarily focuses on the states of Gujarat and Tamil Nadu for the identification of potential zones for development through techno-commercial analysis and preliminary resource assessment. A platform is proposed to be established for structural collaboration and knowledge sharing between stakeholders from the European Union (EU) and India on offshore wind technology, policy, regulation, industry and human resource development. The consortium was awarded a grant of Euro 4 million by the EU delegation to India in 2013.

In 2014, an MoU was signed between the MNRE, NIWE, and a consortium of partners comprising NTPC, Power Grid Corporation of India Limited, the Indian Renewable Energy Development Agency, Power Finance Corporation, the Power Trading Corporation and GPCL, for setting up a joint venture (JV) company to undertake the first demonstration offshore wind power project in the country. This project, to be set up along the coast of Gujarat, would have a capacity of around 100 MW. The JV was also tasked with undertaking a detailed feasibility study based on the inputs received from pre-feasibility studies, as well as other necessary steps for the project’s implementation. However, there is no update on the implementation of the project.

In October 2015, the Government of India released its first national offshore wind energy policy to create a favourable regulatory environment for the segment’s development. Moving a step forward towards harnessing offshore wind energy in November 2017, the FOWIND consortium commissioned India’s first offshore light detection and ranging (LiDAR) device for the NIWE’s platform in the Gulf of Khambat, Gujarat, for the collection and measurement of wind speed data.

In April 2018, the NIWE invited expressions of interest for the development of a commercial offshore wind energy project of 1,000 MW located off the coast of Gujarat. Both domestic and global wind companies were eligible to participate, although their qualifying parameters differed. The proposed project will be set up in Zone B of FOWIND, located 23-40 km off the coast in the Gulf of Khambat, across an area of about 400 square km. The wind resource assessment study is being carried out by the NIWE using the recently installed LiDAR device and the 100 metre wind mast installed on the Jafrabad coast. However, the complete LiDAR data will be available only by November 2018, and that may lead to delayed tender results.

Challenges

Offshore wind power can play a vital role in meeting the inevitable rise in energy demand resulting from increasing industrialisation and economic growth. While the onshore wind market has progressed to become the fourth largest in the world with 33 GW of installed capacity, the offshore sector faces multiple challenges.

The capital cost of offshore projects is much higher compared to that of onshore wind projects. The installation of turbines accounts for 45-50 per cent of the project cost, while foundation structures, evacuation facilities and project management account for the rest. The development of transmission infrastructure and coastal security during the construction and operation period further raises the costs and, in turn, tariffs.

Developing offshore wind projects requires timely clearances from military authorities, port authorities, coastguards, oil and telecommunication companies and other governmental agencies. Additional approvals may be required from state government bodies for the creation of evacuation infrastructure, logistics, etc. Delays in these can impact project completion. For offshore wind projects, it is important to plan in advance for proper power evacuation facilities, grid expansion, vessels for transportation of wind turbine components and supply chain logistics. Connecting offshore wind farms to the inland grid network depends on several factors such as distance to the coast, cable routing options and undersea cabling. Meanwhile, other challenges associated with offshore wind projects such as regulatory constraints and the lack of availability of low-cost finance also impact the viability of these projects and increase their risks.

Outlook

The cost of electricity from offshore wind projects is expected to decrease over time as economies of scale are achieved for larger projects. A gradual increase in the capability of the local supply chain enables import substitution, with cost-effective domestically produced goods and services. The cost trajectory of offshore wind in other countries substantiates this claim. The previous year saw the first zero-subsidy tender for offshore wind power in the Netherlands. Meanwhile, China’s offshore segment witnessed a 71 per cent increase in just one year, setting an example for India. The US has undertaken active planning at the state level with a combined capacity of 23,735 MW of projects under development. These use cases indicate the level of effort India will need to match in order to build its offshore wind capacity.

It is expected that further technological innovation and operational lessons during the course of development will continue to drive costs down. The FOWIND project has laid the groundwork for the development of the first offshore wind project in India. That said, the country still has a long way to go in terms of harnessing its offshore wind potential. Given the challenges that the segment faces, the government must shoulder the responsibility of creating a conducive environment for segment growth. It can do this by facilitating clearances, and providing the requisite infrastructure and financing for smooth development of the sector. These efforts will increase investor confidence and help the market gain maturity.

India has made bold commitments at the United Nations Paris Climate Agreement, which include the promise to develop 60 GW from onshore and offshore wind energy. The development of the 1,000 MW offshore wind power project in Gujarat is a stepping stone to achieve the target of installing 5,000 MW of offshore wind capacity over the next four years. Looking ahead, India can also reap the benefits of this segment by investing in indigenous research and development, which can increase the pace of domestic offshore wind energy development in the coming years.

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