Growing momentum

Progress, challenges and outlook for offshore wind in India

Souvik Bhattacharjya, Sr. Fellow and Associate Director, Integrated Policy Analysis Division, TERI
Kartikey Sharma, Research Associate, Integrated Policy Analysis Division, TERI

It has been more than 7 years since the National Offshore Wind Energy Policy was green flagged by the union government of India, with the notion that that the segment will contribute sporadically to the growing momentum around the adoption of wind energy across the country. Wind energy segment over the years has seen a monumental rise in its adoption amplitude in India. Between March 2016 and 2020 the sector consistently came out on top of solar energy with respect to end of the year numbers around overall installed capacity. Further, with countries across the world looking to diversify their supply chain practices, the move opens up opportunities for India within the renewable energy sector to become a technology developer, exporter and manufacturer, as nations across are looking for viable trading partners in the clean energy space within the South Asia region.

While the growth trajectory for the industry has experienced a minor stagnation owing to the COVID-19 pandemic, the global sentiment around it is still remains extremely bullish. Global offshore wind energy market has grown by 24 percent annually since 2013, with 36 GW installed by the end of 2020. The market is expected to grow from an estimated US$ 31.8 billion in 2021 to $56.8 billion by 2026, at a compounded annual growth rate of 12.3 percent[1]. Although offshore wind assets constitute only 5% of the total deployed wind assets globally, projections have indicated that it will grow rapidly in the future to meet renewable energy targets well beyond 2030.

Offshore Wind Energy Advantages

India’s renewed renewable energy target of 500 GW by 2030, coupled with its 2070 ambitions of a transformative net zero economy, has really bolstered both investor and consumer sentiment in the long-term with respect to the development of a sophisticated clean energy market. Traditional on shore wind power and solar energy projects have seen a tremendous upside over the last decade, owing to progressive policy and regulatory decisions that helped economise their ownership at both industry and retail level. India’s energy demand is set to grow by 3% per year up to 2040[2], and as the country looks to elevate its renewable energy-based capacity additions, it is imperative for it to diversify its energy portfolio to include all possible renewable energy sources. Diversity ensures energy supply stability and warrants energy security. Now that solar PV and wind power technologies have thoroughly established themselves within the power generation mix, the focus must shift towards the inclusion of other low carbon technologies, such as offshore wind.

With a 7600 km long coastline and an ability to fulfil 1.2 million GWh[3], the potential for offshore energy generation in the Indian peninsula is compelling. One of the reasons it can succeed in India as an alternative source of energy is because of its ‘landless’ characteristic. In a time when acquiring land for energy projects is becoming difficult, offshore wind projects can thrive in such a situation and continually contribute to India clean energy mission. In addition, the momentum behind the blue economy, with its emphasis on utilizing the “ocean as a resource”, has further promulgated the need to significantly utilize this vital source of energy. Moreover, in the wake of the recent energy crises that has engulfed Europe there is now a renewed focus globally to help strengthen the notion of energy security. Infact, China has identified offshore wind as a strategic emerging industry and is prioritizing its addition due to higher capacity factors and predictable energy supply[4]. The United Kingdom also began reviewing its policy focus towards offshore wind as a means to realize its ambitious 2050 target of net zero emissions.

From a technical standpoint offshore wind has a reputation of being a superior technological innovation. It possesses a higher capacity utilisation factor which allows the wind farm to operate and generate energy for long hours. On an average in deep oceans the projects can deliver a utilisation factor between 50-55%[5]. Further, since the wind speed in water bodies is high and flow consistently in one direction, offshore wind farms generate more electricity per installed capacity. Additionally, since India has a strong wind turbine manufacturing base, the price of the offshore wind turbines and the tariff rates are expected to be competitive and at par with onshore wind turbine rates, especially at the time of large commercial scale deployment.


Although India has a strong turbine manufacturing base it currently has no installed offshore wind energy projects. The 1 GW project that was supposed to be installed in the Gulf of Khambat, Gujarat is yet to take off[6]. The major barriers for the deployment of offshore wind power in India largely circumnavigate around high costs of offshore wind facilities; technical challenges surrounding installation and infrastructural shortcomings. While the notion must be to help build capacities in both offshore and on shore projects, the government has indicated that the per megawatt cost of the offshore wind turbine would be two to three times the cost of onshore wind turbines[7]. Offshore windfalls are costlier to install due to underwater construction constraints, also, if DISCOM’s don’t receive their subsidy payment on time, it can make them very reluctant to buy expensive power produced by offshore wind farms.

Cost-effective offshore wind turbine installation currently necessitates the construction of portside infrastructure to fabricate and transport offshore wind foundations and other structures, as well as specialised installation vessels. India currently lacks the necessary infrastructure and specialised vessels. Moreover, construction and operation of offshore wind farms can disturb mobile and sessile species, leading to displacement of or reduction in fish and shellfish resources. Regions in India that are primed for offshore wind deployment, such as Gulf of Khambat, are ecologically sensitive zones.

Policy Developments

Over the last 18 months to bolster the portfolio of offshore wind energy in India the government has come out with significant regulatory interventions. The Deep Ocean Mission received a budgetary allocation of 4077 crore INR over a 5-year period in the Government of India’s Union Budget 2021-22. Offshore wind energy was explicitly mentioned in the Mission, since the Mission’s overarching goal is to accelerate the principle of blue economy, which can contribute to India’s development and help meet its future energy needs [8]. Additionally, In July 2021, the central government notified that it has allowed 100% foreign direct investment under the automatic route for renewable energy projects, which also includes offshore wind energy projects.  The Union Minister for Power and New and Renewable Energy, Shri R.K. Singh further announced that the ministry has formulated a committee to finalize a roadmap for offshore wind development in the country, including upcoming offshore projects[9].

Also, since India’s power transmission infrastructure is still battling a few infrastructural challenges, at a recent Central Transmission Utility (CTU) meeting, MNRE suggested supporting cost-free evacuation and power transmission from offshore to onshore transmission networks for projects commissioned by 2030[10]. Further, to maintain a steady development of offshore mind projects, starting next year the government has announced that it will start accepting bids for project capacity of 4 gigawatt per annum, for a period of three years[11].


Given the scale and expansion of onshore wind energy is one of India’s most successful indicatives in renewable energy, it is likely that offshore wind will be able to draw from the best practices and implementation framework that made onshore deployment so triumphant. While there still isn’t an installed offshore wind project in India, to ensure their responsible development in future some critical points need to be adhered to.

National Policy

While India does have an overarching policy on offshore wind, there are still some bottlenecks in its framing, such as no reference of environmental laws, regulations, and guidelines that apply to offshore wind projects. The policy also doesn’t mention the development of an institutional mechanism at the decentralised level that will carry out the implementation of different projects. Offshore markets in countries such as China, Vietnam, and Japan have witnessed high levels of uncertainty due to lack clarity on policies. Thus, it is extremely imperative to have a clear overarching national policy document that addresses all possible issues and challenges. Hence, the union government must look to add specific amendments to the national policy and opt for a broad consultation inviting stakeholders to suggest changes to regulatory proceedings listed under it.


Unlocking India’s offshore wind market will require enabling capital in the range of around $2.5 to 3 billion per GW[12].  This is a massive undertaking and will require precise financing routes to achieve the end goal. Since debt financing tends to have slightly different lending capabilities than traditional banks, with a preference for fixed rates, and ability to undertake long a long maturity pathway, it can be an effective tool for financing offshore wind farms. Additionally, the central government in the union budget this year announced that sovereign Green Bonds under the government’s overall market borrowings in 2022-23, will be used to mobilise resources for green or climate-friendly infrastructure. The proceeds from these bonds will be deployed in public sector projects, such as offshore wind farms that help in reducing the carbon intensity of the economy.


Under the Goods and Services Tax law, electricity and power sales are exempted from any form of GST taxation. On the contrary, wind power generation companies cannot claim input tax credit when they pay GST on the purchase of goods and services for setting up a project. Since, most of the equipment’s that go into the development of a wind farm are imported, the existing tax system makes their acquisition extremely expensive. Thus, if excise duties and GST could be waived, early offshore project development could become affordable.

Although the potential for offshore is significant, it should largely be seen as a tool that’ll contribute to the overall augmentation of renewable energy targets set by the union government, and not as a competitor to onshore wind energy. Both technologies have their own strategic advantages and fulfil different energy and environmental needs. Thus, it is critical to approach policy frameworks in a manner that simultaneously uplift the two energy choices.









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