Offshore wind power is one segment that has witnessed a lot of discussion over the past few years but has seen little on-ground action. A policy was released more than five years back, followed by an expression of interest for project development, but no significant development has taken place. As a result, India still has no offshore wind project deployed till date. In fact, no project has even started construction. However, this is expected to change soon as the draft tender document for seabed leasing for offshore wind development was issued in November 2022.
As a preface, the government had announced in June 2022 that bids for offshore wind energy blocks of 4 GW would be issued every year for the next three years for development off the coast of Tamil Nadu and Gujarat for the sale of power through open access, captive, bilateral, third-party sale, or merchant sale. Further, a project capacity of 5 GW will be bid out every year for a period of five years till 2029-30. This announcement was intended to attract interest in the segment, and it did succeed, with the industry waiting for a tender announcement. Finally, after months of speculation, the Ministry of New and Renewable Energy notified the draft tender document for the selection of offshore wind power developers for the allocation of seabed lease rights for offshore wind power projects off the coast of Tamil Nadu on November 14, 2022. The tendering agency is the National Institute of Wind Energy, and the draft tender document was open for stakeholder comments till December 9, 2022.
Key features of the tender
The said tender is for the selection of offshore wind power developers (OWPD) for leasing of seabed areas equivalent to 4,000 MW of offshore wind power projects off the coast of Tamil Nadu through international competitive bidding. The selected OWPD will have exclusive rights over the allocated sea block. Further, while each block will be assigned with a minimum indicative offshore wind capacity, the final detailed project reports will determine the actual capacity to be installed by the OWPD in each block.
The scope of work for the selected OWPD also includes grid connectivity and long-term open access or access to the grid under the general network access framework. In addition, the OWPD will be responsible for the other project-related work including the identification of land for onshore manufacturing, assembly, storage of wind turbine components, transport of equipment, installation, commissioning, and ownership of the offshore wind power project. Further, the offshore wind energy generated from these projects will be consumed in captive mode or sold to a third party under the open access framework or sold through merchant sale or the power exchange. For multiple offshore wind facilities in a single block, the OWPD will have to set up separate injection points, control systems and metering arrangements. The lease granted in pursuance of this construction and operation lease deed will be for 35 years, which includes the period of the concession agreement, construction and decommissioning.
A single stage and two-envelope bidding procedure will be adopted, and the tender document specifies that no e-reverse auction will be conducted for bidding of offshore wind blocks. While a bidder can submit bids for all the blocks, it should provide a separate and independent financial bid for each block. For the evaluation of bids, the technical bid will be scrutinised to establish techno-commercial eligibility and then the responses of the techno-commercially qualified bidders to the questionnaire shall be opened. These responses will be scored and bidders with scores equal to, or more than, the minimum score specified in the tender document will be considered for financial bid opening. Finally, the financial bids with the “quoted lease rental” for each block will be evaluated with the highest scoring bidder declared as the winning bidder. One bidder should not be allocated more than two blocks and the winning bidder should be given the choice of blocks.
With just eight years left for the country to achieve its 500 GW clean energy target, offshore wind deployment can contribute to this journey. While this is only a draft tender, this document reflects the government’s intent of developing India’s offshore wind capabilities as it is considering recommendations from relevant stakeholders instead of just announcing a bid right away. Offshore wind projects have a long gestation period compared to onshore wind as they require significant time for surveys, construction of power evacuation infrastructure, permits from different authorities, logistics and port facilities as well as the actual installation of offshore wind turbines. Thus, this draft tender comes at an ideal time to prepare the global and domestic wind industry for the upcoming bid. Net, net, with the release of the draft tender, it seems that India’s offshore wind segment will finally take off soon.
By Khushboo Goyal