Setting Sail: A new course for offshore wind development

A new course for offshore wind development

With roughly 42 GW of installed wi­nd power capacity as of Novem­ber 2022, India is one of the leading nations in terms of wind power dep­loy­me­nts. Much older and more mature than the solar power segment, wind pow­er dominated India’s renewable energy mix for years. However, of late, the segment has wit­nessed a significant slowdo­wn in capa­city addition and lags far behind solar po­wer, which has an installed capacity of over 61 GW. Land acquisition-related concerns along with the exhaustion of many wind-rich sites, protracted approval proce­ss­es, grid connectivity issues and the swit­ch from a feed-in tariff to an auction-based re­gime are the primary reasons for this slowdown. This year too, only 1.5 GW of new wind power capa­city has been dep­loyed between April and November 2022.

At a time when onshore wind deployments are experiencing a lull and the co­untry is racing to achieve its clean energy goals, the offshore wind power segment is em­erging as a possible solution. India currently has no offshore wind capacity deployed, but there is a high degree of interest from stakeholders owing to the many benefits of this technology. Offshore wind power is deployed off the coast where wind speeds are much higher and thus, significantly hi­gher volumes of wind energy generation can be achieved. For this reason, offshore wind turbines are mu­ch larger in capacity as compared to onshore wind turbines. For instance, commercially available offshore wind turbines normally range from 8 MW to 14 MW ag­ainst just 3-4 MW for onshore wind turbi­nes. Moreover, as offshore wind proje­c­ts are deployed in the sea, they are free from land acquisition challenges. Su­rrounded by water on three sides, India has a long coastline of about 7,600 km, ma­king it a good candidate for offshore wind energy deployment.

However, offshore wind projects come with their own challenges, including significantly high project costs and long gestation pe­riods, as well as logistics, power evacuation, construction and O&M issues at sea. Despite this, it is believed that offshore wi­nd power costs will decline with econo­mies of scale and the energy and efficiency gai­ns will outshine any drawbacks. This has been the experience ac­ro­ss the globe and the same trend is expected in India as well. Nota­bly, despite the high initial project co­sts and long project development timelines, the global offshore market has grown by 36 per cent per year on average in the past decade, according to the Global Wind Energy Council (GWEC), to reach 56 GW of installed capacity as of end 2021. The GWEC report also identifies India as a key market to watch in the offshore wind energy space, especially with the recent focus on developing the country’s capabilities in this area. The government, mo­re­over, has set a target for deploying 30 GW of offshore wind capacity by 2030.

This article highlights the potential for offshore wind development in India along with the initial steps taken to help realise this huge, untapped opportunity…

Potential mapping and assessments

As the offshore wind segment is at a nas­cent stage in India, various studies have been carried out or are under way to de­te­r­mine the potential for offshore wind development in India. Based on preliminary assessment data from studies done by the National Institute of Wind Energy (NIWE) in collaboration with various multilateral ag­en­cies, eight zones have been identified in both Gujarat and Tamil Nadu for offshore wind exploration and development. Meso­scale mapping and initial surveys in these identified zones suggest ap­p­roximately 36 GW of offshore wind pot­ential off the coast of Gujarat and 31 GW off the coast of Tamil Nadu. Thus, roughly 70 GW of offshore wind potential has al­ready been identified through initial studies, indicating significant scope for clean energy development.

In addition to the resource assessment work being carried out by government ag­e­n­­­cies, the NIWE had, in September ­2018, issued “Guidelines for Offshore Wi­nd Power Assessment Studies and Sur­ve­ys” to enable private investors to carry out offshore wind resource assessments. Furt­h­er, since actual ground mea­sureme­nts are required for accurate potential es­ti­mation, light detection and ranging (LiDAR) eq­uip­ment is planned to be de­ployed at the identified zones off the coast of Gujarat and Tamil Nadu. The NIWE had already commissioned one LiDAR in 2017 off the coast of Gujarat ne­ar­ly 25 km from Pipavav port and analy­sed two years’ data collected from this equipment. Bas­ed on this analysis, which has been validated by a gro­und-mounted wind monitoring station at Jafrabad, the annual ave­rage wind speed at the site is observed to be 7.52 metres per second at 100 metres hub height. Two more such systems are planned to be deployed off the coast of Gujarat.

Apart from wind data, offshore wind project development requires careful analysis of the site conditions for which accurate oc­ea­nographic, geophysical and geotechnical data is needed. In this regard, geophy­sical surveys of 365 sq km for 1 GW of project capacity have been completed alo­ng with geotechnical studies for five bore holes in the Gulf of Khambhat, off the Guja­rat coast.  A rapid environment impact ass­essment study has also been conducted through the National Institute of Oce­an­o­graphy for this location.

The Ministry of New and Renewable En­ergy (MNRE) has allocated the required budget to the NIWE for the installation of three LiDARs off the coast of Tamil Nadu in the Gulf of Mannar. Following this, in Novem­ber 2022, the NIWE issued a global tender for the supply, installation and commissioning of an integrated floating buoy for mounting offshore LiDAR equipment al­o­ng with meteorological and oce­an­og­ra­phic sensors at three locations in the Gulf of Mannar. Thus, resource ass­ess­ment work through LiDAR is expected to pick up speed in the coming months.

Policy initiatives so far

India has been an early mover in the offshore wind space as far as policy is concerned. The government had notified the National Offshore Wind Energy Policy way back in 2015, providing the basic framework for developing offshore wind. The policy authorises the NIWE to serve as the nodal agency for the development of off­sh­ore wind energy and to conduct the auction of offshore wind farms. Acc­or­ding to the policy, offshore wind blocks will be leased out through an international competitive bidding mechanism. In ad­dition, the policy di­rects the NIWE to be the sole facilitator for obtaining clearan­ces and no-ob­jection certificates for such offshore blocks.

Interestingly, in 2018, the NIWE had invited ex­pressions of interest (EoIs) for the de­velopment of a 1 GW offshore wind energy project in the Gulf of Khambhat. The purpose was to shortlist prospective offshore wind power developers and assess India’s readiness for offshore wind development and boost activity in this area. While this first ever large-scale offshore wind power tender received a good res­pon­se with leading global offshore wind players and 35 bidders submitting EoIs, the project did not ultimately progress to the implementation stage owing to factors such as high capital costs, lack of incentives and inadequate data.

The government has conducted several st­a­keholder consultation meetings to addre­ss and analyse the different aspects of offshore wind energy development. So­me de­monstration and feasibility projects have also been launched with the he­lp of international agencies. For instan­ce, the Facili­ta­ting Offshore Wind Energy in India (FOWIND) project was implemented by a consortium led by the GWEC with supp­ort from the European Union from Dec­em­ber 2013 to March 2018. It focused on the id­entification of potential zones for offsh­ore wind development in Gujarat and Tamil Na­du based on preliminary resource ass­ess­ments. Similarly, the First Offshore Wind Po­wer project in India (FOWPI) was implemented between 2016 and 2019 by a consortium led by COWI and supported by the European Union. The aim of this project was to provide aid up to the pre-financial in­vestment decision stage as well as help in capacity building of the Indian industry. Both these projects have been instrumental in India’s offshore wind journey, especially with respect to the launch of the policy and EoIs as well as resource assessments.

Similar collaborative programmes are un­der way today as well, including a joint de­claration of intent between Renewable Energy Catapult and the NIWE for supporting the Indian and UK offshore wind industries. Further, as part of an MoU between India and Denmark, the Centre of Excell­en­ce for Offshore Wind and Renewable En­ergy was launched in September 2021 to develop cost-effective offshore wind in India and mobilise investment for the sa­me. These initiatives are expected to significantly help in addressing the bottlenecks in offshore wind capability development in India through dialogue, knowled­ge sharing and raising finance.

Encouraging measures

While these past developments have be­en important in setting the context for In­dia’s offshore wind development journey, they have not been effective in actually implementing a large-scale commercial offshore wind project. However, the landmark interventions witnessed in the offshore wind space in 2022 may finally lead to the start of project development activity in this sp­ace. The MNRE has explored various ap­proa­ches for competitive bidding and project implementation in the offshore wind segment and, after much deliberation, the go­vernment announced an offshore wind tendering trajectory in June 2022. Accor­d­ing to this bidding plan, 4 GW of capacity will be auctioned every year for a period of th­ree years starting 2022-23. These offsh­ore wind projects will be developed off the coast of Tamil Nadu and Gujarat. At the end of these three years, 5 GW of capacity will be tendered each year till 2029-30. Thus, according to this trajectory, 37 GW of offshore wind capacity is pla­nned to be bid by 2029-30, which provides clear visibility to interested parties, both domestic and global, regarding project development. As an incentive for developers, the evacuation and transmission of power from offshore pooling substations to onshore transmission will be free for all offshore wind capacities that are bid till 2029-30.

Shortly after the announcement of this broad tender trajectory, in July 2022, the MNRE released a strategy paper for the establishment of offshore wind energy projects, which envisages three models or ap­p­roaches for project development. Accor­ding to the defined strategy, Model 1 will be followed for sites for which surve­ys have been conducted by the NIWE or other government entities. Model 2 will be app­licable to sites where the surveys are to be conducted by prospective developers selected through the bidding process. These developers would not have any exclusivity on the seabed. Model 3 will also be followed for sites for which surveys will be co­nducted by prospective de­velopers, but the developers will have exclusivity on the seabed and power sale will be done th­rough bilateral agreements or be used for captive consumption or be undertaken on a power exchange basis. In addition to defining these different models, the paper presents an indicative auction trajectory for each model to streamline offshore wind power development.

Following these two important developments, the MNRE finally released a draft tender document in November 2022 to lease seabed blocks off the coast of Tamil Nadu for surveying and developing offshore wind energy projects with a total ca­pacity of 4 GW. These developers will be chosen through an international competitive bidding process and the NIWE will be the tendering agency. The winning bidd­e­rs will be responsible for the required surveys and investigations, establishing of the offshore wind power projects as well as grid connectivity and long-term op­en access to the grid. The power produced from these offshore wind projects will be consumed in captive mode or be sold through open access, bilateral, third-par­ty, or merchant sale modes. The selec­ted developers will sign a long-term lease deed agreement for 35 years. Although the tender document is still at the draft stage and is under stakeholder consultation, it clearly is a big milestone for India’s offshore wind segment. Once finalised, this tender and the ensuing bidding will lead to the allocation of a massive 4 GW of offshore wind capacity and put India on the global offshore wind map.

Simultaneously, the government is focusing on other aspects of offshore wind de­ve­lop­ment. According to a recent MNRE press note, a viability gap funding sche­me of Rs 142,830 million is being considered for the initial 3 GW of offshore wind energy projects and has been sent for approval to the Ministry of Finance. Further, the Draft Offshore Wind Energy Lease Rules, 2022 have been drafted and sent for legal vetting, and draft contractual documents are being circulated for sta­keholders’ consultation. Clearly, various aspects relating to offshore wind power development including policies and regulations, financing, tendering and contracts are being considered to ensure that project implementation and power procurement take place in a streamlined manner. Grid availability still remains a key concern. The recent Central Electricity Autho­rity report, “Transmission System for Inte­gration of over 500 GW RE Capacity by 2030”, mentions only 10 GW of plan­ned tra­ns­mission capacity development for offshore wind projects by 2030, while the target is 30 GW of offshore wind. This is­sue needs to be quickly addressed and the on-ground implementation needs to be in sync with the planning.

Outlook

India’s offshore wind power segment is finally getting the attention it deserves, not only from the government and bilateral agencies but also from prospective developers. A case in point is the Oil and Natu­ral Gas Corporation and NTPC Limited signing an MoU to jointly explore offshore wind prospects. Tata Power Renewable En­ergy too is collaborating with Germany-based RWE Renewables to jointly develop offshore wind projects. Another global player, ENGIE is actively looking at In­dia’s offshore wind market through a 50:50 joint venture with EDPR called Oc­ean­Winds. Thus, there is growing interest around de­veloping India’s offshore wind potential through mega projects.

In conclusion, offshore wind can be an im­p­ortant contributor to achieving India’s cle­an energy goals. However, it is critical that the key bottlenecks are removed quickly and the final tender released soon so as to not lose the current momentum.

By Khushboo Goyal