MNRE proposes tender for setting up offshore wind energy projects

The Ministry of New and Renewable Energy (MNRE) has proposed to float bids for allocating offshore wind sites along the Tamil Nadu coastline through its nodal agency National Institute of Wind Energy (NIWE) for setting up of offshore wind projects. These projects will produce electricity that will be distributed through a number of channels, such as open access mode, third-party sales, power exchanges, or internal consumption.

According to the proposal, by February 1, 2024 zone B is anticipated to be tendered. During the upcoming fiscal year, an auction will be held for the E and G zones. A two-envelope, single-stage bidding technique will be followed. The techno-commercial bid will be in the first envelope, and the financial bid, in which bidders will detail the site lease rental, will be in the second envelope. The annual minimum floor price for site leasing rental is fixed at Rs 100,000 per square. The developer will be given a five-year initial lease on the seabed region, with the possibility of an additional year’s extension on a case-by-case basis. The developer must commission offshore wind energy projects within this time period, which includes carrying out any relevant studies or surveys. The developer may exit the project during the lease time as long as it gives NIWE the survey results and forfeits the $1 million bank guarantees that it had provided for each site. Throughout the term of the lease, NIWE will oversee the project’s development. A percentage of the site allocation cost paid by the developer above the floor price will be reimbursed, if the project is successfully commissioned by the due date.

The lease will be extended following project commissioning for the duration of the project’s operational life, which includes the decommissioning phase. The project developer is obligated to pay the annual seabed lease floor price of Rs 100,000 per square km starting on the date of commissioning for the duration of this extended period. The central transmission utility will provide the grid evacuation infrastructure, spanning up to and including the offshore substation, as a vital part of the inter-state transmission system (ISTS) network. Offshore wind power projects that are operational by December 31, 2032, or before, will be exempted from ISTS fees and the additional surcharge for the electricity produced by them. In an effort to replicate the current benefits provided for onshore wind turbine manufacture, the MNRE has recommended broadening the reduced customs duty rates for importing necessary components used in the manufacturing of offshore wind turbines. For offshore wind projects, renewable energy credits with multiple carbon credit advantages are also suggested.