Promising Outlook: Industry perspectives on offshore wind development

India has an impressive wind energy installed capacity of 44,089.68 MW as of August 2023. However, this entire capacity is accounted for by onshore wind. Offshore wind is yet to take off, but represents a pivotal element of India’s renewable energy strategy. It promises significant environmental benefits, energy security and economic growth. Therefore, there is a need to promote the offshore wind segment to ensure a sustainable and green solution to India’s growing electricity demand. At Renewable Watch’s recent “Wind Power in India” conference, senior representatives from public and private companies shared their perspectives on the current status of the offshore wind segment and the key challenges. Edited excerpts…

Harsh Nupur Joshi, Group General Manager (Electrical), Head (Renewables), ONGC

Oil and Natural Gas Corporation Limited (ONGC) has traditionally engaged in the exploration and production of oil and natural gas. With the need to promote sustainable development, energy transition has become inevitable for us and we are bound to move towards renewables. We have an installed renewables capacity of 205 MW, of which 189 MW is operational and 15 MW is under construction. We have set a very ambitious target of reaching a renewable capacity of 10 GW by 2030. To achieve this, we are adopting a two-pro­nged growth strategy utilising or­ganic as well as inorganic roots. We are exploring all options, including solar, wind, offshore wind, green hydrogen and pum­ped hydro. Since renewable energy is the futu­re, we are exploring opportunities in each of the­se segments. However, oil production will peak, since it will remain the primary input for petrochemicals. So, the two core focus areas for our organisation are oil and rene­wables, and petrochemicals.

Not all exploration and production companies focus on renewable energy. If you look at American companies such as Exxon­Mobil Corporation or Chevron Cor­po­ration, they are primarily concentrating on decarbonising their hydrocarbon emissions due to their substantial shale gas reserves. In contrast, European companies are undergoing significant transformations to be­come electrical companies and po­wer utilities. For example, Equinor ASA is a state-owned oil and gas company based in Norway, and is heavily invested in offshore wind projects. The reason for this shift is that companies with experience in offshore oil and gas operations understand how the environment works, and possess the expertise to execute large-scale projects in challenging conditions.

Understanding the market scenario, such as the availability of barges and vessels, is crucial for the successful execution of offshore projects. This requires significant manufacturing capacity. In India, for ins­tan­ce, Larsen & Toubro Limited operates two large yards, one in Hazira, Gujarat, and the other in Kattupalli, Tamil Nadu. We have been involved in offshore operations since 1974, making this transition synergistic with our existing operations. The only challenge is that there is no history of offshore wind projects in India. Therefore, we are actively seeking an alliance partner with substantial experience in offshore wind projects.

If we look at any country in the world where offshore wind projects have been developed, especially at their initial or early phases, we will see that they have received government support in various forms, such as viability gap funding and other incentives. This support was crucial for the successful implementation of these projects. Similarly, in India, government support is essential. We are enthused to see that the government is actively working on this, and we anticipate the introduction of favourable financial incentives.

An offshore wind plant in India is estimated to cost Rs 200 million-Rs 250 million per MW, resulting in an energy cost of about Rs 7 per unit, which is relatively high. There­fore, government support and incentives are necessary to make offshore wind projects economically viable. The government is already undertaking significant initiatives in this direction, and we believe that in the near future we will witness the development of offshore wind plants in India. Fur­thermore, a well-defined policy and regulatory framework is essential; only then can progress be expedited. Additio­nally, we must focus on developing our ports to accommodate the transportation of large equipment and anticipate the need for specialised vessels. The vessels required for installing these wind turbines should have very high capacities. In offshore op­erations, vessels capable of handling up to 3,000 tonnes are common, but in this case, vessels capable of handling up to 5,000 tonnes will be necessary. How­ever, the market for such vessels is currently constrained. Developing the supply chain is crucial, but this will only happen when the outlook becomes promising for suppliers. Therefore, concerted efforts are req­uired from all stakeholders, not just de­velopers and the government. Another critical aspect is obtaining clearances. While it has been mentioned that a nodal agency will be responsible for granting clearances, in practice, this process often takes a considerable amount of time.

Tarun Popli, Head, Business Development, Tata Power Renewable Energy

Tata Power is an integrated company that offers renewables, transmission and distribution, conventional generation, and various other energy solutions to its customers. We have multiple subsidiary companies engaged in customer-related tasks that provide energy solutions to our cli­en­ts. For renewables, we conduct our business through Tata Power Renewable Energy Limited, with a portfolio of 8 GW of capacity at present. Of this, more than 4 GW is operational, including 1 GW of wind power plants and 3 GW of solar power plants, while the remaining 4 GW is at various stages of implementation. Our target is to achieve a portfolio of 20 GW or more by 2023, and we are optimistic that, with the emergence of new technologies, government policy guidelines and our own strategic plans, we will reach this goal.

As far as offshore opportunities are concerned, we have been engaged in discussions and policy analysis with the government for the past one to two years. We are collaborating with various agencies and technical partners from global firms, who are providing valuable insights into offshore wind project development.

India has always been a price-sensitive market, which makes the promotion of em­erging segments such as offshore wind challenging. Since last year, due to the Russia-Ukraine conflict and various other factors, the entire world has been aggressively pursuing renewable energy development. However, what we have come to understand over the past year is that many companies have their production and supply chain commitments booked for several years ahead. This is a key challenge and it means that these companies may not be able to provide the necessary equipment and resources for renewable energy projects in the near future.

There are several challenges associated with developers and investors who are co­mmitting substantial funds to projects with long gestation periods, spanning se­ven to nine years. A significant amount of developer experience is required to reach a stage where they can confidently say that the project has commenced and is ready for development. In the model for offshore wind deployment, where the offtaker is not guaranteed by the government or any ot­her agency, the primary challenge is to identify an offtaker. In a market with various renewable alternatives offering cheaper power, finding a suitable offtaker is currently one of the most significant challenges for the offshore wind segment. In addition, there are numerous stakeholders involved in obtaining clearances. Dealing with various ministries, local environmental conce­rns and the complexities of this first-of-its-kind offshore development in India poses additional challenges. Moreover, the un-der­developed renewables supply chain is a hurdle that needs to be addressed for the offshore wind segment.