Cabinet approves Viability Gap Funding scheme for implementation of offshore wind energy projects
Jun 19, 2024
New Delhi [India], June 19 : The Union Cabinet, chaired by Prime Minister Narendra Modi, on Wednesday approved the Viability Gap Funding (VGF) scheme for offshore wind energy projects at a total outlay of Rs 7,453 crore.
This includes an outlay of Rs 6,853 crore for the installation and commissioning of 1 GW of offshore wind energy projects (500 MW each off the coast of Gujarat and Tamil Nadu), and a grant of Rs 600 crore for the upgradation of two ports to meet logistics requirements for offshore wind energy projects.
An official release said that the VGF scheme is a major step towards implementation of the National Offshore Wind Energy Policy notified in 2015 with an aim to exploit the vast offshore wind energy potential that exists within the exclusive economic zone of India.
The VGF support from the Government will reduce the cost of power from offshore wind projects and make them viable for purchase by DISCOMs.
While the projects will be established by private developers selected though a transparent bidding process, the power excavation infrastructure, including the offshore substations, will be constructed by Power Grid Corporation of India Ltd (PGCIL).
Ministry of New and Renewable Energy, as the nodal ministry, will coordinate with various ministries and departments to ensure the successful implementation of the scheme.
Briefing reporters on the decisions of the union cabinet, Information and Broadcasting Minister Ashwini Vaishnaw said renewable energy is a big opportunity for India.
"Union Cabinet has taken a landmark decision by approving India's first offshore wind energy project. These will be 1GW offshore wind projects, 500 MW each (off the coast of Gujarat and Tamil Nadu). This is a big opportunity for India."
The release said the construction of offshore wind energy projects and its operations also require specific port infrastructure, which can handle storage and movement of heavy and large dimension equipment.
Under the scheme, two ports in the country will be supported by Ministry of Ports, Shipping and Waterways to meet the requirements of offshore wind development.
Offshore wind is a source of renewable energy which offers several advantages over onshore wind and solar projects, such as higher adequacy and reliability, lower storage requirement and higher employment potential, the release said.
Development of the offshore wind sector will lead to economy-wide benefits by attracting investments, development of indigenous manufacturing capabilities, creation of employment opportunities across the value chain and technology development for offshore wind in the country.
This will also contribute towards achieving India's energy transition targets.
The release said successful commissioning of 1 GW offshore wind projects will produce renewable electricity of about 3.72 billion units annually, which will result in annual reduction of 2.98 million ton of CO2 equivalent emission for a period of 25 years.
"This scheme will not only kickstart the offshore wind energy development in India but also lead to the creation of a required ecosystem in the country to supplement its ocean-based economic activities. This ecosystem will support the development of an initial 37 GW of offshore wind energy at an investment of about Rs.4,50,000 crore," the release said.
