India’s Union Cabinet has approved the viability gap funding (VGF) scheme for offshore wind energy projects totalling Rs. 7453 crores (approximately EUR 833 million).

This includes about EUR 765 million for the installation and commissioning of 1 GW of offshore wind projects – 500 MW each off the coast of Gujarat and Tamil Nadu – and a grant of approx. 67 million for upgrading two ports to meet logistics requirements for offshore wind energy projects.

The VGF support from the government is said to reduce the cost of power from offshore wind projects and make them viable for purchase by distribution companies.

While the projects will be established by private developers selected via a transparent bidding process, the power infrastructure, including the offshore substations, will be built by Power Grid Corporation of India Ltd (PGCIL).

According to the government, the successful commissioning of 1 GW offshore wind projects will produce renewable electricity of about 3.72 billion units annually, which will result in an annual reduction of 2.98 million tonne of CO2 equivalent emission for 25 years.

“Further, this scheme will not only kick start the offshore wind energy development in India but also lead to the creation of the 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 government said.

At the beginning of this year, India launched a tender for four blocks of 1 GW each on an open-access basis, for the development of offshore wind projects off the coast of Tamil Nadu.

The last date for bid submission was 2 May. With four areas already announced, the remaining three off the coast of Tamil Nadu are planned to be put on offer in 2025.