TN vies to buy 4GW offshore wind energy under VGF;First tender for sea-bed leasing in India likely before the end of the year

 C Shivakumar @ Chennai:

Tamil Nadu government is planning to buy 4 Giga Watt (GW) of offshore wind energy under the Union government's Viability Gap Funding (VGF) Scheme as India's first tender for sea-bed leasing for offshore wind projects is likely to be issued before the end of this year. This comes as 14 blocks of seabeds in Tamil Nadu have been earmarked as potential sites for generating 1GW of offshore wind energy by the Ministry of New and Renewable Energy (MNRE).

Industry secretary S Krishnan on Friday said that the state desires to have tenders for both open access (4GW) and under the VGF scheme (4GW) simultaneously. He said that the state had initially quoted a price of Rs 3 kw per hour (KWH) but MNRE came out with a price of Rs 4 KWH under VGF mechanism for which the state has agreed. The original cost of producing offshore wind power is around Rs 6 to Rs 7.5kwh. Under VGF, the Centre will bear the open access cost of offshore wind power which is sold in the exchange while offering subsidy to the state.

This apart, the state is also keen to have some portion of the offshore windpower (4GW) which would be bid through open access. He said that offshore wind energy is more reliable than onshore wind power as it is available for a longer period. The state is providing onshore facilities with various clearances as such it requires some portion of the power to be provided to state transmission utilities if VGF based bidding doesn't come up to begin with, he said.

Industry sources told TNIE that the decision to float tenders under the VGF scheme would depend on the Union Cabinet decision. It is learnt that  tender will be for four blocks of sea-bed in the Gulf of Mannar, off the coast of southern Tamil Nadu, each of which can accommodate 1 GW of wind power plants. Thirty-five lakh houses could be lit up with clean energy with 1GW of offshore wind power.

The base price for quotation is Rs 1 lakh per square kilometer. Each block is 200 sqkm and above as such the base price for each block would be Rs 2 crore. The bidder who wins the contract will conduct a pre feasibility study in the next five years. After that project development proposal should be submitted following which it will be leased out for the next 35 years.

The tender documents are under stakeholder consultation and it is learnt from industry sources that some issues need to be ironed out before the tender is floated. This include fixing the responsibility on who will provide grid connectivity from offshore to onshore facility (for around 30km) and reworking the timeline from five years to seven years for the developer to implement the project. Currently, it is unclear on whether it will be Power Grid Corporation of India or Central Transmission of India Utilities which will do the grid from onshore to offshore.

Meanwhile, India will be adding another 58GW of onshore wind energy in the next seven years with an investment of Rs 4 lakh crore. Currently, the renewable energy mix of the country is 172.4MW of which wind's share is around 42 to 43 GW, according to D V Giri, secretary general of Indian Wind Turbine Manufacturers Association. Initially, the country plans to add 8MW in the next two years and then it has set a target of 50MW in the next five years, he said.