The last two years has seen India take significant steps to spur the development of offshore wind energy. A notable milestone was the approval of the $821 million Viability Gap Funding (VGF) program back in June, intended to incentivize the development of the first 1 GW of offshore wind capacity. But India’s current levels of government support fall short in delivering the 37 GW offshore wind capacity goal by 2030, according to a report released last week.
The report by the International Institute for Sustainable Development (IISD) and the Center for Study of Science, Technology and Policy (CSTEP) found that the cost gap to make offshore wind competitive in India is still high, requiring sustained government subsidies and policy support. The offshore wind could take at least 12 years to reach the grid parity in India. The cost gap identifies how much the cost of clean power needs to drop to reach cost parity with conventional sources such as coal.
While the recent VGF scheme is an important development, the report claims that it may be insufficient given that the cost gap per GW of capacity is around $1.1 billion. Thus, to achieve the aspirational goal of 37 GW by 2030, the total cost gap is estimated at $61 billion, or $8.75 billion per year between 2024 and 2030.
“India’s clean energy ambition is remarkable, and delivering on these goals will require bold investments and policy alignment. Emerging technologies like offshore wind represent transformative opportunities for the country’s energy landscape but need sustained support to realize the potential,” said Swasti Raizada, Policy Advisor at IISD and co-author of the report.
In the view of the high cost gap in deploying offshore wind in India, the report recommends several policy options. This includes postponing the 2030 capacity goal to allow costs to fall, but not delay provision of support. The sooner India starts deployment, the sooner domestic costs will decline. Further, the government could consider a new model for pooling renewable energy, so that offshore wind is bundled with cheaper clean energy sources to create demand and secure off takers for initial projects. For instance, solar PV is already cheaper than new coal and gas installations in India.
Meanwhile, government support for the offshore wind sector extends to port infrastructure, strengthening the domestic supply chain. Recently, the government designated V.O. Chidambaranar (VOC) Port in Tamil Nadu as an offshore wind port. As a result, the port on Saturday announced it will construct a terminal for handling windmill blades and accessories. The terminal will feature two berths, with quay length of 370 meters.
