Budget may announce viability gap funding for offshore wind projects

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₹ 6,000 crore. The initial allocation is specifically aimed at supporting 1 GW of offshore wind capacity, and the ministry of new and renewable energy (MNRE) has sent the proposal to the finance ministry, two people familiar with the developments told Mint. Queries sent to MNRE and finance ministry remained unanswered till press time.

This proposed scheme aligns with the government's broader strategy for offshore wind projects, to be developed under three models. The first involves VGF for two 0.5 GW sites off the coasts of Gujarat and Tamil Nadu. The other models propose bidding processes for site exclusivity during survey periods, with or without guaranteed seabed rights.

Given the capital-intensive nature of these projects, the MNRE's revised strategy paper from September last year had highlighted the need for central financial support to bridge the gap between actual tariffs and designated power purchase rates. This is particularly crucial given the high costs of setting up turbines on the seabed and the associated power evacuation expenses. In 2022, the MNRE had informed a parliamentary committee that the per megawatt cost of offshore wind projects could range from ₹ 20 crore to ₹ 25 crore, varying based on technology, marine conditions, and distance from the shore.

Acknowledging the financial challenges, the committee had recommended VGF to ensure project viability and the necessary transmission infrastructure. It had added that the potential for offshore wind projects should also be explored in coastal areas other than Gujarat and Tamil Nadu along India’s 7,600 km-long coastline. The ministry's estimates indicate a need for ₹ 14,212 crore in VGF to set up 3 GW of offshore wind energy capacity, along with an