High cost, challenges: Why offshore wind energy potential remains untapped

Three-and-a-half years since the government asked companies to come forward to set up India's first offshore wind energy project, in the Gulf of Khambhat in Gujarat, the project is yet to take off. In offshore plants, wind turbines are installed in the sea as opposed to onshore projects with turbines on land. The Gujarat project would have a capacity of 1 gigawatt. 

By 2022, India plans to produce 5 GW electricity--for comparison, at its peak, Delhi's electricity demand was about 3.3 GW on November 14--from such offshore wind energy projects, and expand it to 30 GW by 2030. But a lack of developed port infrastructure, higher costs of installing turbines in the sea and delays because of the Covid-19 pandemic means progress has been slow, according to experts. Currently, India has no operational offshore wind energy plant. 

This is despite a 7,600 km-long coastline, and an offshore wind energy potential of 140 GW by 2050. Of this, Gujarat and Tamil Nadu make up 71 GW. 

In this explainer, we look at India's offshore wind energy potential and the challenges the sector is currently facing. 

Why offshore wind energy is important for India 

India's energy demand is set to grow by 3% per year up to 2040, and meeting this demand sustainably will require clean sources of power. 

On November 1, India announced a new climate pledge of meeting 50% of its energy requirements with renewable energy by 2030. Currently, India meets 26.4% (103 GW) of its energy requirements from renewable energy sources, such as solar and wind. Though its contribution may be small, offshore wind energy will help achieve this target and yet, its vast potential remains untapped, six years since India created a National Offshore Wind Energy policy. 

Globally, the offshore wind market has grown from 29.2 GW in 2019 to 35.3 GW in 2020, according to the Global Wind Report 2021 of the Global Wind Energy Council (GWEC). Leading in total offshore wind installations was the UK (10 GW), followed by China (9.99 GW), Germany (7.7 GW), Netherlands (2.6 GW) and Belgium (2.2 GW), as of 2020. Global offshore capacity would exceed 2,000 GW by 2050, with India accounting for 140 GW, an earlier report by European Union and Facilitating Offshore Wind in India project had estimated. 

In India, 36 GW of offshore wind energy potential exists off the coast of Gujarat and nearly 35 GW exists off the Tamil Nadu coast, according to an assessment by the National Institute of Wind Energy (NIWE), a research and development institute of the Indian government. 

Installation of onshore wind turbines requires large tracts of open land and, has on occasion, been met with resistance from local communities. Offshore wind energy does not have that constraint. Also, at sea, winds are free from any obstruction [such as construction on land], and thus flow more smoothly, with higher speed, according to this NIWE report. 

If a power generation project would function for 24 hours a day for 365 days a year, it would be utilised 100% of the time, but as winds are intermittent, a wind power plant cannot be used all the time. With onshore wind, utilisation is at best 35%, but with offshore, it could be upto 50-55%, due to stronger winds at sea, said Kashish Shah, an energy finance analyst at the Institute for Energy Economics and Financial Analysis (IEEFA). 

Higher cost, challenges in grid connectivity 

Though offshore wind energy could help India produce more clean energy, it is more expensive than onshore wind and solar power. "The exact cost of the offshore turbine and tariff cannot be ascertained at this stage…However, based on the preliminary studies, it is estimated that the per megawatt cost of the offshore wind turbine would be two to three times the cost of onshore wind turbines," according to a March 2021 report by the Lok Sabha's 17th Standing Committee on Energy. 

"Offshore wind is a very expensive technology for India right now, especially when prices have fallen for onshore wind and solar," said Shah of IEEFA. 

Take the Gujarat project, for instance. Due to the need for very high initial capital investments and the lack of financial support, the project has not progressed since 2018, as per a Global Wind Energy Council (GWEC) report, published in April 2021. In mid-2019, the Ministry of New and Renewable Energy (MNRE) applied for a €800 million (Rs 6,700 crore) viability gap funding--a grant to cover the high investment in infrastructure projects--to the Ministry of Finance, to support the construction of this project, the report said. 

We did not receive a response to an email to the NIWE, the contracting agency for the offshore project, and to MNRE, asking about the reasons behind the delay in the offshore project, concerns over its costs, and the status of the viability gap funding. The story will be updated when we receive a response. 

No tender for an offshore wind project has yet been floated in Tamil Nadu, the GWEC report said. Tamil Nadu is reportedly in talks with Denmark for India's first offshore floating wind park in the Gulf of Mannar. The Tamil Nadu chief minister recently urged the Centre to come out with a viable policy for harnessing offshore wind. 

NIWE plans to install five Light Detection and Ranging instruments (LiDARs), a method of remote sensing, that would gather precise data critical to developing offshore wind projects. But none of the three in Tamil Nadu have yet been installed and one in Gujarat was commissioned in 2017, the GWEC report said. 

We emailed NIWE asking for an update on offshore wind energy projects and on LiDARs in Tamil Nadu, but we did not receive a response. This story will be updated when they respond. 

In addition, distribution companies (DISCOMS) in India are loss-making and unable to build infrastructure to help transition to renewable energy sources, according to this NITI Ayog report. DISCOMS would have to buy expensive power produced by offshore wind plants, after which either the government would cover the cost through subsidies, as the excess cost will most likely not be passed on to the consumer. Or, the companies will have to bear the losses in their own books, said Shah. Subsidies are often not paid to DISCOMS on time, disincentivising buying expensive power, Shah explained. 

Also, there is no plan for "planning and delivery of offshore wind grid Infrastructure", that would take the power from the offshore plant to where it would be used, according to the GWEC report. 

Turbine manufacturing infrastructure, environmental impact 

Offshore wind turbines require longer blades and transporting them over long distances is not viable, experts said. Ports in Tamil Nadu and Gujarat would have to be developed such that blades can be manufactured near the closest port from the offshore site, according to the GWEC report. 

Offshore plants have "significant challenges", including "subsea cabling, turbine foundation, installation of turbines including logistics, grid interconnection and operation, development of transmission infrastructure and coastal security during construction and operation period", noted the National Offshore Wind Energy policy. 

We asked MNRE for comments on the challenges of offshore wind energy plants and steps ahead to meet India's target, but we did not receive a response. This story will be updated when they respond. 

In addition, "as with all energy supply options, wind energy can have adverse environmental impacts, including the potential to reduce, fragment, or degrade habitat for wildlife, fish, and plants. Furthermore, spinning turbine blades can pose a threat to flying wildlife like birds and bats," according to the US Department of Energy. 

Though an offshore wind energy plant would be cleaner than a coal-based power plant, it can still have environmental impacts. For instance, the Gulf of Khambhat is one of the important natural systems of Gujarat and is an "ecologically sensitive coastal region", according to this ecological profile by the Gujarat Ecology Commission in 2011. One of the "essential elements" of offshore plants would be an Environment Impact Assessment (EIA) study of the plant's effect on "aquatic life, fishing etc., studies relating to navigation, undersea mining and related exploration/exploitation activities and other users of the sea", the offshore wind policy says. 

The way ahead 

Overall, growth of both offshore and onshore wind energy has been slowing down in India. 

"The impact of Covid-19 lockdowns on India's wind energy market was more severe than anticipated, with only 1.1 GW installed out of the 3.3 GW originally forecasted for 2020," according to a GWEC report published in June 2021. "But the market is set to bounce back. India is expected to install nearly 20.2 GW of wind power capacity between 2021-25." 

Offshore wind projects are also important for diversification of energy assets so that a region is not entirely reliant on one source of energy, especially as renewable energy is intermittent, said Shah of IEEFA. 

There are ways of reducing the cost if you start looking at offshore projects not only as a source of power but also as a source of other avenues, said Ajay Devaraj, secretary general of the Indian Wind Power Association, a nonprofit that works to push regulations and policies for developing the sector. For example, around an offshore plant, you could set up a desalination plant, a hydrogen recovery plant or a facility for private companies that have very large servers and require large-scale cooling, and use the electricity produced by the plant, he explained. Further, projects in Tamil Nadu could also export electricity to Sri Lanka, he added. 

The government expects the cost of offshore projects to fall. "With strong onshore wind turbine manufacturing base in India, the price of the offshore wind turbines and the tariff are expected to be competitive and at par with onshore wind turbine rates, at the time of large commercial scale deployment of offshore wind turbines in the country," the MNRE said in its report published in March 2021. 

"When we look at [offshore energy] targets, we have to take them with a pinch of salt," said Shah. "What targets do is they provide clarity to the industry and are illustrative of the ambition. What we need to remember is that offshore wind energy may be an expensive proposition now but will be an important resource in the future," he said. 



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