The Union Cabinet has approved a Viability Gap Funding (VGF) program with a total outlay of ₹74.53 billion (~$893.34 million) for offshore wind energy projects.

The program includes ₹68.53 billion (~$821.43 million) for installing and commissioning 1 GW of offshore wind energy projects, split equally between the coasts of Gujarat and Tamil Nadu.

An additional ₹6 billion (~$71.92 million) will go towards upgrading two ports to support the logistics requirements of these projects.

The VGF program aligns with the National Offshore Wind Energy Policy, which aims to utilize the vast offshore wind energy potential within India’s exclusive economic zone. By providing financial support, the government seeks to reduce the cost of power from these offshore projects, making them viable for purchase by power distribution companies.

Private developers, selected through a transparent bidding process, will establish these projects. Power Grid Corporation of India will construct the necessary power evacuation infrastructure, including offshore substations. The Ministry of New and Renewable Energy, serving as the nodal ministry, will coordinate with other ministries and departments to implement the program.

Developing offshore wind energy projects requires specialized port infrastructure to handle heavy, large-dimension equipment storage and movement. The program will support two ports, which will be upgraded by the Ministry of Ports, Shipping, and Waterways to meet these demands.

Offshore wind energy offers several advantages over onshore wind and solar projects, including higher adequacy and reliability, lower storage requirements, and greater employment potential. The sector’s development is expected to attract investments, foster indigenous manufacturing capabilities, and promote technology development for offshore wind in India.

The commissioning of 1 GW of offshore wind projects is projected to produce approximately 3.72 billion units of renewable electricity annually, reducing 2.98 million tons of CO2 equivalent emissions over 25 years. This initiative is anticipated to create an ecosystem supporting an initial 37 GW of offshore wind energy, attracting investments of around ₹4.5 trillion (~$53.94 billion).

In February, Solar Energy Corporation of India invited bids to allocate sea-bed lease rights for 4 GW offshore wind power projects along the Tamil Nadu coast on a build-own-operate basis.

In December, the Ministry of External Affairs notified rules for leasing offshore wind energy sites.