Page 46 - Policy Economic Report - June 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

clean energy and serve as an inspiration for the global clean energy transition. The Mission will lead to
significant decarbonization of the economy, reduced dependence on fossil fuel imports, and enable India
to assume technology and market leadership in Green Hydrogen.

Cabinet approved Viability Gap Funding (VGF) scheme for implementation of Offshore Wind Energy
Projects

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, approved the Viability Gap Funding
(VGF) scheme for offshore wind energy projects at a total outlay of Rs.7453 crore, including an outlay of
Rs.6853 crore for installation and commissioning of 1 GW of offshore wind energy projects (500 MW each
off the coast of Gujarat and Tamil Nadu), and grant of Rs.600 crore for upgradation of two ports to meet
logistics requirements for offshore wind energy projects.

The VGF scheme is a major step towards implementation of the National Offshore Wind Energy Policy
notified in 2015 with an aim to exploit the vast offshore wind energy potential that exists within the
exclusive economic zone of India. The VGF support from the Government will reduce the cost of power
from offshore wind projects and make them viable for purchase by DISCOMs. While the projects will be
established by private developers selected though a transparent bidding process, the power excavation
infrastructure, including the offshore substations, will be constructed by Power Grid Corporation of India
Ltd (PGCIL). Ministry of New and Renewable Energy, as the nodal ministry, will coordinate with various
Ministries/Departments to ensure successful implementation of the scheme.

Construction of offshore wind energy projects and its operations also require specific port infrastructure,
which can handle storage and movement of heavy and large dimension equipment. Under the scheme,
two ports in the country will be supported by Ministry of Ports, Shipping and Waterways to meet the
requirements of offshore wind development.

Offshore wind is a source of renewable energy which offers several advantages over onshore wind and
solar projects, such as higher adequacy & reliability, lower storage requirement and higher employment
potential. Development of offshore wind sector will lead to economy-wide benefits by attracting
investments, development of indigenous manufacturing capabilities, creation of employment
opportunities across the value chain and technology development for offshore wind in the country. This
will also contribute towards achieving India’s energy transition targets.

The successful commissioning of 1 GW offshore wind projects will produce renewable electricity of about
3.72 billion units annually, which will result in annual reduction of 2.98 million ton of CO2 equivalent
emission for a period of 25 years. Further, this scheme will not only kick start the offshore wind energy
development in India but also lead to creation of required ecosystem in the country to supplement its
ocean based economic activities. This ecosystem will support the development of initial 37 GW of offshore
wind energy at an investment of about Rs.4,50,000 crore.

JUNE 2024 Page | 45