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Topic : Viability Gap Funding for Offshore Wind Projects in India
GS-3 Mains : Economy
Revision Notes
Government Approves VGF Scheme
The Union Cabinet approved a Viability Gap Funding (VGF) scheme to support offshore wind energy projects in India. This is a significant step towards harnessing the country’s vast offshore wind energy potential as outlined in the 2015 National Offshore Wind Energy Policy.
What is VGF?
The VGF scheme bridges the gap between the cost of setting up a project and the revenue it can generate. This financial assistance from the government makes offshore wind projects more attractive for developers and reduces the final cost of electricity produced.
Implementing the Scheme
The Ministry of New and Renewable Energy (MNRE) will oversee the scheme’s implementation. Key aspects include:
- Installing 1 GW of offshore wind capacity (500 MW each off the coasts of Gujarat and Tamil Nadu)
- Upgrading two ports to handle the logistical requirements of these projects
Benefits of Offshore Wind
- Reduced Power Cost: VGF support will bring down the cost of electricity generated by offshore wind farms, making it more competitive for purchase by electricity distribution companies (DISCOMs).
- Renewable Energy Source: Offshore wind generates clean electricity, contributing to India’s renewable energy goals and reducing dependence on fossil fuels.
- Environmental Benefits: Over 25 years, these projects are expected to generate 3.72 billion units of clean energy annually, offsetting an estimated 2.98 million tons of CO2 equivalent emissions.
- Boosting Ocean Economy: The development of offshore wind infrastructure will create a supportive ecosystem for ocean-based economic activities in India.
Advantages of Offshore Wind Energy
- Higher Electricity Generation: Offshore wind speeds are typically stronger and more consistent compared to onshore locations, allowing turbines to generate more electricity.
- Reduced Noise Impact: Locating wind farms far from populated areas minimizes noise and visual disturbances for residents.
- More Space and Less Obstruction: Offshore locations offer ample space for larger turbines and minimize interference with shipping lanes or land use.
Challenges of Offshore Wind
- High Installation Costs: Building and maintaining offshore wind farms is more expensive than onshore projects due to complex marine logistics and construction.
- Environmental Impact: Construction and operation of offshore wind farms can potentially impact marine ecosystems and wildlife. However, modern projects incorporate environmental assessments and mitigation measures to minimize such risks.
Future of Offshore Wind
Despite these challenges, offshore wind energy is gaining significant traction worldwide due to rising energy demands, climate change concerns, and advancements in technology and supportive policies. Countries like the UK, Germany, and Denmark are leading the way in offshore wind deployment, with ambitious projects planned globally. India’s VGF scheme is a positive step towards joining this global movement and harnessing its clean energy potential.
Source : https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2026700
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