The global offshore wind energy market has grown by 24 percent annually
since 2013 (GWEC 2020), with 36 GW installed by the end of 2020 (GWEC 2021). The market is expected to grow from an estimated US$ 31.8 billion in 2021 to $56.8 billion by 2026, at a compounded annual growth rate of 12.3 percent (BloombergNEF 2021).

Offshore wind can play a prominent role in India’s energy transition, especially given the country’s target of 500 GW renewable energy (RE) by 2030 across different technologies. The advantages of offshore wind are predominantly due to its higher plant load factors (40–45 percent) when compared with onshore wind (30–35 percent) and ground-mounted solar (20–25 percent) (SECI 2020). The Indian government has set offshore wind targets of 5 GW (by 2022) and 30 GW (by 2030); however, currently there is no offshore wind project in India.

Several interlinked factors need to fall into place if India is to expand its offshore wind market to the levels achieved by, for example, the United Kingdom and Denmark, and the levels that countries such as Taiwan are achieving. These factors include policy and regulation, energy pricing, local content requirement and customization of technology, infrastructure (with an emphasis on ports and grid connectivity), transparency and certainty (availability of data for investors to assess the feasibility of investment and project pipelines), and environmental and social impact assessments.

Key Findings

India has a few building blocks in place that can help the sector expand, but the stakeholders must work together to improve them. For example, on the policy and regulatory front, the National Offshore Wind Energy Policy, 2015, if updated and improved, could serve as a foundation for the sector.

India can take some steps to lower the cost of energy for offshore wind, so that it can be economically included in the energy mix. Bringing down this cost needs time and involves considering multiple elements. Approaches include providing supportive mechanisms such as offshore wind procurement obligation, low-cost debt through subsidies with adequate repayment time frames, and development of domestic manufacturing, thereby achieving economies of scale. The installation platform accounts for a large part of the capital cost of offshore wind. Building large turbines (of 12–15 MW capacity) can reduce the overall capital costs.

India has started considering infrastructural requirements. Recent reports have identified key ports that need to be developed further in Gujarat and Tamil Nadu to support offshore wind activity (FOWIND 2016). Grid interconnections are a key factor in the development of the offshore sector; for onshore renewables, the government is already implementing a Green Energy Corridor scheme.

The RE sector in India currently does not need to obtain prior environmental clearances or environmental permissions from the regulatory authority, but recent research (Forum for the Future et al. 2021; Dharmadhikary 2020) and reactions from affected stakeholders have demonstrated that this situation needs to change.

Executive Summary

All of the 40 GW (as of November 2021) of installed wind capacity in India is located onshore. There is potential to harness 70 GW of offshore wind energy off the coasts of Gujarat and Tamil Nadu. A planned demonstration project is being evaluated before committing to larger capacities. Given the time this project would take to develop, India may need to build its first project while simultaneously evaluating higher commitments.

Offshore wind can become a key part of India’s energy mix, but rapid progress must be made on aspects of policy and contracting certainty, low-cost financing, establishment of a local competitive manufacturing base, and supporting infrastructure.

Our global offshore market review and stakeholder discussions establish that policy and contract volume certainty are key to initiating offshore wind projects. Low-cost financing and greater volume transparency can help reduce tariffs (unit cost), while establishment of local industry depends on the volumes that can be supported by the domestic and export market. Environmental protection and community trust-building efforts are also necessary.

India can take several steps to increase its offshore wind capacity. In some respects, the examples of other countries can be followed, but in others, India must chart its own path.