The Union Cabinet had in June approved a VGF scheme for 1,000 MW offshore wind projects in Gujarat and Tamil Nadu.
Proposed guidelines for the tender, which were issued last week, state that the successful bidder or bidders will get to sign a power purchase agreement at a fixed tariff of ₹4.5 per unit for Gujarat.
Bidders will be required to submit technical and financial bids, with the lowest quoted VGF getting the highest capacity. There will be a greenshoe option as well for allocation of additional capacity of up to 50 MW with the total maximum capacity set at 550 MW.
In a tender, a greenshoe option is a provision that allows procuring additional power capacity through competitive bidding.
The VGF plan for the offshore wind capacity is a part of the Union government’s 100-day milestone. The scheme is a step towards implementation of the National Offshore Wind Energy Policy issued in 2015 to explore wind energy potential within the exclusive economic zone of India. In June, Crisil Market Intelligence and Analytics had said VGF for offshore wind energy projects was a much-awaited boost for the segment, and could possibly trigger investments into the space where developers have so far shied away due to high cost, operational challenges and offtake-related risks. The VGF support will reduce the cost of power from offshore wind projects, which are costlier than onshore wind, it had said. For comparison, capital cost for an offshore wind energy project is four times that of onshore on a per GW basis due to enhanced requirements such as high-maintenance outer layer of steel, underwater transmission network and additional port infrastructure for assembly.
However, it enjoys benefits such as high plant load factor of 40-45% compared with 25-30% for onshore, and utilisation of sea area instead of usable land mass, the report said.
