Evolving Legal and Regulatory Framework for Offshore Wind Energy Projects in India

Introduction

The offshore wind energy projects in India are playing a major role in the country's renewable energy sector. As the world is slowly transitioning towards cleaner energy sources, India is making significant strides in harnessing its vast offshore wind potential. This article aims to analyse the evolving legal and regulatory framework for offshore wind energy projects in India and its potential impact on the renewable energy sector.[1]

Regulatory Support

Central Government through the Ministry of New & Renewable Energy (MNRE), frames the policy and schemes for the promotion of electricity generation by renewable energy projects. National Institute of Wind Energy (NIWE) is the central agency that overlooks the development of offshore wind energy in our country. [2]

MNRE accordingly came out with the National Wind Energy Policy – 2015 (aka “Offshore Wind Policy”) to optimize the exploitation of offshore wind energy in India. Key Factors highlighted in this policy have been stated below:[3]

• International Competitive Bidding: Offshore wind power projects in India are now awarded through an open competitive bidding process. Successful bidders are granted the right to exploit allocated wind energy blocks based on various parameters, including tariff, revenue sharing, project costs, and lease rates.
  This move towards international competitive bidding ensures transparency and competition in the allocation of offshore wind energy projects. It enables the selection of developers with the best proposals, thus optimizing the utilization of India's offshore wind potential.
• Clearances: The policy streamlines the process for obtaining necessary NOCs (No Objection Certificates) and clearances from relevant authorities, with NIWE facilitating the coordination of these approvals.
  Securing the required clearances and NOCs is often a complex and time-consuming process. By designating NIWE as the coordinating agency for these approvals, the policy aims to expedite the development of offshore wind energy projects and reduce bureaucratic hurdles.

• Power Purchase Agreement: Offshore wind projects are required to enter into Power Purchase Agreements (PPAs) with designated agencies or private companies, adhering to guidelines set by the Electricity Regulatory Commission.
  The inclusion of PPAs in the policy framework provides clarity on how the power generated from offshore wind projects will be purchased. It ensures that the projects have a guaranteed market for their electricity, thus enhancing their financial viability.

• Power Evacuation & Infrastructure: The policy mandates the development of onshore infrastructure for power evacuation by the Central Transmission Utility (CTU) or State Transmission Unit (STU). The central government may also support the creation of evacuation infrastructure.
  Efficient power evacuation is critical for offshore wind projects to deliver electricity to consumers. By requiring the development of onshore infrastructure, the policy ensures that power generated offshore can seamlessly integrate into the grid, promoting the reliability of renewable energy sources.

• Incentives: To encourage offshore wind energy development, the policy offers fiscal incentives, potentially making them equivalent to onshore wind projects. Power bundling with conventional sources is also promoted to reduce overall costs.
  Fiscal incentives play a crucial role in attracting investment in renewable energy projects. By extending these incentives to offshore wind projects, the policy aims to create a level playing field and promote the growth of this sector.

• Surveys & Studies: Private developers with expertise in offshore studies and surveys are permitted to collect data on offshore blocks, subject to NIWE's permissions and guidelines.
  Access to accurate data is vital for project planning and execution. Allowing private developers to conduct surveys and studies fosters collaboration and ensures that projects are based on comprehensive research and analysis.

Draft Offshore Wind Energy Lease Rules, 2022

The Draft Offshore Wind Energy Lease Rules, 2022, were recently released by the MNRE amending the old 2019 Draft Rules. These rules provide a more detailed legal framework for leasing offshore blocks for wind energy projects. The rules include provisions for a 35-year lease period, prospecting, and project installation. They also emphasize the importance of obtaining an offshore wind energy lease before commissioning projects.

The Draft Offshore Wind Energy Lease Rules, 2022, are a significant step forward in the development of offshore wind energy in India. They provide the clarity and certainty that developers need to invest in this promising sector.

Strategy Paper

The MNRE has also released a strategy paper for the development of offshore wind energy in India. The strategy paper identifies 16 offshore wind zones off the coasts of Tamil Nadu and Gujarat. It outlines three development models, including demarcation of zones, detailed surveys, and incentives for developers. The paper aims to boost confidence among project developers and aligns with India's ambitious targets of 30 GW by 2030.

The strategy paper is a roadmap for the systematic development of offshore wind energy projects in India. It provides a clear vision for the future of this sector, and it is essential for attracting investment and ensuring the success of offshore wind energy in India.

Following this paper in 2022, Danish Energy Agency (DEA) and the Indian Ministry of New & Renewable Energy (MNRE) in November 2022 published a conceptual offshore wind plan for 15 locations in India under their joint initiative, the Centre of Excellence for Offshore Wind & Renewable Energy.  It provides a plan for 14 selected zones off the coast of Tamil Nadu and one zone off the coast of Gujarat.

Both parties presented a viability assessment of the existing port infrastructure in proximity to the coasts of the two states, including the recommendations for upgrades and development. It also included details on the exact locations of the first 4GW in Tamil Nadu.

Revised Strategy Paper on 18th August 2023

In a revised strategy paper released on 18th August 2023, the MNRE has announced plans to auction 37 GW of offshore site leases over the next seven years, starting with 4.5 GW in FY24 and 3.5 GW in FY25. This ambitious plan includes three models: PPA awards with VGF support, exclusive site leases, and sea-bed allocation bids. These models offer developers various opportunities to participate in India's offshore wind energy growth.

The revised strategy paper underscores India's commitment to rapid offshore wind energy development. By auctioning site leases and providing different models, the government is opening up avenues for diverse participation in this burgeoning sector.

Conclusion

The development of offshore wind energy in India is a complex and challenging task, but it is also an essential one. Offshore wind energy has the potential to play a major role in India's transition to a clean energy future. By overcoming the challenges and seizing the opportunities, India can become a global leader in offshore wind energy.

FAQs

[1] https://pib.gov.in/PressReleasePage.aspx?PRID=1885147

[2] https://mnre.gov.in/img/documents/uploads/file_f-1692332330838.pdf

[3] https://mnre.gov.in/wind/offshore-wind/

King Stubb & Kasiva,
Advocates & Attorneys

Click Here to Get in Touch

New Delhi | Mumbai | Bangalore | Chennai | Hyderabad | Mangalore | Pune | Kochi
Tel: +91 11 41032969 | Email: info@ksandk.com