Ministry of External Affairs Notifies Rules for Leasing Offshore Wind Energy Sites

Introduction

The Ministry of External Affairs (MEA), on 19^th December 2023 notified the Offshore Wind Energy Lease Rules, 2023 which are aimed at boosting wind energy production across the country. Under the Rules, the ministry has laid down a three – year period of lease for the seabed areas which is extendable up to two additional years for the purpose of resource measurement and surveys.

As per the rules, an obligation has been laid down upon the lessee to submit survey data or other relevant documents to the National Institute of Wind Energy unless it has started setting up wind energy capacity plants as per the lease agreement. Moreover, the area of lease can also be extended from 25 to 500 Square Kilometers, depending upon the size of the project.

For setting up and commissioning an offshore wind energy project, the applicants are required to submit a deposit of Rs. 1,00,000/- per MW and for a separate offshore wind transmission project, a deposit of Rs, 50,000/- is required to be made to the Central Government within a period of three months from the day when the demand is made. The security deposit made by the applicant is also refundable upon the successful operations of the offshore wind project or at the end of lease agreement. Moreover, a provision of 30 days has been given for the lessee to give a notice to the central government for giving up or relinquishment of the entire or part of the leased area.

The lessee also has the right to utilise the waterways for offshore winds or transmission activities if required including the right to impose restrictions such as restrictions on navigation of boats, ferries, and ships that obstruct the operations of project site, managing activities such as scuba diving, windsurfing and other activities within the designated lease areas and prohibition of anchoring or using fixed fishing gears within the area designated by lease.

Moreover, there are certain restrictions which are also imposed upon the lessee which include prohibition on extraction of minerals or resources from the seabed or the adjacent waters. The lessee is also prohibited from subleasing any part of the lease without any approval from the Central Government. Additionally, the lessee is also subject to a monthly penalty of 5% in the event the lessee fails to make payments on time. In case the lease payment or other fees remains overdue for a period of more than three months, the Central Government has the right to cancel the lease and publish the same in the official gazette.

Conclusion

The new rules for leasing offshore wind energy sites as notified by the Ministry of External Affairs are a trailblazer for shifting towards non – polluting and sustainable sources of energy in a regulated and structured manner. Through these rules, the government has also planned to offer credits for renewable energy and carbon benefits which will make such energy sources more attractive. Furthermore, developers can also distribute the renewable energy so generated through energy exchanges or third-party sales, making it a freely exchangeable source of energy.