Govt okays viability gap funding scheme for offshore wind energy projects

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The Viability Gap Funding (VGF) scheme has a budget of ₹7,453 crore. This government support will lower the cost of power from offshore wind projects, making it affordable for distribution companies (discoms) to buy.

Govt okays viability gap funding scheme for offshore wind energy projects

Govt Okays Viability Gap Funding Scheme for Offshore Wind Energy Projects

The Union Cabinet has given the green light to the Viability Gap Funding (VGF) scheme for offshore wind energy projects, marking a significant step forward in India’s renewable energy ambitions. The scheme involves a substantial financial commitment, with a total outlay of ₹7,453 crore. This includes ₹6,853 crore dedicated to the installation and commissioning of 1 gigawatt (GW) of offshore wind energy projects.

Key Projects and Investments

Under this initiative, two major offshore wind projects are planned, each with a capacity of 500 megawatts (MW) — one off the coast of Gujarat and the other off Tamil Nadu. In addition, ₹600 crore has been allocated for upgrading two ports to meet the specific logistics requirements of these offshore wind energy projects.

Aligning with National Offshore Wind Energy Policy

This VGF scheme is a critical component of the National Offshore Wind Energy Policy, which was notified in 2015. The policy aims to harness the vast offshore wind energy potential within India’s exclusive economic zone. By providing financial support, the government intends to lower the cost of power from these projects, making them more attractive for distribution companies (discoms).

Project Execution and Infrastructure

The offshore wind projects will be developed by private entities selected through a transparent bidding process. However, the Power Grid Corporation of India Ltd (PGCIL) will handle the construction of the power evacuation infrastructure, including offshore substations. The Ministry of New and Renewable Energy will coordinate with various ministries and departments to ensure the successful implementation of this scheme.

Port Infrastructure Upgradation

The construction and operation of offshore wind energy projects necessitate specialized port infrastructure capable of handling heavy and large-dimension equipment. The scheme includes support from the Ministry of Ports, Shipping, and Waterways to upgrade two ports to meet these requirements, ensuring a smooth logistical flow for the development of offshore wind energy.

Advantages of Offshore Wind Energy

Offshore wind energy offers several benefits over traditional onshore wind and solar projects. It provides higher adequacy and reliability, requires lower storage, and has a higher employment potential. Moreover, the development of the offshore wind sector is expected to attract significant investments, foster indigenous manufacturing capabilities, create employment opportunities, and spur technological advancements in the country.

Environmental and Economic Impact

The successful commissioning of 1 GW of offshore wind projects is expected to generate approximately 3.72 billion units of renewable electricity annually. This would lead to an annual reduction of 2.98 million tons of CO2 equivalent emissions over a period of 25 years.

Building a Sustainable Ecosystem

The VGF scheme aims not only to jumpstart the offshore wind energy sector in India but also to create a supportive ecosystem for ocean-based economic activities. This ecosystem is anticipated to facilitate the development of an initial 37 GW of offshore wind energy, requiring an investment of about ₹4,50,000 crore.

Financial Projections and Future Goals

To achieve its ambitious target of 500 GW of renewable energy capacity by 2030, India will need to invest approximately $385 billion, according to Moody’s. This translates to an annual capacity addition of around 44 GW. Over the next seven years, adding the necessary 310 GW of renewable energy capacity will require investments ranging from $190 billion to $215 billion, or about $32 billion to $36 billion annually.


The approval of the VGF scheme for offshore wind energy projects is a landmark decision that underscores India’s commitment to renewable energy and sustainable development. By reducing the cost of offshore wind power and fostering the necessary infrastructure and ecosystem, India is poised to make significant strides towards its energy transition targets, benefiting both the economy and the environment.

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