Government to Auction First Offshore Wind Site in February 2024
The National Institute of Wind Energy will oversee the auctions
The Ministry of New & Renewable Energy (MNRE) plans to conduct auctions to allocate offshore wind sites along the Tamil Nadu coastline. These projects will generate power for distribution through various avenues, including open access mode, third-party sale, power exchanges, or internal consumption.
The National Institute of Wind Energy (NIWE) will administer these auctions. The first zone (B) is expected to be tendered by February 1, 2023. The other zones (E and G) will be auctioned sometime during the next financial year.
The bidding process will follow a single-stage, two-envelope system. The first envelope will contain the techno-commercial bid, and the second will contain the financial bid, where bidders will specify the site lease rental. The minimum floor price for site lease rental is set at ₹100,000 (~$1,202) per square kilometer per year.
The initial seabed area lease to the developer will be for five years, possibly extending it by an additional year on a case-by-case basis. Within this timeframe, the developer is responsible for commissioning the offshore wind energy projects, including conducting necessary studies or surveys.
During the lease period, the developer can exit the project development, provided it submits the survey data to NIWE and forfeits the submitted bank guarantee of $1 million for each site.
NIWE will monitor the progress of project development throughout the lease period. If the developer successfully commissions the project on time, a portion of the site allocation fee paid by the developer beyond the floor price will be refunded.
After project commissioning, the lease will be extended for the project’s operational life, including the decommissioning period. During this extended period, the project developer must pay the seabed lease floor price of ₹100,000 (~$1,202)/sq. km/year (lease rentals) from the commissioning date.
The grid evacuation infrastructure, extending up to and including the offshore substation, will be supplied as an integral component of the inter-state transmission system (ISTS) network by the central transmission utility.
Offshore wind power projects operational on or before December 31, 2032, will qualify for an exemption from ISTS charges and the Additional Surcharge for the electricity generated by these offshore wind power projects.
MNRE has proposed extending the reduced customs duty rates for importing essential components used in the production of offshore wind turbines, mirroring the existing benefits offered for onshore wind turbine manufacturing.
Renewable energy credits with multiplier carbon credit benefits are also proposed for offshore wind projects.
The ministry recently formulated three models for developing offshore wind energy projects, especially along the country’s extreme southern and western shorelines.
Earlier, MNRE had issued a draft tender to select wind power developers for leasing seabed areas to develop 4 GW of offshore wind power projects off the coast of Tamil Nadu.