To Boost India’s Offshore Wind Sector, MNRE Issues Draft Lease Rules
No offshore wind project development activity can be undertaken without a lease
Though the government has announced big plans to utilize the country’s offshore wind potential, there has been no progress in terms of project development so far. To this end, the Ministry of New and Renewable Energy (MNRE) has now issued draft offshore wind energy lease rules which are aimed at spurring activity in offshore wind, which has until now remained dormant.
The draft is up for comments and suggestions up to February 25, 2019.
This set of rules has been framed to regulate the award of leases that belong to the central government over to the developers to build offshore wind energy projects. The offshore wind projects will be set up along the coast line of India up to 200 nautical miles within the exclusive economic zone.
- No project development activity or site survey for calculating potential of offshore wind can be undertaken without a lease.
- MNRE will grant lease for all offshore wind projects in Indian exclusive economic zones.
- For cases where the lease is to be granted by the state government, the central government will be consulting with the state before agreeing to additional terms and conditions.
- Every lessee (person who has secured the lease) will have the exclusive right to carry out geological and geophysical surveys, studies relating to geo-technical survey and investigations, and testing operations required for development of offshore wind energy projects.
- The area covered by a lease will be specified and the terms of a lease will be initially valid for a period of five years for prospecting and 30 years for the establishment of offshore wind power projects.
- The lease can be extended on renewal of the lease for five years at a time.
- The area covered under a lease will be 100-500 square kilometers depending on the size of the offshore wind energy farm.
- For getting lease, applicants must deposit ₹100,000 (~$1406.2)/MW for installations and ₹1,000 (~$14)/km2 in case of prospecting.
- The applicants must pay yearly lease fee, a sum calculated for each square kilometer covered by the lease at the rate of ₹10,000 (~$140) every year.
- In case of the government exercising its power of preemption of energy generated, it will have to pay the lessee the price prevailing at the time of preemption for the power procured.
- The central government in the national interests such as grid stability and security, by general or special order, can restrict the amount of electricity generation by a lessee in a particular offshore wind generation area.
- All lease fee and other payments under these rules, if not paid within the time specified for such payment, will be increased by 10 percent for the duration of non-payment.
When contacted, an MNRE official said, “We have learnt from implementing renewable energy projects in India. These rules will lead to faster development of offshore wind sector as provisions have been provided where state and central governments can work in tandem to boost this sector. The rules have been made in such a way that there will be very little arbitration going forward. Everything has been clearly marked out. Right now, not even a megawatt of offshore wind projects have been set up in India. These rules will ensure that growth happens in the right direction and it doesn’t get derailed due to developer problems, state government issues.”
In June 2018, the MNRE had announced short-term installation target of 5 GW offshore wind capacity by 2022 and long-term installation target of 30 GW offshore wind projects by 2030. This new set of rules will help the government develop offshore wind power sector in India and replicate the success of onshore wind power sector in the country.
Image Credit: Ragnar1904 [CC BY-SA 4.0]
Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.