India approves funding for offshore wind projects

India's federal government cabinet has approved viability gap funding (VGF) for the installation and commissioning of 1GW of offshore wind projects in Gujarat and Tamil Nadu states.

India's plans for offshore wind energy will increase short-term demand for rare earth permanent magnets and minor metals such as chromium, cobalt, manganese and molybdenum.

The cabinet on 19 June approved VGF of 68.53bn rupees ($820mn) for installation and commissioning of 500MW of offshore wind projects each off the coast of northwest India's Gujarat and southeast India's Tamil Nadu. It also approved a Rs6bn grant for upgrading two ports to meet the logistics requirements for developing the projects.

The VGF scheme aims to support infrastructure projects that are economically justified but fall marginally short of financial viability. The funding support from the government reduces the cost of power from offshore wind projects and make them viable for purchase by electricity distribution companies.

India's Ministry of New and Renewable Energy expects the commissioning of the 1GW wind projects to promote development of the offshore industry. It is targeting an initial 37GW of offshore wind power generation capacity with investment of about Rs4.5 trillion.

Initial assessments by India's National Institute of Wind Energy for potential offshore zones for wind energy projects indicate the potential of 36GW of wind energy projects off Gujarat and about 35GW offshore Tamil Nadu.

By Samil Surendran