Viability Gap Funding (VGF) Scheme for Offshore Wind Energy Projects
Disclaimer: Copyright infringement not intended.
Context
- The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, approved the Viability Gap Funding (VGF) scheme for offshore wind energy projects.
- The scheme has a total outlay of Rs. 7,453 crore, including Rs. 6,853 crore for installing and commissioning 1 GW of offshore wind energy projects and a grant of Rs. 600 crore for upgrading two ports to meet logistics requirements.
Viability Gap Funding (VGF) Scheme
- The Viability Gap Funding (VGF) Scheme aims at supporting infrastructure projects that are economically justified but fall marginally short of financial viability.
- Support under this scheme is available only for infrastructure projects where private sector sponsors are selected through a process of competitive bidding.
- The total VGF under the scheme does not exceed 20% of the total project cost, however, the Government may decide to provide additional grants up to a limit of a further 20%.
Objective of the Scheme for offshore wind energy projects
- The scheme aims to implement the National Offshore Wind Energy Policy of 2015, exploiting India's vast offshore wind energy potential within its exclusive economic zone.
- Government support through VGF will reduce power costs from offshore wind projects, making them viable for purchase by DISCOMs.
National Offshore Wind Energy Policy The National Offshore Wind Energy Policy, introduced in 2015, aims to promote the development of offshore wind energy in India. Despite significant progress in onshore wind power, the vast potential of offshore wind energy remains largely untapped, necessitating a targeted policy framework to unlock its benefits. Objectives: Pioneering Offshore Wind Energy The policy delineates multifaceted objectives aimed at catalyzing the offshore wind energy sector:
Mechanism of Offshore Wind Energy: Leveraging Nature's Bounty Offshore wind energy harnesses the formidable power of the wind at sea, where wind speed is higher and more consistent. This clean, renewable energy source leverages sophisticated structures equipped with cutting-edge technology to capture wind energy and convert it into electricity. Advancements in offshore wind technology have enabled installations in shallow waters up to 60 meters deep, facilitating efficient deployment and operation of offshore wind farms. Development in India: Nurturing Growth and Innovation
Benefits and Global Perspective: Harnessing Nature's Bounty Offshore wind energy offers a myriad of benefits:
Leading nations in offshore wind energy, including the UK, Denmark, and Germany, serve as beacons of success, showcasing the immense potential and benefits of offshore wind energy development. |
MUST READ ARTICLE: OFFSHORE WIND ENERGY IN INDIA: https://www.iasgyan.in/daily-current-affairs/offshore-wind-energy-in-india#:~:text=Offshore%20wind%20energy%20refers%20to,and%20convert%20it%20into%20electricity.
WIND ENERGY IN INDIA: https://www.iasgyan.in/daily-current-affairs/wind-energy-in-india
Implementation Strategy of VGF for offshore wind energy projects
- Private developers will establish projects through a transparent bidding process.
- Power excavation infrastructure, including offshore substations, will be constructed by Power Grid Corporation of India Ltd (PGCIL).
- The Ministry of New and Renewable Energy will coordinate with various Ministries/Departments for successful scheme implementation.
Port Infrastructure Support
- Construction of offshore wind projects requires specific port infrastructure.
- Ministry of Ports, Shipping, and Waterways will support two ports to meet offshore wind development requirements.
Benefits of Offshore Wind Energy
- Offshore wind offers advantages over onshore wind and solar projects, including higher reliability, lower storage requirements, and higher employment potential.
- Development of the sector will attract investments, develop indigenous manufacturing capabilities, create employment opportunities, and drive technology development, contributing to India's energy transition targets.
Environmental Impact and Future Prospects
- Commissioning 1 GW of offshore wind projects will produce renewable electricity, resulting in significant CO2 emission reduction.
- The scheme will kickstart offshore wind energy development in India and create the necessary ecosystem to support the development of 37 GW of offshore wind energy at a substantial investment.
PRACTICE QUESTION Q. Analyse the potential impact of offshore wind energy on India's renewable energy landscape. Evaluate the challenges and opportunities associated with the development and integration of offshore wind energy projects. Discuss the policy measures required to harness offshore wind energy effectively and its role in achieving India's energy security and sustainability objectives. |
SOURCE: PIB