Subsidy-free offshore wind plants piquing interest of clean energy industry

The first set of projects will set the course for a subsidy-free offshore wind regime in India too

Question: What can a wind turbine installed in the sea give you? 

Answer: Very competitively priced electricity.

After subsidy-free solar and onshore wind power, subsidy-free offshore wind plants are piquing the interest of the clean energy industry. The first such plant was announced in Germany last year, and the Netherlands gave the contract for a subsidy-free plant earlier this month to Vattenfall.

Fascinatingly, large turbines installed in the sea — near shore or further — tap into the rich wind resource there to generate power. The larger the turbine, the more the cost savings. 

General Electric is working on the world’s biggest offshore wind turbine that, at a height of 260 meters, will be nearly as tall as the Eiffel Tower. It will have a capacity of 12 megawatts, while the most powerful commercially available turbine currently is less than 10 megawatts in size. “In offshore, we are leapfrogging competition” in turbine technology, Jerome Pecresse, chief executive office of GE Renewable Energy told Bloomberg News. 

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The total capacity of offshore wind globally is projected to reach 100 gigawatts in the next 10 years, from about 18 gigawatts now. The big three in the space are the UK, Germany, and China. Denmark is also a large player, and hosts the world’s largest offshore wind developer — Orsted (which was earlier known as Dong Energy). Taiwan is also betting on offshore wind — it raised its 2025 offshore wind capacity target to 5.5 gigawatts earlier this month, from 3 gigawatts. The US is a late starter compared to Europe, but is now starting to expand its offshore wind installations. 

With its vast coastline, India also has the potential for gigawatt-scale offshore wind installations. An offshore wind policy was announced back in October 2015, but there has been scant progress since then.

The critical decisions on incentive mechanisms, seabed lease, targets and local content are yet to be announced, despite “reasonable potential” seen off the coast of the states of Tamil Nadu and Gujarat. 

Renewable energy minister RK Singh has promised a gigawatt-scale auction soon — though there is no operating project yet. 

Responding to a question in Parliament on offshore wind in January, the minister said that the National Institute of Wind Energy (NIWE — nodal agency for offshore wind) had carried out preliminary studies, in collaboration with various multilateral agencies, and identified eight locations off the coast of Gujarat and Tamil Nadu where offshore wind farms can be set up. “NIWE has already initiated wind resource measurement by establishing Light Detection and Ranging (LiDAR) at one of the locations off the coast of Gujarat,” he said.

The developers will be selected through international competitive bidding. It is almost certain that the first set of projects will not be very cost-competitive, but they will likely set the course for a subsidy-free offshore wind regime in India too. 

Interestingly, there is no explicit target for offshore wind in the government’s 175 gigawatts clean energy target for 2022.

The author is the Editor — Global Policy for Bloomberg New Energy Finance. She can be reached at vgombar@bloomberg.net