Offshore Wind Energy growth in India

Offshore Wind Energy is Still a Non-starter in India

Industry is sceptical about the success due to high costs and cumbersome procedures involved

India has begun work to assess the country’s potential to generate wind energy offshore, but the industry is sceptical about the option because of high costs and cumbersome procedures. Wind energy accounts for less than 10% for India’s total power generation, with installed capacity of 16,000 MW. But ambitions for the sector are big, with estimates that the capacity will be doubled within five years.

While offshore turbines deliver 50% higher plant load factor (a measure of capacity utilisation) than onshore farms because of higher wind speeds at sea, the capital cost of tapping offshore wind could be over . 30 crore a MW, five times that of onshore.

“So, we would require incentives to make it attractive,” said Sumant Sinha, founder chairman and CEO of the Goldman Sachsbacked ReNew Wind Power.

A call for more incentives than what is offered now could make it a non-starter. More so, because of the terrible financial condition of state distribution utilities. The Tamil Nadu Electricity Board, for example, owes over . 1,000 crore to wind energy players.

Asenior official in the ministry of renewable energy agreed that the higher expense means that the government is unlikely to push the offshore case any time soon.

“Given the condition of our distribution companies, we can’t expect them to pay such rates,” he said, requesting anonymity. The focus for Ramesh Kymal, CMD of Spain-based Gamesa, is the immense potential onshore. Even if India’s wind energy potential is taken to be just 60,000 MW, a conservative estimate, only a fourth of that has been fulfilled. Also, Kymal said offshore wind needs clearances from 10 departments.

“You have to deal with bureaucracy and red tapism. And evacuation is also going to be a key issue.”

The likes of Gamesa, Siemens, Vestas, Suzlon-owned REpower and Areva, all of whom have significant India presence, have driven offshore wind in global markets, particularly Europe. Industry information provider Bloomberg New Energy Finance estimates offshore wind capacity was 3.8 GW by the end of 2011.

And, since 2009, over $24 billion has been invested in offshore wind projects, with the UK, Denmark and the Netherlands leading the race. China wants to expand its offshore wind power installed capacity to 5 GW by 2015 and 30 GW by 2020, according to the Chinese Renewable Energy Industries Association. Suzlon Energy CFO Robin Banerjee, however, seemed less sceptical about offshore wind in India.

He said his company would be prepared to participate in offshore projects as and when they come up in India, but declined to discuss specifics. The company expects the offshore market’s global share in total installations to increase from around 4% in 2010 to 11% in 2016, driven by northern Europe and Asia. Huge offshore installations in the UK (around 18 GW) and Germany (around 10 GW) would hold the key. In overseas offshore markets, Suzlon believes, the biggest challenge in the short term is the insufficient transmission infrastructure. The first step toward any future in offshore wind power was taken only recently. That was when the Centre for Wind Energy Technology, a Chennaibased Government of India agency, put up its first offshore mast in Dhanushkodi, off Tamil Nadu’s coast. CWET’s report, prepared with a Scottish agency’s help, has identified Dhanushkodi, Ramnad and Kanyakumari as areas with the highest potential.

Tamil Nadu accounts for 50% of India’s wind power generation capacity.

Gomathi Nayagam, CWET’s executive director, said if executed with Indian engineering project contractors, offshore wind is likely to be cheaper than in Europe and America. The Tamil Nadu Energy Development Agency, which promotes renewable energy in the state, has moved the Centre for permission to do more.

“We are hopeful in the coming year that at least the demonstration projects will come up,” said Sudeep Jain, its chairman and MD. Ashish Sethia, head of Research-India, Bloomberg New Energy Finance, said even the demonstration projects have to be developed differently in India. “In Europe, power utility companies have developed, owned and operated a majority of projects as these are capital intensive and also require setting up of associated transmission systems. However, in India, initial demonstration projects could be done by turbine manufacturers themselves (maybe through one of their group companies) or large oil and gas exploration and production companies.”

Source: ET