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INDIA NEEDS TO BREAK CATCH-22 OF OFFSHORE WIND TO MEET ITS DOUBLING ELECTRICITY DEMAND BY 2030- MEC

OW can emerge as an alternative to polluting coal to fill a gap created by infrastructural restrictions on land-based renewables by 2030

  • A new report, ‘Breaking the Catch-22 in Indian Offshore Wind‘ published by MEC Intelligence (also known as MEC+) and QVARTZ, finds that offshore wind-based generation could compete with coal-based power towards meeting the demand-supply gap expected in 2030.
  • India has announced an ambitious target of 5 GW OW by 2022 and 30 GW by 2030. Currently, nearly 70 GW potential area has been earmarked for OW development and 1.7 GW is in pipeline. The government invited an Expression of Interest for a 1 GW project in 2018, which received a response from 40+ players.
  • Limited progress has been made in the exploration of offshore wind resources since the announcement of target and EOI. OW in India is currently expected to compete with cheap land-based renewables, available in the range of EUR 30-40 per MWh. The competitive pricing expectation has stalled the market.
  • However, the report underlines that offshore wind must be seen as a green alternative to polluting new coal power plants, which will be available at EUR 65 per MWh in 2030, to meet India’s doubling electricity demand.
  • Interested players must leverage their global expertise and develop local capabilities to build a sustainable industry. The onus lies on both government and supply chain to deliver a roadmap that can unlock the large resource available to India.

11 June 2020, New Delhi/Copenhagen: According to a new report released today by MEC+ and QVARTZ, Offshore wind can fit in the energy mix of India as the need for higher-priced power is expected to emerge in the country by 2030. The available options for meeting India’s doubling demand will fall short by nearly 50 GW. India would have the option to fire expensive coal power to meet this demand or switch to a greener alternative of offshore wind. While coal-based power prices increase to reach EUR 65/MWh in 2030, offshore wind costs can decline from current high levels to reach that figure.

The report highlights that an emerging need for expensive power (~EUR 65/MWh) combined with ambitious targets and a conducive tender design are expected to promote offshore wind in the country. However, misplaced pricing expectations at levels of land-based renewables, local resource and siting conditions being dis-similar to that in Europe, ambiguous approval process, and lack of indigenized supply chain create hurdles for uptake.

Participants can leverage existing local capabilities and their global expertise to deliver cost-competitive OW projects in India. The report deep dives on all supply chain players and observes that India has access to supply chain and has experience within OW adjacent sectors – onshore wind and O&G. No fundamental bottleneck is expected in the availability of the supply chain for OW deployment. Nonetheless, investments would be required to scale existing capabilities.

Additionally, the report recommends that prospective participants must build comfort with quality along with Health Safety & Environment (HSE) practices of the local supply chain and modify practices as per the Indian supply chain cost structure.

Sidharth Jain, Founder and CEO at MEC+ commented: “OW in India is attractive but has practical challenges that can be resolved to make it a scalable opportunity. Foreign players entering the market should take caution of the pricing dynamics, OW resource variation between EU and India, and the difference needed in the business practices to meet those price targets.”

See our video discussing the key findings of the report, tune-in here to know more. MEC+ is planning an exclusive session to address the questions received from Industry, submit your questions here or write to us at info@mecintelligence.com

To read more, download the teaser here

About MEC Intelligence (MEC+)

MEC Intelligence (MEC+) is a market strategy and consulting firm focused on the renewables sector and is based out of India and Denmark. MEC+ has supported the largest global wind OEMs, European utilities, global supply chain players, equity funds to succeed in global OW markets. The company has been extensively working in the offshore wind sector since 2010 and has supported the development of supply chain, contracting models. Work has involved identifying bottlenecks in the supply chain for M&A, clarifying cost reduction levers, and IRR in OW. MEC+ has also been supporting Indian government institutions in defining the framework for OW incentives, tender design, and realistic price benchmarks, to facilitate OW development in the country. The company is uniquely placed to understand the complexity of the Indian market combined with the complexity of OW technology, for helping players set course.

For more information on India related work, see www.mecintelligence.com/expertise. For regular updates on the Indian Energy Sector, follow us on Linkedin.

About QVARTZ

QVARTZ is a first-tier management consulting firm with Nordic roots and global reach. From offices in Scandinavia, Singapore and Manila, the firm serves leading businesses, governments, and organizations as a trusted advisor to top management, and as a hands-on coach for front line employees. QVARTZ has worked in the offshore wind sector since 2004 and has assisted some of the largest offshore wind players in Northern Europe with making the most of their offshore wind investments. The consulting company has helped government authorities define the right incentives, institutional investors make the right deals, and more importantly, crafted winning offshore wind strategies for some of the largest utilities. The work has provided QVARTZ with best-in-class insight into the dynamics and pitfalls of offshore wind and has paved the way for a unique understanding of tomorrow’s winning business models.

For more on QVARTZ, visit https://qvartz.com/

For more information, please contact:

Tarannum Tarar, MEC+ | tarannum@mecintelligence.com| +91 8800 1100 61