India OW market is attractive yet challenging. The risks cannot be ignored or wished away, but the industry can be kick-started with a targeted approach. To deal with the uncertainty, the government needs to provide a clear market roadmap and players need to commit a price trajectory.

In 2018, India announced an Expression of Interest for 1 GW offshore wind (OW) project and laid out the national target of 5 GW by 2022 and 30 GW by 2030. Preliminary assessments have shown a combined potential of 160 GW for offshore wind projects in Gujarat and Tamil Nadu. As on date, 70 GW of the area is earmarked for the development of projects out of which detailed investigations have been planned for 1.7 GW.

However, developments have been few and slow in the past two years. This is because OW is expensive to install due to the higher amount of engineering needed to install and operate a plant in the sea. The cost, excl. grid is estimated in the range of INR6-8 per kWh (EUR 70-90 per MWh). These are 2X-3X of the cost of renewables currently and hence have stalled the progress of the commercial activity.

Nevertheless, OW may be inevitable for India’s fast-growing electricity demand towards 2030, as the available options fall short by nearly 50GW as per MEC+ estimates. Offshore wind is a green alternative to meet this demand-supply gap, as compared to polluting new coal which is expected to be available at EUR 65 per MWh in 2030. Globally, large targets have been pre-cursor to decline in costs. Europe today has 22GW of OW projects and recent tender awards in Europe for offshore wind were subsidy-free. This was made possible by clear volume roadmaps leading to the development of larger turbines, high scale serial production, and installation techniques. On similar lines in India, we have both land-based wind and solar moving to being the lowest-cost source of energy when reaching ~70GW of installed capacity. The resource quality in India is not as high as compared to Europe and hence the landed cost of power will be higher. However, this is not unique, innovation will be needed to bring the costs down along-with the economies that come from scale.

To kick start the industry, the government has taken the initial step of coming up with a big target that has attracted global attention. However, it should now back it up with a tender roadmap and clarify whether today’s bid price will be the only criterion or is unlocking a new industry a priority.

Players must think big about the potential of the Indian market and assist the government by committing to a cost reduction strategy that converges on the price of coal. In doing this, players can explore the synergies available from adjacent industries of onshore wind and O&G, which are quite mature in India.  Additionally, the players need to develop comfort with local business practices and develop relations to help them navigate the complex labyrinth of regulations in India.