The Wind Energy Lease Rules, 2023, herald a significant shift, paving the way for sustainable offshore wind projects and fostering a green energy future
The Indian government has taken an important step towards expanding its renewable energy portfolio with the notification of the Offshore Wind Energy Lease Rules, 2023. This marks the country's first foray into offshore wind power. Currently, it generates all of its 44,089.68 MW of wind energy from land-based projects.
The Offshore Wind Energy Lease Rules, disclosed on December 19 and made public on December 20, decree that the lease area will typically range from 25 to 500 square kilometres, contingent on project size.
Given that the country is stepping into the uncharted waters of "offshore" wind energy, the rules incorporate a gamut of security measures, necessitating clearances from multiple ministries, including Defence, Home Affairs, External Affairs, Environment, Forest and Climate Change, Department of Space, and Ports, Shipping, and Waterways.
Offshore wind power involves harnessing the sea's wind force to generate electricity, with transmission to the grid facilitated by undersea cables embedded in the seafloor.
Lease agreements will specify the covered area and are initially valid for three years and extendable for two additional years. After these five years, failure to initiate projects will result in the forfeiture of all clearances. However, if construction and operation commence, the government may extend the lease for up to 35 years or more.
The Ministry of New and Renewable Energy (MNRE) highlights that failure to initiate studies, surveys, or projects within six months may lead to lease cancellation and security deposit forfeiture. No royalty applies during offshore wind energy project development. Applicants must pay an annual lease fee of Rs 1 lakh per square kilometre or part thereof in advance. Payment should be made within a month of the Lease Issuing Authority's demand letter.
The government issued its inaugural tender on September 28, allocating seabed sites along Tamil Nadu's coast for offshore wind projects. The MNRE will auction these sites and grant waivers on inter-state transmission system charges for projects commissioned by December 31, 2032.
MNRE officials anticipate that operational offshore wind projects may emerge post-2030, considering the estimated five-year duration for project studies.
To incentivise offshore wind adoption, the government plans to offer renewable energy credits with multipliers and carbon credit benefits, making it more attractive and tradable. Developers can distribute the generated renewable power through open access, third-party sales, power exchanges, or for captive consumption.