GWEC recommendations for Indian offshore wind market

wind

Global Wind Energy Council (GWEC), in its latest Offshore Wind Policy and Market Assessment Outlook, has recommended a set of guidelines for Indian offshore wind energy market.

While the offshore wind industry has completed over ten years in commercial operation, the industry in India represents a significant regulatory, technical and financial challenge, says GWEC.

India has a strong record in onshore wind. In 2014, it was the 5th largest market globally with a total installed capacity of 22,465 MW. There is a strong need for large-scale, clean and indigenous energy generation in a rapidly developing economy like India, the report says.

After analyzing the challenges, GWEC makes the following recommendations for Indian offshore wind energy market.

  1. Set a clear offshore wind target and roadmap to convey the vision to industry Experience shows that a clear, time-bound, quantitative target for offshore wind development, and a roadmap of how to achieve it, is an effective tool to focus minds on the offshore wind opportunity.
  2. Clearly articulate and affirm energy policy objectives to maintain industry confidence A clear understanding of wider policy objectives helps to provide industry with confidence that the drivers for offshore wind will persist even if the exact milestones do not always go to plan.
  3. Ensure managed progression from demonstration to commercial projects Demonstration sites are crucial for identifying regulatory issues, testing the local supply chain, understanding specific environmental concerns, helping transfer knowledge and testing new technology. A clear plan for well-managed progress to commercial-scale projects is also required for industry to make the necessary investment in infrastructure.
  4. Provide strong initial public investment and utilise Public-Private partnerships where possible Public investment is needed not just to reduce project risk and to provide soft loans but also to ensure that the preliminary assessments and necessary supporting infrastructure is developed. The current high cost of offshore wind means that a mix of public and private finance is likely to be required for early projects.
  5. Ensure sufficient volume, delivered in a smooth pipeline, and design risk informed support mechanisms to drive cost reduction Confidence in sufficient market volume helps industry to maximize local ‘learning by doing’ and benefit from economies of scale – thus pushing down costs. Yet it is important to ensure a smooth pipeline, as rapid increases or decreases in deployment are challenging for the supply chain to manage. A further aid to cost reduction can be designing ‘risk-informed’ financial support mechanisms, which are structured such as to minimize upfront developer risk, and therefore minimize the cost of financing.
  6. Carefully consider the costs and benefits of promoting a local supply chain Job creation can be a key driver for offshore wind, yet needs careful consideration. It could be beneficial for India to promote investment in this sector with a view towards creating a robust supply chain as part of the country’s industrial development strategy. However the decision to develop a supply chain must be based on whether the potential market is big enough to warrant a local supply chain that is commercially viable, and whether local companies would be able to win export opportunities in the wider global market.
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“The Indian environment presents both unique challenges and opportunities when it comes to offshore wind. This report is one step on the long road to building a robust, sustainable and cost-effective offshore wind industry in India,” said Steve Sawyer, GWEC secretary general.

The report was developed as a part of the FOWIND (Facilitating Offshore Wind in India) project launched by the GWEC led consortium in December 2013.

At the end of 2014 global offshore wind installations reached 8,771 MW. By 2020, this capacity could reach 29,000 MW (IEA, 2014).

Source: GWEC

Rajani Baburajan

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