India will need offshore wind to meet demand for electricity that is expected to double in this decade alone unless, that is, the nation really wants to see gas or even coal stepping in to fill a gap that land-based renewables just wont be able to fill.
The latest National Electricity Plan (NEP) of India estimates a requirement of nearly 475GW of new installed capacity from all sources by 2030.
Offshore Wind is actively being explored as a new source in the energy mix of India. Government has earmarked areas with potential for up to 70GW and is considering development of sites with 1.7GW of pipeline. At the same time a highly ambitious target of 30GW by 2030 was announced, which will be missed.
This is against the backdrop of cheap prices of large-scale onshore solar and wind in India. The current price for these sources range between $35-50/MWh. In contrast, offshore wind costs are currently expected to be two to three times of onshore wind and solar, which sceptics say makes the case for sea-based turbines look very weak.
But they are failing to take account of the pressure of the scale of installations envisaged in the NEP. There will be just not be enough land and grid infrastructure to evacuate 440GW of renewables.
Solar and wind-based plants are the main pillar of the NEP, which requires expansion of power on the grid by nearly 375GW within the next decade. This has never been attempted, and will be an uphill if not an impossible task; realistic estimates are for about 250GW of additions by 2030, based on previous growth trajectories, budget allocations and transmission utility plans.
Furthermore, this new capacity will be installed on sites with Tier-3 resources (for onshore wind) negating some of the improvements in underlying technology to bring down prices. Despite decline of cost of generation, the cost of grid infrastructure and demand for sites for renewable projects will drive the landed costs up by around 30% on current prices for both solar and wind.
The second pillar of the desired future energy mix is coal-based plants, which are also facing challenges. Some 97GW of coal-based power plants are planned, but only 41GW are likely to come online by 2030, and cancellations are expected in the pipeline, as new projects will find it hard to raise finance due to multiple reasons.
Coal based power plants continue to be under severe pressure of high-risk perception due to financing, fuel and demand risks. Other non-emitting power resources contribute a small amount, as nuclear and hydro are in total expected to contribute only 34GW by 2030. There is no plan to add gas-based power plans this decade.
A shortfall in onshore renewables could revive demand to fire up more coal and gas-based plants.
Offshore wind can emerge as a preferred source of electricity, if it can compete and win against coal.
But fossil fuels are likely to become expensive while the generation cost from offshore wind is only expected to decline as the supply chain builds up.
Offshore wind is a renewable alternative that can emerge as a preferred source of electricity, if it can compete and win against coal-based power in India.
The cost benchmark for offshore wind must be set at the future LCoE of new coal in India, which is expected to be around $70/MWh, and that benchmark must be from pure LCoE, as India does not have a carbon emission tax and may not agree to impose one
The emerging shortfall of required installed base and price benchmark of $70/MWh in 2030 creates reasonable conditions for offshore wind growth in India.
It would be down to prospective players in the sector proactively set cost targets, and look for ways to reach them by leveraging local capabilities in supply chain and project development.
Sidharth Jain is managing director at MEC+
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Why India needs offshore wind to blow coal out of the water | Recharge - Recharge
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