Cabinet approves Viability Gap Funding (VGF) Scheme for Implementation of Offshore Wind Energy Projects

The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the Viability Gap Funding (VGF) scheme for the implementation of offshore wind energy projects in India. This decision marks a significant step towards harnessing the vast offshore wind energy potential within the country’s exclusive economic zone. The total financial outlay for this scheme is ₹7,453 crore.

The Viability Gap Funding(VGF) Scheme

The VGF scheme is a major step towards implementation of the National Offshore Wind Energy Policy notified in 2015 with an aim to exploit the vast offshore wind energy potential that exists within the exclusive economic zone of India. The VGF scheme includes ₹6,853 crore allocated for the installation and commissioning of 1 GW of offshore wind energy projects, divided into two projects of 500 MW each off the coasts of Gujarat and Tamil Nadu. Additionally, ₹600 crore has been earmarked for the upgrading of two ports to support the logistics requirements for these projects.

Objective of this scheme

The introduction of this scheme is a crucial move towards the realization of the National Offshore Wind Energy Policy, which was announced in 2015. The primary objective of this policy is to exploit the offshore wind energy resources available in India’s exclusive economic zone. The VGF support from the government aims to make the cost of power from offshore wind projects more viable, ensuring that it becomes an attractive option for purchase by Distribution Companies (DISCOMs).

Reduce the cost of power

 The VGF support from the Government will reduce the cost of power from offshore wind projects and make them viable for purchase by DISCOMs. While the projects will be established by private developers selected though a transparent bidding process, the power excavation infrastructure, including the offshore substations, will be constructed by Power Grid Corporation of India Ltd (PGCIL). Ministry of New and Renewable Energy, as the nodal ministry, will coordinate with various Ministries/Departments to ensure successful implementation of the scheme.