India’s offshore wind energy segment needs more for it to take-off

As India takes second stab at offshore wind projects after the initial unsuccessful attempt, the government must de-risk initial projects with more favourable tender designs while rapidly developing transmission infrastructure and ramping up supply chains for the offshore foray, said an analysis by Ember, a not-for-profit energy think tank.  

It said to truly kickstart offshore wind energy generation in India, the government’s approach must evolve, building on early groundwork through a blend of domestic innovation and global best practices.

Despite there being a national policy since 2015, a decade of support from expert organisations and generous subsidies, India has not been able to harness its offshore wind power potential. Two landmark auctions found little interest from developers and were eventually called off in 2025.

The 500 MW offshore wind tender in Gujarat demonstrates how failing to learn from international experience adequately can turn even a well-intentioned pilot into a struggle. The auction, by design, failed to address risks that such first-of-its-kind projects face, leading to its eventual scrapping.

“Overly stringent subsidy terms or rigid pricing structures, as seen in India’s first 500 MW offshore wind auction in Gujarat, can dampen developer participation. This risk becomes particularly acute when external factors beyond industry control, such as tariff shifts and commodity price volatility, begin to sway initial assumptions,” according to the analysis.

The absence of local supply chains is a major deterrent for offshore wind in India. India’s original equipment manufacturers (OEMs) have largely catered to onshore wind’s requirements of wind turbine generators (WTG) in the 2-3 megawatt (MW) range.

“India’s tendering model even produced an uncovered gap: even after VGF subsidy, the levelised cost of generating electricity was about INR 5/kWh higher than the pre-determined tariff at INR 4.5/kWh. The tendered sites’ lower capacity utilisation factor (CUF), estimated at ~36%, well below international benchmarks (40-50%), compounded the challenge,” it said.

Tendering the Tamil Nadu site, with its much higher CUF potential (60%), might have offered stronger project economics. However, metocean data for Tamil Nadu remains preliminary, unlike the more extensively studied Gujarat site.

Transmission risk was also only partially addressed: while the tender allowed developers deadline extensions if the central transmission utility delayed grid readiness, it offered no compensation for lost revenue opportunities.

“Once these elements are in place, risk-but-patient capital, which has so far been absent, will flow to the offshore wind sector. Sources of debt, such as development finance, and equity investors, who provide not just risk capital but also their experience in structuring complex offshore wind projects, will invest after the aforementioned preconditions are in place,” it added.

Financing is unlikely to be the binding constraint, given that banks and investors are generally willing to lend to higher risk but bankable projects when the fundamentals are strong.