Examine why India's first offshore wind seabed lease tender failed to attract adequate investor interest. What policy instruments can address this?

India notified the Offshore Wind Energy Lease Rules in December 2023 and invited bids for 4 GW of offshore wind off the Tamil Nadu coast [1][2]. Despite nearly 35 GW of assessed potential off Tamil Nadu and 36 GW off Gujarat [1], the tender drew an inadequate response — a failure of project economics and ecosystem readiness, not of the wind resource.

Why investor interest was inadequate

• No assured offtake: seabed lease rights were offered for captive, bilateral and open-access sale, leaving developers to find buyers without a firm long-term power purchase arrangement [2].
• High upfront capital cost: offshore turbines, foundations and marine installation are far costlier than onshore wind or solar, and this tender carried no central financial support [1][2]. Officials have themselves acknowledged that expensive technology is the binding constraint [4].
• Risk transfer to the bidder: winners had to undertake their own seabed, geo-technical and geo-physical surveys, adding unpriced pre-construction risk.
• Missing supply chain and expertise: India has no domestic offshore wind manufacturing base, specialised vessels or port handling capacity, and few experienced developers [3][4].
• Regulatory novelty: leasing in the Exclusive Economic Zone is a new domain requiring multiple maritime, defence and environmental clearances, lengthening timelines.

Policy instruments that can address it

• Viability Gap Funding: the Cabinet-approved VGF scheme of ₹7,453 crore — including ₹6,853 crore for an initial 1 GW (500 MW each off Gujarat and Tamil Nadu) and ₹600 crore for upgrading two ports — directly lowers tariffs and makes power saleable to DISCOMs [3].
• Government-funded de-risking: NIWE has completed feasibility studies off Tamil Nadu showing a capacity utilisation factor above 50%, well over onshore wind; sharing this data reduces bidder uncertainty [4].
• Assured-offtake bidding under MNRE's central-assistance model, plus transmission and evacuation support [1].
• Demand aggregation through green hydrogen hubs and concessional long-tenor finance to crowd in private capital.

Offshore wind's high, stable output makes it strategically valuable for India's 2030 non-fossil goals. Sequencing a smaller, VGF-backed, offtake-assured pilot before scaling — while building ports and local manufacturing — can convert Tamil Nadu's resource advantage into bankable projects.