Prime Minister Narendra Modi has laudably prioritised renewables in the government’s domestic economic and energy policy. He has also elevated its status in international discussions, notably, in the G20. The Chief Minister of Tamil Nadu, M K Stalin, has similarly embraced the green vision, committing the state to even faster adherence to the net zero target than the country (2050 versus 2070).
The two can come together in a bout of cooperative federalism to produce economic and energy benefits for Tamil Nadu and the country, and to advance India’s foreign policy goals. The surprising opportunity is in off-shore wind energy. Consider how.
The waters between Tamil Nadu and Sri Lanka are amongst the world’s best locations for generating offshore wind power (applied to wind not white whale, the sailors’ shouts in the novel Moby Dick are resonant: “There she blows! — there she blows!”) The sites are relatively close to the respective coasts and the winds are strong. Most distinctively, the energy generated is not intermittent. It is only available for about seven months, but during that period, the winds blow reasonably consistently, day and night. The readily exploitable energy potential for Tamil Nadu is estimated at about 15 gigawatts, which is greater than its current renewable (wind and solar) capacity.
It is in the nature of off-shore wind that the investments to exploit it — turbines, cables, ports — and indeed to use the energy generated either require or benefit from proximity. Proximity means that less of the installation and maintenance of the large wind turbines can be done at sea and more on shore. It also encourages agglomeration via standardisation, sharing of logistics and reduced transmission expenses. Tamil Nadu, therefore, stands to gain significantly. India’s green hydrogen initiative could also be a beneficiary as the ocean becomes the source and site of converting green electrons to chemical molecules. For example, ammonia could be produced and shipped to foreign markets directly from the Gulf of Mannar.
As in many areas of economic policy, both the Centre and the state have to cooperate to maximise the benefits. Since the waters are international and sensitive, and the seabed a national property, the Government of India has to be involved. At the same time, investments can only be successful if the state government of Tamil Nadu addresses a number of implementation challenges, especially the politically sensitive ones of acquiring land, eliciting the cooperation of local communities (for example, fishing) and developing the local infrastructure.
Developing this off-shore potential is not proceeding as fast as it might: For example, even the detailed energy assessment that is a precondition for attracting investment has not been completed. But the Centre and Tamil Nadu can together accelerate the process. Initially, the cost of generated power will be high (ranging from Rs 5-8 per kwh). Achieving scale will lower costs but that might require subsidisation by the Centre and Tamil Nadu — both to guarantee minimum demand and trigger development of local supply chains. Once scale is achieved and unit costs decline to about Rs 4-5 per unit, the Indian model can be credibly exported.
This opens up the Sri Lanka opportunity. It is estimated that Sri Lanka’s off-shore potential is even greater than India’s. Sri Lanka needs the energy but in the current circumstances does not have the economic capability to exploit the potential on its own.
The central government can provide the necessary, complementary resources. India could even offer to buy the energy generated that might be necessary to ensure the financial viability of the investments in the first place. It is likely that the manufacturing benefits from the off-shore investments to exploit Sri Lankan wind could benefit Tamil Nadu because of the proximity factor. But other states will benefit too from the cheap, green energy that is generated. Effectively, India can leverage for itself some fraction of Sri Lanka’s off-shore potential.
Currently, Indian firms are making investments in Sri Lankan wind power but that is on-shore; the significantly more important bounty is off-shore. Other actors, including the World Bank, foreign governments, and especially China, are looking to help Sri Lanka. If China is able to establish a foothold, the economic and strategic consequences for India would be adverse. Since firms in the UK and Europe are the most competitive developers in off-shore wind, India should engage with their governments both to exploit Tamil Nadu’s potential but also eventually that of Sri Lanka.
India, therefore, needs to act swiftly to cement its role and perception in Sri Lanka relative to those of China. The foreign policy gains, based on India’s increasing and constructive role in the region, could be enormous. Another form of economic diplomacy could be meaningfully added to the arsenal of foreign engagement.
Cliched as it may sound, there is a win-win-win opportunity for Tamil Nadu’s economy, Sri Lanka’s energy needs, and India’s green and foreign policy ambitions.
In the Ramayana, one of the key protagonists in the India-Sri Lanka encounter — more adversarial than amicable — is Hanuman, the son of Vayu, the wind god. Today, wind offers an opportunity for improving relations between India and Sri Lanka.
But to make that happen, the Indian Centre and the state of Tamil Nadu will need to work urgently and cooperatively to realise Tamil Nadu’s off-shore wind potential. Domestic cooperative federalism coming first could then sustain the strategic international cooperation to follow. Many answers could be blowing in the wind.
The writer is former chief economic adviser, Government of India, he is currently advising the Tamil Nadu government on power sector reforms and the green transition
