The 100 megawatt plant will lie off the coast of Gujarat and be partly financed by state subsidies, the ministry of new and renewable energy said in a statement on Wednesday.
A consortium of partners including power producer NTPC and Power Grid Corporation will lead the project.
Renewable energy sources such as solar and onshore wind farms currently generate less than 2 per cent of India's energy needs, with coal fuelling the generation of around three fifths and gas and hydropower most of the remainder.
Prime Minister Narendra Modi, who oversaw the launch of several solar power plants in Gujarat when he was chief minister of the state, has said India needs to expand its renewable energy capacity to help meet rapidly growing demand.
Copyright: Thomson Reuters 2014