• Cost of oil and coal-fired power generation has increased 
• Many solar and wind projects at a standstill awaiting CEB permission
• Confusion within ministries about renewable energy drive
• Feasibility studies underway for Pooneryn and Mannar projects
• CEB transmission system a bottleneck?
• CEB owes renewable energy companies billions of rupees
• Change in organisational culture at CEB needed: Fernando

By Maheesha Mudugamuwa Despite Sri Lanka being blessed with an abundance of renewable energy resources such as wind and solar, they are yet to be utilised effectively to meet the ongoing energy shortage faced by the island. The present power generation shortage is the result of the limited fuel supply due to the ongoing foreign exchange crisis and due to long-term policy-related issues by the State. It has forced the State-run utility provider, the Ceylon Electricity Board (CEB), to impose daily power cuts lasting around four hours to manage the electricity demand.   According to CEB statistics, of the country’s energy demand (as of 27 April) 44% of the total energy requirement had been generated by coal and another 34.1% had been generated from oil-fired thermal power generation plants. The production cost of both coal and oil power generation has drastically increased by nearly 100% due to the dollar rate fluctuations as both resources have to be imported and as a result, the future electricity supply of the country remains uncertain due to the ongoing severe economic crisis. In such a backdrop, concerns have now been raised by consumers as to why the Government failed to utilise renewable energy resources such as solar and wind for electricity generation to meet the existing energy shortage in the national grid. The Sunday Morning learns that many viable solar and wind power projects that could have been generating power by now are still waiting to receive necessary permissions from the CEB. It is learned that some in the CEB are reluctant to permit claiming the issues pertaining to the national grid and transmission lines. Solar power Speaking to The Sunday Morning, the Secretary to the State Ministry of Solar, Wind and Hydro Power Generation Projects Development Hemantha Samarakoon stressed that a number of solar power projects were in the pipeline, but the Ministry had prioritised large-scale solar parks in order to meet the concerns raised by the CEB. He noted that solar power directly from a large-scale power park would be easy to manage, unlike small numbers of solar such as 1 MW each being added to the grid separately due to the issues pertaining to the transmission lines and the grid capacities. Samarakoon noted that even though there were many project proposals, the Ministry had prioritised large-scale projects such as the 100 MW solar power park in Siyambalanduwa for which all pre-preparations had been concluded. “We have already called for Expression of Interests (EOI), and we received nearly 40 proposals. A Request for Proposal (RFP) was prepared by the Asian Development Bank (ADB) as a donation. Now we have to issue an RFP and a procurement committee has also been approved,” he added.   Samarakoon expressed concern that the recent change of the minister and the purview of the Ministry would further delay the process as many officials were still at a loss on whether they retained powers previously vested with them under their respective designations. According to the State Secretary, two major renewable energy power plant projects had been proposed for Pooneryn and Mannar for which the feasibility studies were being conducted. “The MoU was signed for the Mannar renewable energy project by India’s Adani Group and feasibility studies are now being conducted. They are to complete the feasibility study in three months. They initially planned to invest in a 500 MW plant but as per earlier local studies the maximum one can go for is 275 or 300 MW in Mannar. However, studies are being conducted by Adani and their team here. They will decide the capacity following the studies,” Samarakoon added. Even if Adani were to build a power plant in Mannar, it would bring electricity to the Nadukuda Grid and from there onwards, the CEB would have to transmit the electricity either to Colombo, Vavuniya, or Puttalam via the national grid. Therefore, Adani would have to invest in grid and transmission line upgrades as well, he stressed. When asked about the delay in approving small-scale plants, Samarakoon stressed that there were practical difficulties in absorbing small-scale renewable energy, especially because the CEB had insisted on going ahead with its generation plan. “Even though large-scale companies like Adani agreed to upgrade the transmission lines and the grid, small-scale companies interested in investing in solar energy cannot invest in transmission line upgrades,” he noted.   Still in the pipeline As claimed by the CEB, transmission lines and the national grid should be upgraded in order to provide space for renewable energy resources. The Sunday Morning reliably learnt that the CEB is avoiding prioritising renewable energy projects and is urging sticking to its long-term energy generation plan for 2022-2041 already submitted to the Public Utilities Commission of Sri Lanka (PUCSL). However, the plan which was submitted on 26 July 2021 has not been approved by the PUCSL yet and instead it has requested the CEB to re-submit the draft plan by amending it to fulfil Government policies including 70% renewable energy. A number of solar and wind power projects are still in the pipeline, unable to obtain approval from the Ceylon Electricity Board (CEB). As per the CEB, the energy shortage is said to be nearly 300 MW under usual circumstances but the shortages now vary depending on the availability of the required fuel and coal.    According to the CEB, the total renewable energy contribution for energy generation as of 27 April was 21.96% out of which the main contribution of 18.13% had been provided by hydropower. The total wind and solar power contribution was 0.65% and 0.69% respectively. The CEB however has mentioned on its website that rooftop solar contribution was not included in the statistics. CEB’s plan As per the CEB’s long-term generation plan 2022-2041, with the April 2019 policy guidelines of the Government, the CEB was given a renewable energy target to aim for by 2030. Clause 31 under the section ‘Environment’ states: “Subject to favourable weather conditions, the country must progress with the vision to achieve 70% of electricity generated in 2030 from renewable sources including large-scale storage hydro and non-conventional renewable energy.” As the renewable energy share by 2030 is stipulated within the policy document itself, deciding the optimal renewable energy/thermal mix via planning studies had to be replaced by taking the mix declared in the policy directly as input. According to the CEB, the total renewable energy capacity is planned to be increased from 2,427 MW at the end of 2020 to 6,240 MW by the end of 2030 and to 9,600 MW by the end of 2040. The year-by-year renewable energy capacities in the plan are based on the study titled ‘Integration of Renewable-Based Generation into Sri Lankan Grid 2021-2030’ conducted by the CEB to investigate the technical and economic implications of renewable energy development dictated by the policy and to study the necessary enabling measures required for the successful renewable energy development programme. As the CEB explained in its plan, a project by project development order of renewable energy resources as provided in the plan, year by year, must be prioritised primarily on economics. Development cost, the level cost of electricity, quality of the resource, and cost of additional transmission infrastructure shall be considered during prioritisation. The first commercial wind power plants were established in 2010 and the total capacity of wind power plants by the end of 2020 was 179 MW. The first large-scale wind farm was commissioned on Mannar island in 2020. The first commercial solar power plants were commissioned in 2016 and the total capacity of commercial solar power plants by end of 2020 was 67 MW and nearly 347 MW of solar rooftops were also connected by end of 2020. Standstill The renewable energy sector has now come to a standstill as the CEB has failed to pay off its debts owed to the renewable energy companies. The Sunday Morning learns that the CEB has owed over Rs. 100 billion to renewable energy companies for the past several years. The delay in paying these debts has turned the companies into non-performing facilities and as a result, the companies are now limited in engaging businesses locally and internationally, it is learnt.    Meanwhile, elaborating on the issues pertaining to the renewable energy sector in the country, Solar Industries Association (SIA) General Secretary Lakmal Fernando stressed that the actual problem in the sector was that the utility had defaulted on all renewable energy projects and the financial liability of utility for the renewable energy sector could be high as Rs. 80 to 100 billion. “This is exerting pressure on all renewable energy companies together because there is a limit that they can finance the projects. If the CEB does not pay the companies, they can’t pay their respective lenders. This is for non-performing facilities and they will not be able to pay for their respective employees. People will go for credit information. When they go for non-performing facilities they will not be able to do business in Sri Lanka and outside it will be limited,” he added. He went on to say that fossil fuel cost alone was Rs. 1.7 billion per day, loading more expenses. “Rooftop solar industry has now come to a standstill. The tariffs were given in 2016 at the time the dollar rate was around Rs. 140. Our projects have become financially non-viable and are therefore not moving forward. Solar production this year will be marginal. Those who have brought down the materials will install solar units,” he stressed. When asked about the amendments to the Electricity Act, Fernando stressed that in order to accelerate renewables, there should be an attractive feeding tariff process.  Therefore, it was opined that the Electricity Act should be amended by allowing the absorption of renewables to the electricity grid without going for competitive bids but by absorbing by way of feeder tariffs. Commenting on the CEB’s concerns, Fernando said: “We have 1,100 very intelligent engineers. If utilities in other countries can absorb renewable energy without any issue, why can’t we do that? It is not we who give solutions. The problem is that our engineers want the convenience factor. They don’t want to operate a volatile grid; they want less work. Look at the world. Australia recently added 85% renewables. We have only below 33% with major hydros. Our people are lazy and that is the problem.” When contacted by The Sunday Morning, CEB Chairman M.M.C. Ferdinando said the Board was currently discussing the request made by solar developers and was in agreement to increase rooftop solar tariffs by up to Rs. 30 per unit.  Further, commenting on the amendments to the Electricity Act, the Chairman said that the omission in the Act would soon be rectified.