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Shedding light on dark days that may lie ahead

19 Jan 2022

  • Why Sri Lanka is facing a power generation issue and how it can be averted
By Sumudu Chamara Covid-19 and inflation-hit Sri Lanka is now further burdened by a power crisis and the adequate supply of power in the coming few months seems uncertain. Although the power cuts that were experienced during the past few weeks have stopped for the time being, even the power sector authorities do not know for how long this uninterrupted supply will last, because the power sector is facing a fuel shortage. The situation got worse this week, as the state-run fuel importer and distributor, the Ceylon Petroleum Corporation (CPC), refused to supply fuel to the Ceylon Electricity Board (CEB) unless adequate notice is given and payments are made in US dollars, due to the difficulties pertaining to the importation of fuel due to the foreign reserves crisis. The Lanka Indian Oil Company (LIOC) too has refused the CEB’s request for fuel. In this context, there is now a question about the future of the power sector and of electricity consumers. Reasons behind the crisis  According to energy sector expert and Resource Management Associates Managing Director Dr. Tilak Siyambalapitiya, one of the main reasons for the prevailing power crisis is the inadequacy of the electricity generating capacity, as there is no capacity that could reliably meet the customer demand throughout the day.  He explained: “We expect this year’s electricity demand to reach a peak of 2,900 megawatts (MW) and this happens usually in the evenings. Typically, in the last few years, it happened in the month of March, because of the weather conditions prevailing in March. In order to meet this 2,900 MW electricity demand, on paper, we have about 4,200 MW of power generating capacity. You might ask, what is the problem then, if we have so much excess power generating capacity? The problem is, out of this 4,200 MW of power generating capacity, the dependable capacity, i.e. fuel-fired power generation and coal-fired power generation, is only 2,200 MW. To meet the rest of the electricity demand, we have a lot of hydro power, solar power, and wind power capacity. But, as we know, solar power is not available at night, wind power is very low in the months of January to April, and hydro power is very low in the same months. In this context, the capability of satisfying the balance electricity requirement with the available hydro power capacity and other capacities is really inadequate.” He also noted that the power crisis is not just a matter of inadequate foreign reserves, adding that managing the supply and demand should also receive attention. “In summary, I would say that even if Sri Lanka did not have a crisis in the procurement of fuel and coal and had all the money to obtain fuel and coal, we would still have blackouts this year. In 2019, we avoided blackouts because there was exceptional rain, and in May of 2019, there was a reduction in the electricity. Also, from 2020, the electricity demand had been suppressed because of the Covid-19 pandemic. However, now, the demand is catching up as expected, and it is not surprising.” Meanwhile, speaking of the reasons for the power crisis, CEB Senior Engineers’ Association Spokesman Nandika Pathirage said that the prevailing crisis is caused by many reasons which can be categorised as long-term and short-term reasons.  “The main long-term reason is not making low-cost, bigger power plants. Since 2014, we have not established new power plants, and when I say we, I mean CEB officials including engineers, Power Ministry officials, and other stakeholders at that level. Short-term reasons include the fact that Sri Lanka’s power requirement has increased and the country faced a drought recently. After the drought, the country has become active, and the demand is again higher. When there is a drought, we do not have hydro power, and when there was a power shortage, we did not make large power plants. As a result, we are now at a marginal level, and we cannot stop a power plant for maintenance in an emergency. About two or three scheduled maintenances at the Norochcholai Coal Power Plant have not been done, because we cannot stop it. If we stop it, it will lead to power cuts.” Dr. Siyambalapitiya also shared the same opinion about power plants operating to their maximum capacity: “We should not forget that just like a car or a bus, thermal power plants, fuel-fired power plants, and also coal-fired power plants also have to undergo maintenance. They run 24 hours, and therefore, we cannot keep them running 24 hours for 365 days without maintenance. Some of them are on scheduled maintenance, while some of them are on emergency maintenance because they have been running for too long without undergoing the proper maintenance schedule. It is a combination of events that has pushed Sri Lanka into this crisis.” CEB Employees’ Association President Noel Priyantha, however, pointed out flaws in decision implementation processes as reasons that have resulted in a power crisis. He said: “Power crisis is a common issue for Sri Lanka. I think that one of the main reasons behind it is that we have not taken decisions on time. When we look at the 1980s, planners in the power sector requested coal power, but it took more than 10 years to implement coal power plants. Similarly, today, we have a long-term power generation expansion plan, but not a single power plant was built after 2014. The major power plant is the Norochcholai Power Plant and its third unit that has been commissioned. After that, we could not build a single power plant other than the 100 MW Mannar Wind Power Plant.” He emphasised that even though Sri Lanka has plans, the execution is very poor, and that even though planners have done their job, implementers, i.e. the Government and other stakeholders, do not provide support to execute these plans.  “Had we done that, we would have been able to meet the ever-increasing demand for electricity,” he opined. Solutions In order to deal with the power crisis and to prevent the same in the future, Pathirage suggested that both long-term and short-term needs should be identified. One of the short-term steps he suggested was purchasing power urgently, which he said was necessary although could be expensive.  He added: “If we are determined to not go for power cuts and provide power at any cost, we will have to go for emergency power purchases. It is expensive. Since 2002, the CEB and the Ministry have been purchasing power.” He said that Sri Lanka is facing this situation due to not taking long-term measures, buying time, opposing power plant projects, and not handling tenders properly, and that the fuel crisis has led to power cuts. Also adding that the prevailing power crisis is a result of long-term actions and inaction, he stressed that long-term steps are the most crucial solutions. With regard to solutions, he said that Sri Lanka should give more attention to the available sources, including renewable energy resources, and that the involvement of the private sector should be obtained. Pathirage explained: “When it comes to power plants of less than 10 MW capacity, we can award tenders to local investors through the feed in tariff. There are so many local and foreign investors the Government can obtain assistance from for this endeavour, and there are local investors who can support even 300 to 500 MW projects. One good thing about this is that the Government can pay them in rupees”.  According to Dr. Siyambalapitiya, however, the authorities should focus on long-term decisions first, and then make medium-term and short-term decisions.  He explained the nature of the decisions Sri Lanka must take: “Some short-term solutions are brought in at an enormous cost forgetting long-term requirements. So, in the long run, Sri Lanka has to go in for more thermal power generation, which can be depended on. Thermal power generation will be on the high end of the cost, and liquefied natural gas (LNG) will be on the low end of the cost. When it comes to coal-fired power generation, we know that Sri Lanka was to have a coal-fired power plant in Sampur in Trincomalee, which was cancelled in 2015. That power plant was to be operational this year. There was a LNG power plant that was scheduled to come into operation in 2017. We are still debating in court on getting LNG. Also, the Norochcholai number four generator was to be built, but it was cancelled just six months ago. It has to be restarted. The LNG terminal has to be built without any further delay. The two power plants in the Kerawalapitiya complex have to be built fast, as only one is being built at the moment. So these will ensure that we have a stable supply of electricity from dependable sources. Therefore, those long-term decisions have to be made first; then we know by which year the projects will be operational, and then we can focus on meeting the electricity demand until then.” Renewable energy and future of the power sector Furthermore, with regard to interim solutions Sri Lanka can look into until large-scale power plants are built, Dr. Siyambalapitiya said that looking into renewable energy sources could be a solution. He noted, however, that renewable energy sources should support, not replace, the existing system. He added: “A wrong notion many people have is that having solar panels on the roof can prevent building big power plants. No, that is not correct, because solar panels cannot give you electricity at the time you want. That is a problem we have at the moment. We have to first of all remember that all countries depend on proven technology. So, at this moment, the proven technologies for generating electricity include hydro power, which we have used to almost the maximum possible extent, wind power, and solar power. But, if we look at ocean waves or ocean thermal energy, I have to say that they are still under research. Also, electricity generation from biomass and agricultural waste are also proven technologies. However, the biomass and agricultural waste we have are limited.”  He opined that in this context, out of the group of renewable energy sources Sri Lanka has, what the country can develop fastest is wind power and solar power. He added, however, that there are many wind and solar projects that are stagnating without being implemented owing to various reasons, institutional delays, politicians and various other parties blocking projects, inability getting lands, expenses, and issues in the procurement process. “Projects are stagnating in various stages, and we need to accelerate these processes, including solar power projects that have been inactive for a long time owing to various reasons, and also accelerate rooftop solar panel projects.” He noted the importance of managing costs of power generation and income made through the supply of power: “This is a very specific issue that we have to address in this process. The cost of electricity production and delivery, as approved by the Public Utilities Commission of Sri Lanka (PUCSL) last year, was Rs. 22 per unit of electricity. However, Sri Lanka's national average selling price of electricity is Rs. 17. So, a commodity that is approved at a cost at Rs. 22 being sold at Rs. 17, and an institution providing services at such rates cannot survive. The CEB is surviving because it is owned by the Government. It is surviving by not paying their suppliers. Renewable energy developers are not paid, the CPC is not paid, and debts owed to the Government are not paid. This cannot go on like this. In the last seven years, the price of electricity has been stagnant, but the cost has been going up from Rs. 15 to Rs. 22, and this year, it can even rise up to Rs. 24. In this context, the price of electricity has to be increased as well. The purchasing price of renewable energy needs to quickly move to competitive processes, not predefined prices, which are subject to corruption. Everybody wants a fixed price to be paid, but this fixed price business has to be ended as soon as possible, so that we can do justice to the technology as well as to the customers who purchase electricity.” Priyantha also pointed out the importance and urgency of paying more attention to renewable energy sources, especially due to the foreign reserves crisis affecting fuel, which is essential for power generation at several power plants. “The President has clearly mentioned his vision about renewable energy sources, and the target is to generate 70% of the national electricity requirement through renewable energy sources by 2030. Yet, the CEB and other stakeholders have not taken positive decisions to implement these plans. Although it has been two years since that target was announced, it is only now that the CEB has decided to accept the 70% renewable energy plan. In fact, renewable energy is the solution and we must accelerate the relevant programmes, especially because it will also address the requirement of US dollars for the importation of fuel for power generation purposes,” he added. The Government’s response Power Minister Gamini Lokuge, however, has conveyed mixed opinions about the future of the power sector and the provision of power. Speaking about the spate of power cuts electricity consumers experienced on many occasions, he said: “The people can say anything, but we tried to not impose a power cut. However, if the demand exceeds the supply, engineers have to control it. That is why they had to resort to the shortest possible power cuts. We are trying our best to not impose power cuts. Unless someone does not cause any act amounting to sabotage at the power plants, it is possible.” He also criticised the CPC’s stance with regard to the provision of fuel to the CEB, and added that the CPC must act in accordance with the agreements the two institutions have entered into. He noted: “There is nothing to request. It is an annual order, and the CPC must provide the amount of fuel in accordance with the order. We do not request fuel every day. When they are planning the yearly requirement, they should plan how much fuel is required for various sectors and institutions such as the CPC, power plants, and the private sector. We expect them to procure fuel according to such a plan. The CPC is the institution that holds the monopoly of distributing and importing fuel. The order for fuel for thermal power generation purposes was always given to the CPC”.  With regard to the President’s vision of meeting 70% of the country’s power requirement through renewable energy sources, Lokuge said that that target can be achieved by 2070, and that the necessary steps are being taken at the moment. “We have made a list of investors who are willing to invest in power generation projects of over 50 MW, and in the coming few weeks, we will issue them permits.” While procuring fuel for power generation purposes remains the priority at the moment, it is high time Sri Lanka pays more attention to its long-term plans that have been forgotten for a long time. To do that, however, more support is needed, and private sector involvement could perhaps be a good option, as some who spoke with The Morning noted.


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