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Why sun-drenched SL lags behind in solar power

29 Nov 2020

By Madhusha Thavapalakumar Through the recently unveiled Budget 2021, the Government plans to add 1,000 MW of solar power production capacity between 2021 and 2023 through the loan schemes from the Asia Development Bank (ADB) and the Indian line of credit. This is the latest budget to focus on solar power generation. However, the budgetary allocations made by consecutive governments have not translated to the spread of solar power, despite Sri Lanka having abundant sunlight for about 12 hours a day almost throughout the year. The Sunday Morning Business this week focuses on Sri Lanka’s solar power production, finding answers to the questions why have we not made significant progress in this area; can Sri Lanka fulfill its national energy demand, at least half of it through solar power; and what can be done to increase domestic solar power production. Sri Lanka’s energy mix Sri Lanka’s per capita energy consumption is 636.3 kWh, one of the highest in the South Asian region. India’s per capita energy consumption is a little more than that of Sri Lanka, with 644 kWh. Pakistan, Nepal, Afghanistan, and Bangladesh are behind Sri Lanka with significant differences in per capita energy consumption. Sri Lanka’s electrification rate stood at 99.3% in 2016, compared to just 29% in 1990, showing steady progress in improving access to electricity. However, the country remains highly dependent on fossil fuels, according to ADB. In 2016, thermal power contributed 67.2% of total power generation, compared to 24.6% and 8.2% contribution of hydropower and nonconventional renewable sources (solar, small hydropower, and wind), respectively. This dependence on carbon-emitting energy sources makes Sri Lanka vulnerable to fluctuating fuel prices, while hampering the Government’s efforts to reduce greenhouse gas emissions by 20% as part of its commitment to the Paris Agreement. It should be noted that coal and petroleum are imported fossil fuel resources and these imports weigh on the country’s import expenditure. On the other hand, per capita energy consumption is on the rise with improving living standards. Also, Sri Lanka’s public transport sector entirely depends on energy generated from fossil fuel. Ideal climate According to the Department of Meteorology, due to the location of our country within the tropics between 5° 55’ to 9° 51’ North latitude and between 79° 42’ to 81° 53’ East longitude, the climate of the island could be characterised as tropical. Sri Lanka hardly passes a day with very little sunlight and this makes the country an ideal place to generate solar power, an abundant resource Sri Lanka is gifted with. According to the Ceylon Electricity Board (CEB), solar resource maps of the country indicate the existence of higher solar resource potential in the northern half, along with the eastern and southern parts of the country. “Resource potential in other areas, including mountainous regions, is mainly characterised by climatic and geographical features. The exploitation of available resources requires the consideration of competing land uses and the availability of transmission and distribution infrastructure,” the CEB notes in its plan. According to the ADB assessment on Sri Lanka’s renewable energy sector, the annual average Global Horizontal Irradiance (GHI) varies from 4.5 to 6.0 kWh per square metre per day (kWh/m2/day) across the country. During the day, solar energy alone will be sufficient to meet the country’s demand. At the same time, during the day, there is likely to be significant curtailment of wind power if the energy generated is not stored. The total storage requirement is expected to be 15,000 MW. The technical resource potential for solar power generation is estimated to be 6,000 MW. The CEB’s Long Term Generation Expansion Plan believes that the solar capacity in Sri Lanka will rapidly grow, more than wind, and its energy contribution will grow steadily over the planning period with the projected development. According to a research paper titled “Renewable energy resources in South Asian countries” by the Energy Centre of Maulana Azad National Institute of Technology Bhopal in India, in terms of solar energy generation, Sri Lanka has the potential to produce 5 kWh of solar power per day. Nevertheless, Sri Lanka is yet to leverage efficiently 100% of its sunlight resource in producing solar power.

Current solar production

Domestic solar panels Solar cells, also called “photovoltaic (PV) cells”, convert sunlight directly into electricity. PV gets its name from the process of converting light (photons) to electricity (voltage). Delays in policy enactments and technical constraints have hindered the early deployment of PVs in the country.   Net-metered rooftop PVs were allowed since 2008, and since 2016, surplus energy sent out to the grid was paid. Rooftop solar PV systems became increasingly popular with the introduction of the net-metering system in 2010 and the government-initiated “Battle for Solar Energy” programme in September 2016. Rooftop solar PV installations can significantly reduce the land use and environmental concerns, particularly in urban and suburban areas with the availability of rooftop spaces as it rules out the need to install in vast areas of lands.  There were 93.7 MW of rooftop solar PV systems connected to the national grid by end-2017, and the total grid-connected solar PV capacity was targeted to reach 200 MW by 2020. Solar PV development in Sri Lanka has been gaining momentum with the decreasing technology costs and global trends in the improvement of solar PV technology, but the momentum has been somewhat slowing down. Commercial solar plants According to the CEB, the first commercial solar power plants were commissioned in 2016 in Hambantota, with financial aid from Japan and Korea. This solar power project established in Buruthakanda, Hambantota was completed in two phases. The ADB noted that by mid-2017, there were eight small-scale solar power plants with a total installed capacity of 51.36 MW. As part of the “Battle for Solar Energy” programme, in March this year, the CEB was seeking proposals to commission 20 solar power projects in the country, ranging from 3 MW to 10 MW, and the total contribution from these 20 projects would be 150 MW. The projects are expected to be commissioned at different locations across the island. Solar power barriers Even though, as CEB said, solar power alone is sufficient to cater to national energy requirements during the day time, we still rely mostly on fossil fuels as the country has not yet made any significant progress in this sector.  The involvement of the private sector in solar power production projects is minimal or progressing very slowly, according to the Sri Lanka Sustainable Energy Authority (SLSA). The authority added that the main challenge faced by renewable energy developers is that solar projects’ capital costs are comparatively higher in terms of specific costs and this disparity can be attributed to a number of factors.  One is that the highest energy production from a Sri Lanka’s solar project is 10 MW while projects of the same nature globally produce between 50 MW and 100 MW. Secondly, leading equipment suppliers are reluctant to bid for small-scale projects. Third is poor engineering infrastructure in terms of lift and ship equipment which compels to hire equipment from overseas at a significant additional cost. The next factor is developers are forced to absorb the cost of the dedicated power transmission line.  Furthermore, according to a research paper titled “Solar panel support systems in tropical countries: an inexpensive approach”, written by A. Salman, E. Homsirikamol, and P.J. Shih of George Mason University in the US and the University of Kaohsiung in Taiwan, the huge initial investment cost involved in solar power projects and the return on investments, which often range to 10+ years without government incentives, are major problems in adopting solar power systems. According to ADB, Sri Lanka does not have the domestic capability to fund large-scale renewable energy projects from commercial banks. The country has to rely on multilateral support and foreign banks with low-cost finance to bolster renewable energy growth. In addition, the non-availability of proper incentives to develop renewable energy-based capacity is a major obstacle towards achieving the desired green energy targets.  “Amidst absence of incentives, people are more inclined to invest their money on other methods that would provide a higher rate of return. The risk associated with the solar power system is also quite high compared to other investment methods. This is because the system must be placed in an open area which can be subjected to theft and other natural elements”, the research paper adds.    The high cost involved in solar power project commissioning results in units of solar power being pricier than power produced from fossil fuel sources. Sri Lanka has historically looked towards the least expensive option to generate power to hold down costs for consumers. High power costs and cross subsidies are the two key factors driving the costs of coal-based generation significantly lower than the cost of power generation by a corresponding non-conventional renewable energy (NCRE) source. As the ADB assessment says, one of the primary reasons for the apparently low cost of fossil fuel-based power plants is that their environmental costs are not considered. The inclusion of the costs of carbon, soil degradation, air quality-related issues, and other externalities will present a different scenario. “At current rates, the levelized cost of power generated from solar plants cost Rs. 22-25/kWh, while power generated from coal-based stations costs Rs. 9-15/kWh. At the consumer end of the equation, for small-scale users, consuming anywhere between 1-60 kWh per month, electricity costs Rs. 7.85/kWh. Large household consumers on the other hand, that is those consuming above 180 kWh, pay Rs. 45/kWh,” an ADB issue released in 2016 added. Therefore, at current prices, increased penetration of renewable energy would further increase the burden on high-end consumers as producers are likely to pass on the costs to them instead of to small-scale users. Moreover, Sri Lanka lacks local research and development (R&D) to promote local capacity development; Sri Lanka has limited or negligible research facilities dedicated to the development of renewable energy resources locally, thus creating an industry which is dependent on importing renewable energy expertise and resources. Slow development of rooftop solar due to a lack of proper education among consumers is also another hindrance for solar energy progression in Sri Lanka as noted by the ADB.

What should be done?

Recycling consumables for cost reduction Reductions in costs involved in setting up solar power projects can be achieved using thinner wafers and better recycling of consumables using diamond wire technologies. In electronics, a wafer is a thin slice of semiconductor, such as a crystalline silicon, used for the fabrication of integrated circuits and, in PV, to manufacture solar cells. Some companies are also working on direct conversion of polysilicon into wafers without ingot slicing, which could substantially reduce overall wafer costs. An expected reduction in silver consumption from 100 µg to 40 µg per cell by 2025, because of new developments in pastes and screens is also likely to contribute towards cost reduction. Moreover, in cells, the substitution of silver with copper and the replacement of aluminum frames in modules with plastic or other cheaper materials will also help reduce costs. Reduction in tariffs Sri Lanka should consider reducing or removing tariffs and taxes in setting up solar projects in Sri Lanka, be it household or commercial, at least for the initial few years to encourage more solar adoption. In India, solar tariffs dropped by over 70%, from Rs. 14.90/kWh in 2010 to Rs. 4.34/kWh by the beginning of 2016. With this steep reduction in tariffs, grid-based solar energy has achieved near parity with conventional sources. Separate laws, guidelines, and research facilities Due to the high costs of setting up solar power in China, solar was mostly being used for electricity in remote villages and telecommunication towers. The Chinese Government enacted the “Renewable Energy Law” in 2005 to facilitate renewable energy generation and several new supporting regulations and guidelines were introduced where research and development, training for manpower skills, and public participation were given due emphasis. As a result, today, the SPV industry in China is growing faster than in any other country. The market share of Chinese PV increased from 1% to 35% in eight years. Sri Lanka is in a need to adopt similar laws and regulations and train citizens in setting up rooftop solar panels, while also educating them of the importance of shifting towards renewable energy sources in the long run. Furthermore, there is a need to conduct detailed assessments to explore their feasibility and viability in Sri Lanka. Adherence to national plans Moreover, budget proposals and national plans on renewable energy, particularly solar power, have to be kept up with. The former Government launched solar power projects in 2016, but till 2020, neither the former Government nor the CEB introduced any concrete steps to increase the capacity of the national grid. The Budget 2021 too has given greater prominence to solar energy production in Sri Lanka and it expects to add 1,000 MW of solar power production capacity through local investments within the period between 2021 and 2023 through the loan schemes from ADB and the Indian line of credit. The Budget promises to provide loans at an interest rate of 4% for such projects, hoping to facilitate low-income families to save the expenditure on electricity and also earn an extra income by supplying excess energy to the national grid. Furthermore, the Budget promises to invest in the installation of solar panels on rooftops of religious places, public institutions, hospitals, schools, and defence establishments. Also, it expects to increase the renewable energy capacity to 1,000 MW by the expeditious implementation of both offshore wind and floating solar power plants exceeding 100 MW, with incentives provided by the Board of Investment (BOI) by allowing a tax holiday of seven years for all renewable energy projects. While the Budget 2021 proposals on solar power addresses main factors that are holding back solar power progression in Sri Lanka, the proposals have to be strictly implemented as many of the plans remain merely as “plans” without taking off. Conclusion Solar energy is expected to contribute about 30% of the national demand by 2050. The assumption is that a significant portion of domestic and commercial use will be powered by solar energy through an accelerated adoption of rooftop solar infrastructure. President Gotabaya Rajapaksa set a target of supplying 80% of the country’s power from renewable energy by 2030. According to the Solar Industry Association of Sri Lanka (SIA), the country must add 200 MW of rooftop solar to the national grid per year to achieve the President’s target. Nevertheless, based on the reports and assessments, Sri Lanka could become 100% solar-powered for its national demand during daytime, if the country addresses the issues listed above and develops necessary infrastructures and research facilities. Even though initial costs in adopting these strategies might be substantially higher and the return of investments cannot be expected for at least five to 10 years, solar power production is an important move towards making Sri Lanka green, given the fact that the country is a part of the Paris Agreement on Climate Change, which say a big “no, no” to greenhouse gas emissions.  


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