Power problems if rains fail: PUCSL

• PUCSL lights up serious shortcomings through ‘Electricity Supply 2020 and Beyond’ report
• If no rain 60 MW of extra power needed from Sept. and 110 MW from Oct. to avoid cuts
• Failure to implement successive generation plans result in cost overruns and load shedding
• A thermal unit price increased six times in 2016 over what was planned for
• Recommends liberalisation of generation sector, wants new tenders called for immediately

Sri Lanka’s power generation over the next six months is in a precarious position if the rain gods fail, a new report said yesterday, warning that failure to implement successive generation plans has left the country vulnerable to cost overruns and power cuts.

If rains fail then demand can be fully catered to only if 60 MW of additional generation capacity is made available from September onwards and 110 MW of additional generation capacity is available from October.

The report released by the Public Utilities Commission of Sri Lanka (PUCSL) titled ‘Electricity Supply 2020 and Beyond: Challenges and Recommendations’ highlighted many issues that stand in the way of ensuring long-term energy security in a sustainable manner.

The report analyses the situation of the country’s electricity supply, forecasted data, power plant schedule with the actual situation and how Least Cost Long-term Generation Expansion Plans prepared from 2006 to 2016 by the Ceylon Electricity Board (CEB), the state utility, have affected the electricity supply situation at various junctures.

The report describes how the shortcoming of implementation of generation plans has affected the electricity supply of Sri Lanka and investment in the industry.

The report discloses that planned plants not being built according to the timeline, unforeseen power procurement and the change of the power mix have resulted in the increase in the average unit cost of electricity. In 2016, actual power purchases from oil-based plants have increased by six times over those planned for 2016.

The report calls for immediately starting the tendering process for the procurement of 150 MW thermal generation capacity for a 10-month period from November 2017. However, the decision of entering into a Power Purchase Agreement (PPA) should be subject to the hydro reservoir level as at the end of October.

The slew of recommendations also includes calling for tenders to obtain the 150 MW capacity at several generation plants, ensuring continuous fuel supply to thermal plants, expediting both rooftop and independent solar plants and entering into power purchasing agreements as necessary.

“It can be noted that the actual capacity additions have been less than what was expected in previous generation plans. However, this has not grown into a full-blown crisis because the actual demand has also been consistently less than what was forecast. These two effects together have cancelled out the negative impact of each other. However, neither of these can be endorsed as it causes the sector to operate at an economically suboptimal state, and undermines the planning process as a whole,” the report said.

The report also recommends liberalisation of the generation sector to espouse investments by amending section 8 and 9 of the Sri Lanka Electricity Act, while creating a robust power procurement program which can introduce price competition to the electricity sector.

The report also goes on to say that given the significant shortcomings in the implementation of the CEB’s Long-Term Generation Expansion Plan, unintended consequences of cost overruns, load shedding, and unplanned power procurement will have to be faced by the Government at a cost to the taxpayer.

Implementation shortcomings also resulted in power cuts in February, March and October 2016 and in July this year, the report said. This meant that power had to be purchased from Ace Power, Barge Power and new oil plant additions had to be made for 2018.

“Uncertainty associated with base demand in the forecast is another noticeable feature, particularly since the 2011 plan. However, the CEB has identified this as a problem and is trying to improve the accuracy of base demand forecast by adopting new forecasting tools. Despite this, the electricity demand is expected to be more stochastic in nature all over the world in the long run,” the report says.

It added that no generation plan that had been considered in this analysis has foreseen the present situation. Thus, the actual outcome has been much different to what was conceived in past plans.