Small hydro developers slam CEB shutdown, demands compensation

• Warns of power crisis and financial fallout
• Claims CEB’s decision stems from its failures in grid modernisation, lack of investment in essential technologies, advanced weather forecasting and lack of effective system planning
• Says shutdown affects nearly 450MW of installed small hydro capacity, with national grid losing 1.8 m units of electricity daily
• Highlights economic consequences with CEB’s emergency power purchase of costlier thermal energy at over Rs. 50 per unit as against Rs. 10 per unit for small hydro
• Accuses CEB of violating binding PPAs; destroying investor trusts, putting entire renewable sector at risk
• Calls for President and Minister’s intervention to reverse decision

 

The Small Hydro Power Developers Association (SHPDA) has strongly condemned the Ceylon Electricity Board’s (CEB) decision to shutdown small hydropower plants across the country starting 11 April, calling it a reckless move that endangers country’s energy security and economy. 

SHPDA President Thusitha Peiris said the CEB’s directive, issued under the pretext of stabilising the grid during the festive season, is both unjustified and illegal. Small hydropower plants provide reliable, round-the-clock electricity and help balance the grid, especially at night when solar and wind sources are inactive.

“The CEB’s decision to shut down these reliable power sources is a self-inflicted wound, stemming from its failures in grid modernisation, its lack of investment in essential technologies like Battery Energy Storage Systems (BESS) and advanced weather forecasting, and its fundamental lack of effective system planning, which prioritises short-term fixes over long-term, sustainable solutions,” he claimed.

The Association pointed out that the shutdown affects nearly 450MW of installed small hydro capacity, with plants forced to stop for about eight hours daily, the national grid loses 1.8 million units of electricity daily. To replace that loss, the CEB will need emergency power purchase of costlier thermal energy at over Rs. 50 per unit, while its pays only Rs. 10 per unit for small hydro. This switch could cost over Rs. 70 million per day and over Rs. 700 million over 10 days. 

“These losses will be passed down to the electricity users as higher electricity bills. Households and businesses will suffer for a crisis that could have been avoided,” he explained.

The SHPDA also accused the CEB of violating binding Power Purchase Agreements (PPAs). Under these contracts, small hydropower plants are categorised as ‘must-run’ facilities meaning they cannot be arbitrarily shutdown. 

“This unlawful action destroys investor trusts and put the entire renewable sector at risk. Developers cannot replay their loans, projects may collapse and banks could see defaults. The ripple effects are massive,” Peiris said, demanding for compensation.

The SHPDA urgently appeals to President Anura Kumara Disanayake and Power Minister Eng. Kumara Jayakody to intervene and reverse this destructive decision. 

We implore the Government to: 1) Immediately rescind the order to shut down small hydropower plants, 2) Direct the CEB to compensate small hydropower developers for the significant financial losses incurred due to this unlawful and arbitrary shutdown, 3) Direct the CEB to prioritise grid modernisation, including the expedited deployment of Battery Energy Storage Systems (BESS), advanced weather forecasting systems, and a dedicated renewable energy desk, to ensure the effective integration of all renewable energy sources, 4) Ensure the CEB adheres to the terms of existing PPAs and cease all actions that undermine investor confidence in Sri Lanka’s renewable energy sector and 5) Establish a transparent and collaborative framework for grid management that ensures the fair and equitable treatment of all power generators, recognising the crucial role of small hydropower as a vital spinning reserve that stabilises the grid against the intermittency of solar and wind power.

The small hydropower sector is a vital component of Sri Lanka’s energy infrastructure and its transition to a sustainable and resilient future. “We urge the Government to take swift and decisive action to protect this sector and prevent further damage to the nation’s economy, environment, and its international standing,” the SHPDA said.

The Association represents developers and operators of small hydropower plants across the country, representing a cumulative installed capacity of 450MW and contribute around 8% of Sri Lanka’s annual electricity demand.