Small hydropower developers face 7-year drought of power purchasing agreements

• Say additional 150 MW could have been connected to national grid if SPPAs had been offered
• Failure by CEB has deprived over Rs. 6.5 b in new investment and generation of over 6,000 jobs

By Hiyal Biyagamage

The Small Hydro Power Developers Association (SHPDA) reiterated that not a single standardised power purchasing agreement (SPAA) had been signed by Ceylon Electricity Board (CEB) for the past seven years, putting the entire industry in a perilous situation. 

Speaking at the 25th anniversary of the grid-connected mini hydropower industry, SHPDA President Thusitha Peiris said if SPAAs were offered, an average of 150 MW could have been connected to the national grid through small hydropower plants.

“To build a plant, we need recommendations from 19 Government agencies. After obtaining those recommendations, it usually takes about three-and-a-half years to complete a project. Accordingly, during the last 18 years, an average capacity of about 25 MW was only connected to the national grid through SHPs. Why I said 18 years without saying 25 years was because no power purchasing agreement was issued for any SHP project in the last seven years.”

Pieris mentioned that only 12 to 14 projects had been constructed per year on an average where at least 7,500 workers have been employed for the construction work. In addition, 65% of the total cost of projects has been added into the flow of the national economy, helping that valuable contribution circulated within the rural economy to elevate people’s livelihood.

“We have completed projects with a capacity of more than 440 MW in as little as 18 years. If SPPAs had been issued during the last seven years, we believe that another 150 MW could have been added to the national grid. Projects that more than 472 local entrepreneurs initiated have been held since 2015,” said Peiris.

According to SHPDA, local entrepreneurs have invested more than Rs. 2.2 billion on small hydropower projects, which have been idle for the last seven years. If SPPAs were signed for these projects, the association estimates that Sri Lanka would have received investments worth over Rs. 6.5 billion and over 6,000 direct and indirect employment opportunities.

With the industry coming to a standstill with no SPAAs signed, many local hydropower developers have moved their investments to countries like Uganda and Rwanda. Peiris requested from State Minister of Solar, Wind and Hydro Power Generation Projects Development Duminda Dissanayake, who was present at the event as a guest, to relook at this issue and provide an immediate solution that would help Sri Lanka to strongly focus on renewable power generation while saving import costs for coal and crude oil.