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Thursday Nov 14, 2024
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Sri Lanka’s State electricity utility, the Ceylon Electricity Board, in April submitted the Least Cost Long Term Generation Expansion Plan (LCLTGEP) 2018-2037, the electricity generation and expansion plan for the next 20 years, to its regulator, the Public Utilities Commission of Sri Lanka (PUCSL), for approval.
With the submission, PUCSL held the written public consultation and oral public consultation on the plan for stakeholders to make proposals and comments on the plan which can be accommodated in the approval process.
The following is a bird’s-eye view on the opinion, comments and proposals that energy experts, economists, environmentalists and policy planners made to the CEB’s proposed electricity plan at the oral public consultation organised by PUCSL at the Bandaranaike Center for International Studies.
According to Strategic Enterprise Management Agency Chairman Ashoka Abeygunawardane: “LCLTGEP is not in line with government policy. Is this the policy of the Sri Lankan Government?” Abeygunawardane asked. “Because, the manifesto of President Maithripala Sirisena has given a clear direction about the Government’s policy for the electricity sector, which the CEB should also follow. ”
The manifesto states fulfilling the basic energy requirements of the people through renewable energy sources (Pg. 56).
But Abeygunawardane says the CEB plans to generate 28% of electricity from coal in 2018, 48% in 2030 and 54% in 2037.
The renewable representation of the total energy generation of LCLTGP 2018-37 is 36% in 2018, 35% in 2030 and 31% in 2037.
“Therefore, I would like to point out that the plan prepared by the CEB is clearly not in line with Government policy,” Abeygunawardane argues.
“Therefore the advantages and disadvantages of renewable energy are not seen in the plan. So it is clear that the CEB has not focused or has not made any effort to generate 70% of electricity through renewable energy by 2030, according to the plan of the Government,” Abeygunawardane added.
“The 30% that they have added through renewable-based energy is to show their sympathy to policy planners and the people.”
He also says that the CEB should look at the issue of the energy mix from the aspect of the climate change issue and the Paris Agreement.
“The quota for renewable energy is an afterthought in this plan,”Abygunawardana said.
“The CEB is insisting on coal whereas the Government’s policy has ‘no place’ for it.”
According to CEB statistics, wind power is the cheapest option.
“They (CEB) say it is not an option for least-cost as it cannot be stored and that when storage costs are added to the generation cost of wind power, the costs are higher than coal,”Abygunawardana says.
“According to them (CEB) coal is the cheapest. But they (CEB) have not taken into account the cost of building pump storage plants for coal. But the value pump storage creates for coal has been taken into consideration. If they wanted they could have added the storage cost to the renewable sources and taken it as an energy generation option. There are problems with these numbers.
“They have tried a numbers game to show that coal is cheaper than other energy sources. A scenario of policy cost has also not been done. The oil mafia is behind the push for coal. The data looks like a backward calculation to make coal and LNG look attractive. This does not include external costs, policy cost, etc. It’s fraud. They are playing with numbers,” Abeygunawardana alleged.
According to Resources Management Associates Ltd. Managing Director Dr. Thilak Siyambalapitiya, planning and implementation of the LCLTGEP are the key issues.
Dr. Siyambalapitiya compared the 2018-2037 LCLTGEP with the 2015-2034 plan and said the regulator PUCSL and the state utility CEB are two independent bodies and hence there is no opportunity to blame the Government for various decisions or indecision.
“In 2015 September I said that a severe situation was building up. Everybody was happy and there was no problem at all. But everybody at the commission as well as in the CEB knew that a severe situation was building up and there was no sense of urgency displayed by the CEB or by the Government to get the problem resolved and now we see and hear day in and day out that to conserve, capacities are not enough and everything is bad about our system,” Dr. Siyabalapitiya said.
“So I did say it looks like the drama of 1995-2005 is being reenacted, which finally results in not renewable energy but oil, oil and more oil.”
Siyambalapitiya says CEB planning overturns the golden rules of planning and decision-making when it comes to long-term infrastructure decisions.
“This (planning) means long-term solutions first, a decision for the shorter term second, energy efficiency and demand response, etc. are the third and finally comes the decisions on emergency power once we have made the first three decisions. Of course, what we are doing now is in the reverse order. Decisions for the long term have been cancelled and we are trying to reinvent the wheel and regenerate new projects. As of now, practically all large projects for the long term are being cancelled.
“So the country is slowly drifting towards using more and more diesel, not renewable energy. This is being done much to the delight of a few, but to the pain of the majority of the country. We started on that trend in 2016 and based on the PUCSL’s own information, during the first four months of this year, 42% of electricity has come from oil. So compared with the long-term generation expansion plan of 2006, we have already spent $ 160 million for diesel and various forms of oils.
“Tell us, when will the Commission stand up to Government pressure (to build more diesel power plants) and order the CEB not to build any more diesel power plants?” Dr. Siyambalapitiya asked.
“When will Sri Lanka reach the 10% limit on diesel or fuel oil in the national policy? The CEB’s Long-Term Planning Report is unique and unparalleled among all utilities in South Asia - and perhaps the entire developing world - as a comprehensive and regular publication since 1990 in the public domain. The problem to discuss is what are we doing wrong and who is preventing its implementation?”
According to Preeni Withanage from the Petroleum Research and Development Secretariat, the CEB has asked to identify the key tasks for near-term projects and to revisit LNG prices.
“I appreciate the CEB’s efforts in identifying different sources of power generation, including natural gas and renewable energy in their base case plan compared with the long-term energy generation plans,” Withanage said. “This is an international document. This is a very handy document for our investors.”
But Withanage had a few concerns over near-term projects as well as the prices of LNG that have been mentioned in the plan.
“This is a 20-year plan. Even though this is for 20 years, our final objective is at least to achieve the objectives of the four-six year projects and thereby I would like to propose to identify key tasks and time targets for the projects at the time of planning and annex them into the plan as well so that this will be handy for investors who concentrate on the near term. Having a 20-year plan is useless if you cannot achieve the objectives of the four to six years of the near term.”
She pointed out that the LCLTGEP of CEB lacks benefit analysis, including other value added benefits to the State at the planning stage of power plants.
“This is something that I find lacking in this document including other value added benefits to the State at the planning stage. There I would see it is least-cost long-term generation but have you considered commercial value? The social and environmental impact has been somewhat considered. There may be some energy source which may give rise to economic benefits for the country. There will be emerging industries in the future and there will be a lot of employment generation. The social cost adds a lot to the economy.”
In the submissions Withanage also talked about the CEB’s plan to fast-track the importation of Liquefied Natural Gas (LNG).
The LTLCEGP has proposed a 300 MW power plant to be commissioned by 2020, with the capacity to be expanded to provide up to 630 MW of power at an investment of $ 600 million.
“This is from the upstream suggestions. Floating terminal 3-5 years, a short term contract.”
Withanage said the cost estimate of $ 7.5 per one million British thermal units (MBT) of LNG should be reviewed in the context that India has recently entered into a contract with Qatar for the purchase of one MBT LNG at under $ 5.
“I think you may have to rethink this price. Even the handling cost has low-cost solutions from $ 1.75 to $ 3. So the price is dependant on the option you take. In your document you say $ 2.5 is for handling plus $ 7.5 and have taken the price as $ 10 dollars per one million British thermal units (MBT) of Liquefied Natural Gas, which I want the CEB to rethink and do a proper trend analysis considering the current pricing of long-term and short-term spot LNG prices and arrive at a figure that is more attractive for us to opt for a LNG plant by 2020. Mind you, we are only left with three years. So how are we going to compare this with coal? You have to practically compare this with the other liquid petrol that you are going to use for power generation.”
She said that Mannar has the potential to provide gas for power generation and has two blocks eyed by six countries, with the smallest having the capacity to provide 300 MW of power.
According to former CEB Deputy Chairman Chula de Silva from the Sri Lanka Engineers Association, the CEB should consider integration of Solar PV energy into the power system and natural gas option.
De Silva said that with the constantly reducing capital cost of Solar PV technology, it is prudent to consider more solar energy additions to the system and it is imperative to study the technical limitations and to find viable storage such as in hydro reservoirs.
“It is important to consider utility scale as well as the residential/industrial scale implementation of solar schemes. Even though considerable solar PV additions are projected in this plan, it is appropriate to review the figures in the next cycle with the rapid advancement of technology and cost reductions. Therefore, IESL would recommend CEB carry out a comprehensive analysis on the technical limitations that restrict Solar PV additions to the system and identify possible solutions such as energy storage systems using our existing hydro reservoirs.”
De Silva also said that it is important to introduce LNG as a fuel for power generation in Sri Lanka.
“In the event of local gas discovery this would open up possible gas usage options for power generation and various other fields. However, a lack of clear milestones in developing LNG infrastructure (LNG terminal, pipelines, etc.) and a LNG procurement process might hinder the progress of introducing LNG to Sri Lanka. However, it is important that identified LNG plants run on natural gas rather than on diesel or any other fuel. Hence it should be ensured that the required infrastructure is in place in a timely manner.”
De Silva said it is commendable that different scenarios have been studied in the planning process to arrive at the least-cost capacity and energy mix for the country. But out of the scenarios studied, no future coal development scenario and energy mix scenario with nuclear development are two alternative pathways which are seen as much more expensive than the base case.
“In no future coal development scenario is it expected that the additional PV cost of $ 1,040 million over the base case plan would have to be incurred and it will be an additional cost to the economy (Rs. 164,000 million in today’s value for 20 years, which means an economic burden of Rs. 8,200 million per annum). It is also important that the nuclear-based power generation option is further studied and capacity building activities carried out.
“The IESL would like to draw attention to the importance of determining the optimum energy mix for the country for the planning horizon, giving due consideration to world trends and not burdening the economy and the consumer with high electricity prices.”
According to Jayantha Wijesinghe from Rainforest Protectors of Sri Lanka, solar, wind and wave energy are the way forward.
Wijesinghe reveals coal energy accounts for more than 38% of electricity generation while diesel provides 18%, with non-convential renewable energy (NCRE) electricity constituting 8%.
“We spent Rs. 2.8 trillion just to generate demand-based energy and about Rs. 1 trillion is spent on coal as well as spending Rs. 580,600 million for diesel, excluding the private purchases that we make,” Wijesinghe said.
“We have the impression that it is only developed countries that develop renewable energy but that is not the case. Countries such as Costa Rica, Nicaragua, Uruguay and even India are developing renewable energy in a massive way. Of course Sri Lanka too can do that.
“Also we have to consider that depending on a large coal power plant like Norochcholei is a risk. We have 900 MW coming from that plant but if it suffered a breakdown this would interrupt the power supply to the country. So that also needs to be kept in mind when we develop long-term energy generation plans because depending on one [single power plant] is a great risk.”
Wijesinghe said it was questionable whether the plans should be least-cost or sustainable cost.
In 2016, renewable energy passed coal production in the international market and renewable energy growth in the world is at about 15% and rising, Wijesinghe said.
“In China, three wind turbines are installed every day. Energy is not just demand and supply. We need to consider what the quality of electricity generated is plus what sources we use to generate this energy.
“In Sri Lanka, we have the highest solar energy potential. So we would like to suggest that we need to be more concerned with solar energy. Why? Because it is the Government’s policy and is the fastest developing technology. Storage space for solar energy is developing at a rapid pace so the PUCSL and CEB should encourage consumers to become producers,” Wijesinghe said, adding that the Hatton National Bank head office branch generates 1.3 MW of solar power, while in the case of MAS Holdings it was 1 MW.
He stated that the other source that Sri Lanka needs to focus on is waste energy. Colombo’s municipal waste can generate 30 MW of power. The Urban Development Authority in this respect received 61 proposals last year.
“The other energy source that I want to focus on is wave energy, There is certain research already done by the University of Moratuwa and India has an estimated 40,000 MW of wave energy along their shores of 6,000 km and calculating their figure and looking at our coastal area, which is about 1,340 km, we have about 9,000 MW in potential.
“Why do we need anything else if we can harness this?” Wijesinghe asked.
He also talked about the potential of wind power in Sri Lanka, which amounts to 20,740 MW, according to the National Renewable Energy Laboratory (NREL) of the US.
“A 3MW wind system (NEG MICON 600 kW, five units) was installed in Hambantota as a pilot plant. The total project cost was around $ 3 million. Therefore, to determine the cost of wind energy at the each of the selected locations in Sri Lanka, considering the experience of the Hambantota pilot wind plant, capital cost and installation cost of one 600kW wind turbine is taken as $ 600,000.”
A study has estimated that there is nearly 5,000 km2 of windy area with good to excellent wind resource potential in Sri Lanka. About 4,100 km2 of the total windy area is on land. The windy land represents about 6% of the total land area (65,600 km2) of Sri Lanka. Using a conservative assumption of 5 MW per km2, this windy land could support more than 20,000 MW of potential installed capacity. The windy lagoon areas are estimated to encompass 700 km2 with a potential installed capacity of 3,500 MW. Additional studies are being conducted to accurately assess the wind electric potential considering factors such as the existing transmission grid availability and accessibility and socioeconomic considerations.
“But the plans are just to add 35 MW of wind energy by 2020. Why?” he asked the CEB.
Prabath Wickramasinghe from the Small Hydro Power Developers Association wanted to know who was responsible for preparing LTGEP?
“As per Section 4(1) b of Electricity Act 20 of 2009, it is the commission’ s responsibility to secure all the demands for electricity in Sri Lanka, but it has not explicitly mentioned the responsible party for preparing the generation plan,” Wickramasinghe said.
“So we see a conflict of interest here because the CEB is only a transmission licensee and a generation and distribution licensee in Sri Lanka. Therefore, if the LCLTGEP is prepared by the CEB it naturally leads to a conflict of interest.
“Thus we are of the view that this plan should be prepared by the PUCSL on the submission of the CEB and other licensees.” Wickramasinghe stated.
“We are of the vew that PUCSL should take the responsibility of preparing the Long Term Generation and Expansion Plan. There is a severe lack of coherence with national policies in the LTGEP. All these national policies and targets should be taken into account at future planning sessions.”
President Maithripala Sirisena in Chapter 10 of his election manifesto promised to meet basic energy needs through renewable energy. It Includes the following:
But Wickramasinghe said contrary to the Government’s above statements, coal power is set to play a major role in the LTGEP for the 2018-2037 period.
“This is not the Government’s view,” he asserted.
The Nationally Determined Contributions (NDC) Report submitted by the Ministry of Mahaweli and Environment in September 2016 to the United Nations Framework Convention on Climate Change (UNFCCC) held in October 2016 says that “Sri Lanka has recently taken strong initiatives to implement efficient and effective sustainable energy programs as well as eliminating the introduction of coal power plants from the national electricity system by 2030.
“This is the Government policy. But the CEB’s 20-year plan does not reflect that. Instead of eliminating coal power plants, there are new additions in the long-term plan,” Wickramasinghe said.
“Surprisingly, the newly-drafted national energy policy by the Ministry of Power and Energy has also mentioned these coal power plants. So we request there to be focus on more renewable energy in making the long-term plan. The new additions of coal power, unless they are strictly required in the LTGEP, should be discouraged and more emphasis on renewable energy based on the vast advancements of the sector needs to be looked at.
“Otherwise, in another 10-15 years, the coal power plants which have terms for 20 years’ operation, may have to be operated even if the country does not need them, just to meet contractual obligations.”
Wickramasinghe added that the calculation of the least cost for coal power was questionable .
“Coal has been identified as the least-cost generation by the CEB. But it has only taken into account expenses for fuel and O&M, which we disagree with.
“Externalities such as impacts on health, greenhouse gas emissions, resource costs and availability, supply security and technological developments have not been considered. Rupee depreciation against the US dollar has also not been considered when calculating the least-cost option. Therefore, the basis on which the least-cost has been calculated for coal power is highly questionable.”
Abnormal hydropower numbers
According to Somaratna Consultants Ltd. Managing Director K.S. Somaratne: “LCLTGEP has abnormal hydropower numbers that need to be corrected.”
Somaratne said that the people of this country would like to see energy being developed in the economy and the environment rather than energy being developed at the expense of the economy and environment.
He stated that the hydropower generation data that has been used in the CEB’s plan are irrational and baseless. He questioned why hydro generation from 2000-2005, which has been lower compared to the rest of the period, has been considered in the 2018 long-term plan?
“Table 2.1 in the LCLTGEP talks about 4,800 GWH of average hydro energy but there is a different graph where the average is taken as 4050 GWH and I don’t know how that particular disparity comes into the picture because if you look at the 2006 generation plan these figures were approximately the same. Also, there is a particular statement here in doing these particular estimates they have taken the dry and very dry scenarios and then calculated the average. They also talk about a weighted average. This is something we need to pay attention to.
“Looking at the graph I believe something has gone wrong because in 2006, with the lowest hydropower generation being 3,121 Gwh, the average is 4,463 Gwh and in 2018 with Upper Kotmale and the lowest being 3238 Gwh the average is even lower than the average in 2006.”
The 2018 LCLTGEP says that the graph was based on the data from 1979-2014.
“Did we take those figures from 2000-2005 also into consideration because it was the time we made the decision on the coal power plant and hydro generation was very low. These are abnormal values,”
He pointed out that the 2006 long-term generation plan had excluded the 2000-2005 period due to this abnormality.
Somaratne was of the view that coal plants will make the north of the country a desert, pointing out that the Norochcholai Coal Plant produces 21 megatonnes of carbon dioxide in a year.
He said that while the world average for carbon dioxide was 400 ppm, on two occasions when measurements were taken from his house in Thalawathugoda this year, he had found the count to be above this average at 495 ppm and 516 ppm.
“This is just in front of my house. What I wanted to emphasise was that carbon dioxide concentration is really increasing.”
Somaratne added that from highway solarisation it would be possible to generate 7,500 Gwh of electricity, sufficient to pay back the highway loans.
According to energy expert Vidura Ralapanawa, LCLTGEP should focus on climate change.
“We need cheap electricity to develop and if this happens year after year, what is the development? Where is the development? Who is getting developed?” Ralapanawa asked.
“In a country that is bound to be devastated by climate change year after year, do we have an ethical or moral right to say we are only emitting so much carbon dioxide, everybody is emitting so much more than us and therefore we shouldn’t be worried about this? Climate change is not an issue for those who live in rich countries. It is a bigger issue for people like us whose development will be forever curtailed unless you address this.
“So what is our ethical position when we disregard this and say you know what emission is not part of this problem. Let somebody else handle it?” he asked.
Ralapanawa says the European Union will create strict regulations on the climate as the EU has already drafted legislation, which will come into effect from 2020, on carbon labelling, carbon foodprints, etc. for certain types of products that come into the EU market.
“Global corporates, especially people who buy from countries like Sri Lanka and other parts of Asia, will have strict climate impact measurements,” Ralapanawa said.
“From next year, most apparel or footwear manufactured in Sri Lanka will be globally measured for carbon. So competitiveness of the product is no longer going to be purely measured on cost.
“So there is an economic argument that we cannot disregard as we talk about generation options.”
He says it is mandatory in some states in India to have rooftop solar panels in the factory otherwise the grid connection is taken off.
“That is the world against which we are competing. And where do we stand?” Ralapanawa queried.
He said Germany curtails all its coal power when its renewables are high. India curtails its coal power when its renewables are high. Only in Sri Lanka is it the CEB’s will to use CEB-owned coal power.
“What are we doing with transmissions? We are generating coal in three ends of the country and trying to bring it all the way to the centre of the country for pump storage and are pumping it back in the night. Is this logical? No. “Why only pumped storage? Where is battery storage? Why is storage only for coal? Why don’t we use storage for renewable energy? Why are these things not in the plan? Why are we curtailing wind power? So that coal power plants run. I don’t think we should be thinking like this. Can we look at this generation plan and proudly say we have made the best power generation plan in the world? Can we say that we are leading the world in any form? We are still doing what people used to do. We are not doing what people are now doing. We can’t think like this. I tell the gentlemen and ladies from the CEB, we were proud of you. Please make us proud again.”
