ENERGY SECTOR
Compiled by Tamara Rebeira
RECOURSE TO RENEWABLES
Dammika Nanayakkara plots a path towards harnessing renewable energy
Q: What opportunities and challenges does Sri Lanka’s energy sector face?
A: Sri Lanka is a signatory to the Paris Agreement and therefore, it is committed to meeting five nationally determined contributions (NDCs) in the sector by 2030. Ensuring that our electricity utility (the Ceylon Electricity Board a.k.a. CEB or a successor) is financially and economically sustainable in the future is essential. This comes with great challenges.
Any tariff increases will affect the economic sustainability of industry. The CEB must be financially independent and viable without the need for subsidies.
Similar to other service sectors, the power sector must be liberalised. Restructuring the CEB will primarily serve this purpose, which will attract more private sector investments from developed countries. Any improvement or development in the power sector will require substantial investments and amid the economic crisis, securing financing and attracting investments is a challenge.
On the other hand, to meet NDCs, over 3,000 MW of renewable power (solar, wind and so on) must be added to the national grid along with other efficiency improvements. This will attract investments valued at US$ 3-4 billion over the next eight years.
As our grid is standalone (i.e. not connected to the regional grid), sufficient storage capacity must be maintained to absorb excess energy when a large quantum of renewable energy is available. This will lead the way for further investments in the sector.
Liberalising the electrical energy market will provide opportunities for power wheeling where consumers and electricity generators can enter into direct power supply and purchase contracts – like in other markets such as telecom, petroleum and gas.
Q: Could you provide an overview of the energy sector…
A: Sri Lanka’s installed power generation capacity is 4,400 MW while peak demand is around 2,600 MW and annual generation is 16,500 GWh. Half of this is generated through renewable energy sources while the balance is sourced from thermal power plants using imported fossil fuels at an annual cost of 600 million dollars.
Three-quarters of the installed capacity and generated energy is received through CEB owned power plants while only 25 percent is from IPPs (independent power plants). Installed renewable power capacity amounts to 2,500 MW of which 1,100 MW is NCRE (non-conventional renewable energy) power plants such as solar, wind and mini hydro.
Power transmission and distribution is entirely under state sector ownership presently while the CEB’s debt exceeds Rs. 500 billion with liabilities to IPPs, the Ceylon Petroleum Corporation (CPC), contractors and suppliers.
A paradigm shift in the power sector is essential to make it financially and economically viable.
Q: Plans are in place to boost renewable energy. What impact would this have on the energy sector?
A: There will be numerous positive impacts. Most importantly, the country will move away from its dependence on imported fossil fuel, substantially reducing the annual forex outflow for fuel imports as well as greenhouse gas emissions.
In fact, the annual forex requirement for fossil fuel imports is more than the dollar requirement for investments to meet the targets of annual renewable power additions.
The majority of consumers can generate electricity and traditional power users will shift from being consumers to prosumers.
Electricity network topology will move from a top-bottom to bottom-up structure with more generation taking place at consumer centres. Most renewable power developments will be scattered in remote areas.
Therefore, constructing new transmission lines, as well as capacity and efficiency improvements in existing lines, will be required.
The output of renewable energy power plants varies and is intermittent. If sufficient storage capacity (and/or supplement capacity like standby generators) is not developed simultaneously, the stability of power grids could be affected despite the availability of reservoir-based hydro plants as maintaining grid stability will only be manageable for a short period.
Connecting our power grid to Indian grids will help maintain stability.
Q: How can the private sector help boost the electrical energy sector going forward?
A: Sri Lanka has ambitious plans to develop over 3,000 MW of renewable energy power plants along with sufficient energy storage capacity by 2030.
The private sector has a major role to play as investors can turn these plans into reality.
Q: Will renewable energy sources change our economic landscape?
A: Yes. We have an abundance of renewable power potential. Just 1.5 times the area of Senanayake Samudraya is sufficient to generate our annual power demand – that’s the extent of our potential.
Developing more renewable power plants will reduce forex outflows for fuel imports as well. Connecting our electrical grid to India’s will also open opportunities to export renewable power to India and South Asia to generate revenue.
Moreover, most of the transport sector can go green with railway electrification, electric vehicles and so on. This is in line with the objective of going fully green by 2050.
