Vidullanka: Championing renewable energy in challenging markets

The listed company aims to develop new renewable energy plants, more than doubling its combined capacity by 2025, with half of that in overseas markets.

Vidullanka Plc, a Rs 4.8 billion market cap listed company in renewable energy with net assets worth Rs. 3.4 billion, is on a mission to promote renewable and sustainable energy in Sri Lanka and other developing markets.

The company has a combined capacity of 37MW including 13MW overseas, composed primarily of hydropower plants, and plans to increase that to 100MW. Riyaz Sangani, Chief Executive at Vidullanka, tells us how the company is unlocking growth opportunities in challenging markets in Africa and South Asia.

Tell us about Vidullanka’s founding, core objectives and the journey thus far?

Vidullanka entered the renewable energy field in 1997. Exploring and nurturing sustainability is core to our business, and our purpose is to uphold people and the planet along with profits. The renewable energy industry in Sri Lanka is challenging, competition is intense at the bid stage, securing approvals and licenses is not easy, and pricing and payments from the energy utility can be volatile.

Vidullanka commissioned its first minihydro power plant in 2001 after many technical setbacks and delays. It nearly ended in a disaster. This experience compelled us to build our technical expertise and capacity. Today, we have some of the best minds in renewable energy at Vidullanka and have perfected design efficiencies.

Over the years, combined capacity has grown to 37MW composed mainly of 11 minihydropower plants with a total electricity supply exceeding 150GWh to the national grid. In 2019, we commissioned a 3.3MW biomass power plant. This has led to the natural extension to 600 acres of Gliricidia plantation to ensure supply of grown fuel wood and related agriculture.

2020 was a challenging year because of Covid-19, and we took every precaution to keep our people safe and ensure uninterrupted power supply. To meet this end, many digitization initiatives were implemented. In June we completed the construction of a new 6.5MW hydropower plant in Uganda. Due to the travel restrictions, we installed all the machinery ourselves with the suppliers directing installation operations online: it was a tremendous achievement.

What are the biggest challenges to renewable energy in this country? How has Vidullanka responded to these challenges?

The early days of private hydropower generation were exciting. The tariff structures were encouraging, and the CEB was a good paymaster. However, anomaly over the interpretation of the Electricity Act led to a total stoppage of development of new project in mini hydro sphere. At the same time there are less viable locations for new mini-hydropower plants. We are overcoming this challenge by building mini hydro plants overseas and so far, we have built 2 projects successfully with total capacity of 13MW with dollar denominated tariff. We are happy that we are able to bring valuable foreign exchange to the country.

The energy industry faced many challenges from policy uncertainty, cut-throat competition, to volatile pricing. Over the years, we have diversified our energy portfolio by developing projects overseas, reducing the dependency on single off taker, the CEB.

Due to our heavy exposure to hydro power generation, weather is a natural challenge. Vidullanka has responded to it by focusing on geographical and technological diversifications.

We are committed and uncompromising to ethical and honest practices, to ensure we develop technically sound and cost-effective power plants that deliver sustainable value to stakeholders and consumers.

 What is the Sri Lankan energy sector outlook?

President’s Vistas of Prosperity envisions renewable energy will supply 80% of the electricity demand by 2030 and we passionately believe this is a realistic goal. If correctly done, the growth potential for the industry is enormous. This growth will come mainly from solar, wind and biomass. The cost to produce a unit of electricity from solar and wind have become competitive over the years while fossil fuels are becoming more expensive. If Sri Lanka is serious about sustainable development and elevating the economy to the next level, it needs more renewable energy capacity.

We are proud of our team of extremely talented engineers and project managers working with us, and we have provided every opportunity for them to hone their skills and deepen their technical capabilities.

 

Vidullanka’s 6.5MW hydropower plant in Uganda. The company completed the installation during the height of Covid-19

The CEB must have a plan to reduce its dependence on thermal power unless it can increase consumer tariffs which is impossible to do. We believe that the best option is to develop more renewable capacity and with costs far lower than thermal power generation, this should help to reduce CEB losses. However, renewable energy does present some technical challenges in terms of grid stability that require innovative solutions to solve, which some countries have addressed effectively.

What are your plans for the future, and from where will Vidullanka generate growth?

We have secured a bid to develop a 2MW ground mounted solar power project in Horana, which is presently in preconstruction stage. Additionally, we are working aggressively on rooftop solar segment, having commissioned a 515kW power plant recently and few more in pipeline. We are also in the advance stages of negotiations to establish a joint venture to develop a 10MW ground mounted solar power plant in eastern Sri Lanka. There will be more projects in this space in the years to come.

As I had mentioned earlier, we are also exploring overseas opportunities in Africa and South Asia. In Africa, European development agencies are supporting the development of renewable energy projects, hydropower to be precise. These agencies expect sound technical capabilities, and this is where we have the edge. We intend to capitalize on this opportunity and hope to increase our combined capacity to 100MW by 2025 and half of that to be implemented in overseas territories.

How do you develop local competencies and expertise, so integral to Vidullanka’s success?

We are proud of our team of extremely talented engineers and project managers working with us, and we have provided every opportunity for them to hone their skills and deepen their technical capabilities.

The technology was always available, but we have fine-tuned execution in terms of our design efficiency to develop projects at optimum costs thus delivering shareholder value and grow as a company. It is people that make the real difference. Our expertise is unmatched. We recruit the best engineering graduates, who are then trained and mentored by expert consultants in the field to take on any projects.