Ravi to be Sri Lanka’s solar Parakramabahu

ECONOMYNEXT – Sri Lanka will expedite licenses for solar farms so that no light that falls on the island is wasted, Power Minister Ravi Karunanayake said drawing a parallel with the words attributed to an ancient king in reference to rainwater.

"King Maha Parakramabahu said ‘Not a single drop of water that falls from the sky should be allowed to flow to the sea without being used," Karunanayake told parliament.

"In the same way, our government and ministry would like to implement a strategy where no ray of sunlight is wasted."

Legislator Thushara Amarasena said the meaning of Ravi was the sun.

He said under the current system it took about three to four years to get a license from the Sustainable Energy Authority and build a plant with an agreement from the Ceylon Electricity Board.

"In addition, there were problems related to the re-sale of licenses," Karunanayake said. "We want to set up a system where the LOI (letter of Intent) can be issued in two weeks."

The standardized licenses issued by the Sustainable Energy Authority had come under fire for paying bloated feed-in tariffs in the past which were likened to green scams practiced in the West by the renewable energy lobby to get breaks or subsidies at the expense of society.

Renewable plants of 10MW were paid in excess of 22 rupees per unit, when global costs have fallen sharply.

In Sri Lanka itself, small plants of 1MW each were awarded for around 16 rupees a unit on competitive tender. A large plant has been awarded for a price of around 12 rupees but land acquisition problems had delayed its construction.

Ex-Deputy Power Minister Ajith Perera urged Sri Lanka not to give licenses without competitive tender given the past experience with the Sustainable Energy Authority.





"I would like to say clearly and with responsibility that we have experimented with many different methods," Perera said.

"My personal belief, based on my experience is that competitive bidding should be preserved. There is no better alternative to competitive bidding."

"There is no point in showing a emergency situation and taking action on that basis. We helped build 50MW and 10MW plants after giving tax breaks.

"Now the price of solar power has come down sharply in the world."

Industry analysts say in India, the cost of solar had fallen to the equivalent to 8 to 9 Sri Lanka rupees.

However, Sri Lanka faces a great challenge in having a soft-pegged central bank which commits monetary policy errors with impunity to depreciate the currency, making even expensive renewable plants cheap over the longer term if the pricing is not tied to the US dollar.

The central bank has busted the currency from 130 to 176 to the US dollar since 2015, partly due to policy errors and partly due to an explicit new Mercantilist monetary anchor involving targeting a real effective exchange rate index.

Since independence, the central bank busted the rupee from 4.76 to 176 with no serious reform to restore the monetary stability Sri Lanka experienced before money printing started in 1951. (Colombo/April 14/2019-SB)

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