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Thursday May 6th, 2021
Economy and Markets

Solar industry proposes own long-term generation plan, promises to save Rs. 266 billion

The Solar Industries Association (SIA), a collective of solar power industry representatives, today announced its own long term solar power generation plan, projected to save the country Rs. 266 billion and add a cumulative 3,150MW of power to the national grid over a period of six years.

The Least-Cost Long-Term Solar PV Generation Plan 2019-2025, to be proposed to the Government next week, according to SIA Secretary Lakmal Fernando, will directly save the economy a total of Rs. 266 billion in costs incurred in emergency power purchases while also preventing a cumulative foreign currency outflow of Rs. 1,187 billion over the same period.

Calling for the immediate installation of solar energy projects across the island, Fernando argued that purchasing solar power at Rs. 23.10 a unit with battery storage and rooftop conversions at Rs. 22.00 a unit is the best solution to the ongoing power crisis – currently held at bay by a temporary drop in demand due to factory closures for the Avurudu holidays and the promise of monsoon rains in May.

Speaking to journalists in Colombo this morning, Fernando warned that the continued purchase of emergency power would lead to an inevitable financial crisis at the Ceylon Electricity Board (CEB), the cost of which would eventually have to be borne by the consumer. Given the CEB’s current  annual turnover of Rs. 230 billion, he said, the proposed purchase of some 700MW of additional emergency power would cost the Board on average some Rs. 170 billion a year.

As proposed by the SIA, solar power generated under its plan can be connected to the national grid within six months of the CEB’s awarding the contracts, at “zero investment cost” to the Government.

“Awarding these contracts to local entrepreneurs will prevent heavy foreign currency outflows, generate many hundreds of jobs in the industry and create a positive ripple effect on a sluggish economy,” the SIA says in the executive summary of its plan.

The Rs. 266 billion saved, said Fernando, could afford Sri Lanka a PET scanner for every hospital and meet the total expenditure of several key ministries including health and education, as well as pay for Samurdhi benefits several times over.

SIA officials called on the Government to implement its generation plan as a matter of national urgency and take immediate measures to approve 1,555MW of solar projects less than or equal to 5MW in size pending approval since 2016 as a first step in resolving the “avoidable crisis”.

Considering the demand for electricity is growing at 5% per annum, and with only two major power plants in the pipeline – the 120MW Uma Oya hydro power project and the 300MW LNG  plant in Kerawalapitiya whose tender has yet to be awarded (neither is likely to be commissioned for several years), the SIA projects a cumulative demand increase of 5,441GWh by 2025.

The only source of power to meet this demand is solar, said Fernando, as it takes only six months to commission a solar power plant. (180MW of solar power has already been added to the national grid).

As the purchase of emergency power is tied to inflation, fuel price and exchange rate fluctuations, its cumulative cost over the next five and a half years would amount to roughly Rs. 1,187 billion.

“There are plans to buy 700MW of emergency power altogether. Assuming that that power will function at the rate of 80%, and every year the rupee depreciates by 5% and accounting for fuel prices going up, etc, at the current rate of Rs. 31 per unit, the total expenditure would amount to Rs. 1,187 billion,” Fernando told RepublicNext.

In contrast, given that solar power contracts are entered into at a long term fixed price in Sri Lankan rupees, what with inflation and rupee depreciation, the cost of solar electricity would gradually diminish in real terms. Fernando and other SIA officials argued that, therefore, the solar industry could provide this much needed energy at a significantly lower cost, even with storage capabilities.

If the Government and the CEB facilitate the implementation of the SIA’s plan, they said, the industry can guarantee a cumulative addition of 3,150MW by 2025, which could be increased to 6,000MW by awarding tenders to large scale (over 10MW) ground-mounted and floating solar power systems.

The SIA recommends that the Government continue the existing ‘Soorya Bala Sangramaya’ rooftop solar tariff scheme, approve the Rs. 23.10/kWh flat tariff with battery storage for 5MW or less projects already applied (617 applications pending since 2016), approve 33kV transmission line inter-connection to the existing CEB/LECO network for those plants, introduce a simple approval process and quick grid-connection approvals, retain preferentual duty structures offered for solar panels and introduce zero tariff for deep cycle batteries, and call for tenders for large scale (10MW or higher) ground-mounted and floating solar projects.


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