An Echelon Media Company
Wednesday February 1st, 2023

Sri Lanka generation plan renewable power share for 2030 equal to Germany: CEB engineers

ECONOMYNEXT – Sri Lanka’s long term generation plan has set practical target for 53 percent of electricity coming from renewable and 70 percent from clean including liquefied natural gas, engineers of state-run Ceylon Electricity Board has said.

The 53 percent target balances affordability, reliability of supply and network upgrading costs and foreign debt and is around the level of present day Germany engineers say.

Costly Exercise

To take it to levels like 70 percent only from renewable by 2030 at least 3.7 billion US dollars extra would be needed in grid upgrades and energy storage solutions which is around the level of the country’s foreign reserves now.

“As per estimates so far 70 percent renewable by 2020 requires 1.7 billion US dollars to lay a backbone 400kV transmission line network for renewable zones around the country,” CEBEU President Saumya Kumarawadu said.

“Another 2.0 billion US dollars would be needed for storage. How much foreign reserves do we have now?”

However batteries may last around 10 to 15 years and would be recurrent cost.

At the moment about 40 percent of energy generated and 56 percent of installed capacity or 2,539 MegaWatts was renewable.

Of this 1351MW were CEB built large hydro plants, which was the cheapest source of power and was also firm energy with storage which could dispatched or used as necessary by day or night.

A 35MW plant will come on line in September with the Broadlands power station, and 120MW plant was expected from Uma Oya was expected in the first half of next year, basically exhausting available locations for large plants.

Another 1,188 MW made up of variable renewable energy (VRE) such as wind, solar and mini-hydro whose supply was uncertain and depended on the availability of wind and sunlight and dendro which were also small.

Another 350MW or wind was under construction, which would make it closer to 60 percent not counting rooftop solar.

“In the 1980s 100 percent of our power was renewable, hydro. But as demand went up we had to move to thermal sources like coal,” Kumarawadu said.

“When coal plants were delayed we had to go to more expensive diesel plants.”

“When cheaper plants are not built according to the plan, we have to run more expensive plants.

According to a general plan for the 2022-2041 period, another 2674 MW of solar and 1,113 MW wind are planned.

Level of Germany

In term of energy renewables were around 40 percent of the total now. It would be 53 percent by 2030 under the long term plan now proposed.

“The level we are planning to go by 2030 is the position Germany is in now,” Kumarawadu said.

“With additional 20 percent from LNG, clean energy would be around 70 percent. We have to go forward in a planned manner taking into account the examples of other countries.”

He said in Germany VRE was only 25 percent. However Germany was also one of the most expensive countries for electricity.

Germany is a country that makes high end industrial goods and imports items like apparel from Sri Lanka.

Sri Lanka’s export require affordable energy, CEBEU said.

From the current 500MW levels, solar was planned to be raised to over 2000MW.

By 2050 Sri Lanka plans to be zero-carbon.

By 2021 cumulative generation cost 2.34 rupees for hydro, coal 7.83 rupees, CEB owned thermal plants were 26 rupees, small standby generators were 32, private plants made up of combined cycle and diesel engines, were around 24 rupees.

Other renewables which were around 22 rupees or above when ‘feed in’ tariffs were implemented had come down to an average of around 18.10 rupees with competitive bidding. Wind and solar were now coming around 12 to 14 rupees with competitive bidding.

“In the 18.10 rupees are renewable power we are taking at 25-26 rupees a unit and wind and solar under competitive bidding which is coming around 12 to 15 rupees,” Kumarawadu said.

Not Firm Energy

However small and variable energy plants were not firm. They came and went out of the system based on sunlight or wind. In some countries high winds or sun had led to cascading failures.

In order to accommodate higher levels of distributed renewable energy plants which were not firm ‘smart grids’ and battery or other storage was needed.

Because the power delivered by small renewable are uncertain the CEB has to keep additional firm energy which can be dispatched or started when the VRE plants go down and vice versa.

“To take renewable plants to the grid we have to have other firm power plants, like a gas turbine as standby – we call it a spinning reserve – to use,” Kumarawadu said.

“When we take solar we have to have storage like a batter or a pumped storage plant.”

Pumped storage involves pumping water up to a reservoir in when extra power is generated in the daytime and running them down in the night, which is also like a battery with potential energy instead of chemical.

“So when we use a battery the cost of renewable power goes up. If we install batteries the cost will go up to 30 to 35 rupees a unit.”

In recent years, the cost of battery technology has, been falling in dollar terms as technology. However they are still high.

Batteries will also have to be replaced every 10 to 15 years.

There are calls for 100 percent renewable energy.

Kumarawadu says to run the system 100 percent on renewable without firm energy is like drifting on a boat without an oar.

“We have to go towards these targets with discipline and a credible plan,” Kumarawadu. “In order to expand renewable we also need firm plants without going like a canoe without oars.”

Blocking Credible Plans

Due bad decisions and blocking of cheap plants in the CEB long term generation plan, cost of power in Sri Lanka had gone up and selling prices were not enough to cover the costs.

In 2019 the CEB had lost 80 billion rupees due to selling power below cost. In 2020 the loss was 62 billion rupees.

In 2019 the generation cost was 23 rupees a unit. In 2020 it was 21.02. Depending on the availability of rain and total demand, the cost will fall as higher cost plants are shut off under a merit order. The government also cut furnace oil prices last year.

In 2020 the selling price was 16.60 rupees resulting in a loss of 4.76 rupees a unit.

“In order to keep cost down, there has be an optimum mix of high cost and low cost plants,” Kumarawadu said.

“But we are always in this crisis. There are people who want to block cheap plants. It cost only 50 billion to build the Katunayake expressway. We the CEB lost 62 billion rupees.”

The CEB had proposed a fourth 300MW plant at the existing complex in Norochcholai. Now statements are being made that it will not take place.

Though LNG is the main new source of power in CEB plans LNG prices have also started go shoot up as the US Federal reserve in printing in its so-called Powell Bubble.

A tender to procure an LNG floating terminal has also been undermined by unsolicited proposal being entertained halfway through the tender process. (Colombo/Aug02/2021)

Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Sri Lanka bond yields down at close

ECONOMYNEXT – Sri Lanka’s bond yields were down at close following a bond auction on Wednesday, dealers said while a guidance peg for interbank transactions remained unchanged.

“The rates were steady at the auction,” a dealer said.

“This can be a signal to the market saying the rates will go down in the future.”

A bond maturing on 01.07.2025 closed at 32.40/60 percent, down from yesterday’s 32.60/85 percent.

A bond maturing on 01.05.2027 closed at 29.10/35 marginally down from yesterday’s 29.20/75 percent.

The Central Bank’s guidance peg for interbank US dollar transactions remained unchanged at 362.14 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 371.38 rupees on Friday, data showed. (Colombo/Feb 01/2022)

Continue Reading

Sri Lanka bill auction hits pothole after 2025 bond spike

ECONOMYNEXT – Sri Lanka sold only 45 billion rupees in Treasury bills at Wednesday’s auction after offering 120 billion rupees, data from the state debt office showed, amid market confusion over a spike in a two year bond at an earlier action.

30.1 billion rupees of 3-month bills were sold at 29.91 percent, unchanged from a week earlier after offering 60 billion rupees for auction.

5.1 billion rupees of 6-month bills were sold at 28.72 percent, flat after offering 30 billion.

10.3 billion rupees of 12-month bills were sold at 27.72 percent after offering 30 billion.

Phase II subscriptions have been opened.

The market was foxed after the 2025 bonds were accepted at sharply higher yield than market on January 30, dealer said.

There was further confusion as the there was an outright purchase of 2025 at around 29 percent earlier in January.

Some investors speculated that the authorities were trying to drive more buyers towards short end bonds as bill volumes were getting larger. (Colombo/Feb01/2023)

Continue Reading

Sri Lanka services exports down 5.9-pct in 2022

ECONOMYNEXT – Sri Lanka’s services exports were estimated to have fallen 5.9 percent to 1,876.3 million US dollars, the island’s Export Development Board said.

Services exports estimated is made up of ICT/BPM, construction, financial services, transport and logistics.

There are more than 500 ICT companies, the EDB said.

Sri Lanka’s merchandise exports were up 4.6 percent to US dollars 13.1 billion dollars in 2022 from 2021.

Sri Lanka’s goods exports are slowing amid lower growth in Western markets. (Colombo/ Feb 01/2023)

Continue Reading