ECONOMYNEXT – Sri Lanka’s Winforce Plc has been awarded an agreement to build a 100 MegaWatt solar farm which will be paid a dollar-pegged tariff by the state-power utility after monetary instability from a ‘flexible exchange rate’.
The project is to be completed by the end of 2025, Energy Minister Kanchana Wijesekra said in a twitter.com post.
A consortium of Lakdhanavi Limited, Wind Force PLC and Blue Circle Pte Ltd of Singapore will build the plant.
The 100 MegaWatt solar farm located in Siymabalanduwa will be paid a dollar-pegged tariff, Windforce Plc, a publicly traded company, said in a stock exchange filing.
Sri Lanka has a highly unstable, ad hoc pegged regime called ‘flexible exchange rate’ which can lead to sudden collapses of the currency and high volatility as it is neither a clean float nor a hard peg.
Critics say Western Mercantilists have peddled such regimes to numerous hapless third world nations without a doctrinal foundation is sound money. The countries have a long history of forex shortages and ongoing exchange controls, indicative of the policy dominance of inflationist macro-economists and the defeat of sound monetary ideology.
One way for economic agents to survive monetary instability is to have dollarized contracts.
The solar plant is estimated to cost 152 million dollars.
It will also have a 12MWh battery energy storage system.
The battery will absorb the shock of ‘ramping’, or steep falls (ramping-down) and rises (ramping-up) in power output from solar panels due to cloud movements or rain which tend to destabilize power grids.
The plant will have a maximum ramping upwards or downwards of 3 percent a minute (3MW/min for 100MW).
Other than hydro with storage, most non-conventional renewable energy is highly volatile requiring large investments by grid operators to avoid power outages from fluctuations.
The CEB is planning billions of dollars in new infrastructure to make the grid ‘renewable ready’.
Related Sri Lanka to invest US$11bn by 2030 to meet renewable target
The CEB earlier promoted renewable energy to be paid a fixed rupee tariff to reduce foreign exchange exposure. The utility already imports oil and coal, exposing it to forex risk.
The CEB has now been promised six monthly tariff changes by the government.
The six monthly tariff revision will allow the CEB to pass on the costs of monetary policy errors of the central bank, which are compensated by permanent depreciation, instead of getting the blame for running losses.
The Siyambalanduwa plant promoters will also build a transmission line and substation to evacuate power to the grid. (Colombo/Aug18/2023)