By Maheesha Mudugamuwa
The solar power industry fears that new policies being introduced by the Government would cripple the industry as a whole and have a ripple effect.
For decades, solar power has been a small player in the energy sector in Sri Lanka, overshadowed by fossil fuel giants. But today, solar power is booming. Industry experts revealed that solar attracted more investments within the last few years than any other power source. Solar-related employment opportunities are also on the rise as the industry employs thousands of people at present.
In the wake of the announcement of the Ministry of Power and Energy of its plan to introduce a flat rate for the solar power industry, power sector experts fear that it would push the country as well as the industry into a disastrous state. They allege that the flat rate would not be an attractive solution, and therefore, the industry would collapse as consumers would no longer be interested in investing in solar power-related projects.
Speaking to The Sunday Morning, Solar Industry Association (SIA) President Kushan Jayasuriya said that the Ceylon Electricity Board (CEB) and the Ministry of Power and Energy have taken steps without consulting the authorities – including the Cabinet, President Maithripala Sirisena, and the Minister in charge of the subject of environment – to completely stop the installation of solar power projects other than those of minimal size.
Gloomy days ahead
According to the SIA, CEB and Ministry officials had informed the association last week that net metering systems (carry-forward of excess energy produced by solar projects at homes) and net accounting systems (sale of extra energy produced by solar projects at homes to CEB) will be cancelled and net plus tariffs (CEB buys all energy produced by solar projects) are to be drastically reduced, rendering the scheme commercially nonviable.
“These steps will lead to the complete destruction of the solar industry in Sri Lanka, leading to over 10,000 people losing their jobs. Reduction in contribution of solar power to the national grid will result in greater purchase of emergency power costing over Rs. 30/KWh, compared to a cost less than Rs. 18/KWh for solar power, averaging over a 20-year contract period not subject to any escalation,” Jayasuriya noted.
He also said the association agreed to CEB’s request to reduce solar power prices, but they were not informed about the scrapping of net metering and net accounting systems, which are very popular.
“A lot of people have taken equipment and loans to install this. Now, it has become a public issue as these two models will be scrapped,” he stressed, adding: “If there’s a requirement like that, the Ministry should discuss it with solar power producers.”
However, according to experts, the initial plan of the “Battle of Solar Power” project was to generate 1,000 MW of solar power by 2020, but thus far, the country has only been able to produce 200 MW of power.
“We’re not even close to our target; and the whole purpose of introducing attractive packages was to encourage more people to generate as much as possible,” a subject-matter expert claimed in this regard.
Unfortunately, the Ministry is planning to cut down all those attractive measures and condemn the industry to a slow death, they stressed. According to experts, at present, there are thousands of people depending on this solar industry.
The new solar power project “Surya Bala Sangramaya” was launched in 2016 from the President’s official residence under the patronage of then Minister of Power and Renewable Energy Ranjith Siyambalapitiya.
Battle for solar energy
Initially, the project was planned to convert one million rooftops to solar power plants to provide an additional income to the customers of the CEB, which would buy the extra solar power generated by each and every household by establishing a large number of separate solar power plants to feed the national grid, thus allowing the customers to sell extra power directly to CEB.
It was the Ministry’s target to add 1,000 MW of solar power to the national grid, accounting for 20% of the total expected power requirement of the country by 2025.
In addition, the Government’s aim was to establish solar parks in the Southern, Northern, and Eastern Provinces of the country with the first solar park established in Siyambalanduwa, which would add 300 MW to the national grid. Two more solar parks generating 100 MW each were scheduled to be established in Valaichchenai and the Northern Province.
Accordingly, there are three systems – net metering, net accounting, and net plus. Net metering is an old system and there are around 4,000 customers at present. Under the net accounting system, customers would produce solar power at their homes and the extra power produced would be given to the national grid where the CEB would pay Rs. 22 per unit. Under the net plus system, the commercial and industrial facilities with large, flat, open rooftops could use this method and add solar power to the national grid, earning an income of Rs. 22 per unit. The agreement was for 20 years and during the first seven years, the CEB would pay Rs. 22 per unit whereas after that, only Rs. 15.50 per unit will be paid.
The sky’s the limit
Responding to the allegations levelled against the Ministry, Minister of Power and Energy Ravi Karunanayake told The Sunday Morning that his Ministry had not taken any decision to halt the first phase of the Battle of Solar Power project introduced to strengthen the national electricity grid. He urged the public not to pay attention to false propaganda spread by certain groups.
The Ministry’s plan was only to introduce a flat rate for solar power, assuring each solar power producer gets equal benefits. Accordingly, from 1 August, solar power generators would be paid a flat rate of Rs. 19.75 up to 50 KW for a contract period of 20 years while systems above 50 KW would be paid a flat rate of Rs. 18.75, also for 20 years.
He also highlighted that the introduction of a flat rate would be a positive development for solar power generators as it would eliminate the gap between the upper and middle-class consumers.
“At the moment, the CEB buys power at an average rate of Rs. 23 and Rs. 24 and sells it at a rate of Rs. 16. The revenue of the CEB comes from only around 4% of the entire CEB network. Of this 4%, about 25% are charged Rs. 45 to Rs. 50 per unit. Some private renewable associations are targeting that Rs. 45 market, hitting the CEB’s financial inflow. What we’ve done is made a flat rate. You can produce whatever amount you want and the CEB would not care. The solar power associations have already agreed to this,” he said.
“Earlier, there were restrictions. But now, there are no restrictions at all, and anybody can generate solar power in the future. We have not cancelled any agreement, but the agreements will lapse in July. After that, we will have a flat rate,” Karunanayake added.
Ministry of Power and Renewable Energy Director (Development) Sulakshana Jayawardena said that in launching this programme in 2016, the Ministry’s plan was to add 200 MW to the national grid by 2020.
“We are already reaching that goal; we are planning to launch another 800 MW system by the year 2025 and add 1,000 MW of solar power to the national grid,” he said, adding that the measures are being implemented to add 300 solar power projects providing 1 MW each in Phase II – competitive bids have been called.
Accordingly, by now, tenders have been awarded for more than 126 MW. The procurement process is being implemented for competitive bidding for another 150 MW.
Under Phase III, steps are being taken to add five 10 MW power plants to the national system and under Phase IV, large-scale solar parks will be built in Pooneryn and Siyambalanduwa areas. This will include the construction of solar power plants floating on reservoirs – Maduru Oya has been selected for this purpose.
“At the beginning of the project, we agreed to review the progress and shortcomings of the project after adding the first 100 MW to the national grid. But we didn’t do it after adding 100 MW. The Government decided to review after adding 200 MW. When reviewing the project, we found that the cost of purchasing solar power under net metering is Rs. 45 per unit. By the other two methods, it is Rs. 22 per unit,” Jayawardene stressed.
According to him, a committee has been appointed to look into the inconsistencies within these systems. The committee is currently conducting the study.
The solar power industry fears that new policies being introduced by the Government would cripple the industry as a whole and have a ripple effect.
For decades, solar power has been a small player in the energy sector in Sri Lanka, overshadowed by fossil fuel giants. But today, solar power is booming. Industry experts revealed that solar attracted more investments within the last few years than any other power source. Solar-related employment opportunities are also on the rise as the industry employs thousands of people at present.
In the wake of the announcement of the Ministry of Power and Energy of its plan to introduce a flat rate for the solar power industry, power sector experts fear that it would push the country as well as the industry into a disastrous state. They allege that the flat rate would not be an attractive solution, and therefore, the industry would collapse as consumers would no longer be interested in investing in solar power-related projects.
Speaking to The Sunday Morning, Solar Industry Association (SIA) President Kushan Jayasuriya said that the Ceylon Electricity Board (CEB) and the Ministry of Power and Energy have taken steps without consulting the authorities – including the Cabinet, President Maithripala Sirisena, and the Minister in charge of the subject of environment – to completely stop the installation of solar power projects other than those of minimal size.
Gloomy days ahead
According to the SIA, CEB and Ministry officials had informed the association last week that net metering systems (carry-forward of excess energy produced by solar projects at homes) and net accounting systems (sale of extra energy produced by solar projects at homes to CEB) will be cancelled and net plus tariffs (CEB buys all energy produced by solar projects) are to be drastically reduced, rendering the scheme commercially nonviable.
“These steps will lead to the complete destruction of the solar industry in Sri Lanka, leading to over 10,000 people losing their jobs. Reduction in contribution of solar power to the national grid will result in greater purchase of emergency power costing over Rs. 30/KWh, compared to a cost less than Rs. 18/KWh for solar power, averaging over a 20-year contract period not subject to any escalation,” Jayasuriya noted.
He also said the association agreed to CEB’s request to reduce solar power prices, but they were not informed about the scrapping of net metering and net accounting systems, which are very popular.
“A lot of people have taken equipment and loans to install this. Now, it has become a public issue as these two models will be scrapped,” he stressed, adding: “If there’s a requirement like that, the Ministry should discuss it with solar power producers.”
However, according to experts, the initial plan of the “Battle of Solar Power” project was to generate 1,000 MW of solar power by 2020, but thus far, the country has only been able to produce 200 MW of power.
“We’re not even close to our target; and the whole purpose of introducing attractive packages was to encourage more people to generate as much as possible,” a subject-matter expert claimed in this regard.
Unfortunately, the Ministry is planning to cut down all those attractive measures and condemn the industry to a slow death, they stressed. According to experts, at present, there are thousands of people depending on this solar industry.
The new solar power project “Surya Bala Sangramaya” was launched in 2016 from the President’s official residence under the patronage of then Minister of Power and Renewable Energy Ranjith Siyambalapitiya.
Battle for solar energy
Initially, the project was planned to convert one million rooftops to solar power plants to provide an additional income to the customers of the CEB, which would buy the extra solar power generated by each and every household by establishing a large number of separate solar power plants to feed the national grid, thus allowing the customers to sell extra power directly to CEB.
It was the Ministry’s target to add 1,000 MW of solar power to the national grid, accounting for 20% of the total expected power requirement of the country by 2025.
In addition, the Government’s aim was to establish solar parks in the Southern, Northern, and Eastern Provinces of the country with the first solar park established in Siyambalanduwa, which would add 300 MW to the national grid. Two more solar parks generating 100 MW each were scheduled to be established in Valaichchenai and the Northern Province.
Accordingly, there are three systems – net metering, net accounting, and net plus. Net metering is an old system and there are around 4,000 customers at present. Under the net accounting system, customers would produce solar power at their homes and the extra power produced would be given to the national grid where the CEB would pay Rs. 22 per unit. Under the net plus system, the commercial and industrial facilities with large, flat, open rooftops could use this method and add solar power to the national grid, earning an income of Rs. 22 per unit. The agreement was for 20 years and during the first seven years, the CEB would pay Rs. 22 per unit whereas after that, only Rs. 15.50 per unit will be paid.
The sky’s the limit
Responding to the allegations levelled against the Ministry, Minister of Power and Energy Ravi Karunanayake told The Sunday Morning that his Ministry had not taken any decision to halt the first phase of the Battle of Solar Power project introduced to strengthen the national electricity grid. He urged the public not to pay attention to false propaganda spread by certain groups.
The Ministry’s plan was only to introduce a flat rate for solar power, assuring each solar power producer gets equal benefits. Accordingly, from 1 August, solar power generators would be paid a flat rate of Rs. 19.75 up to 50 KW for a contract period of 20 years while systems above 50 KW would be paid a flat rate of Rs. 18.75, also for 20 years.
He also highlighted that the introduction of a flat rate would be a positive development for solar power generators as it would eliminate the gap between the upper and middle-class consumers.
“At the moment, the CEB buys power at an average rate of Rs. 23 and Rs. 24 and sells it at a rate of Rs. 16. The revenue of the CEB comes from only around 4% of the entire CEB network. Of this 4%, about 25% are charged Rs. 45 to Rs. 50 per unit. Some private renewable associations are targeting that Rs. 45 market, hitting the CEB’s financial inflow. What we’ve done is made a flat rate. You can produce whatever amount you want and the CEB would not care. The solar power associations have already agreed to this,” he said.
“Earlier, there were restrictions. But now, there are no restrictions at all, and anybody can generate solar power in the future. We have not cancelled any agreement, but the agreements will lapse in July. After that, we will have a flat rate,” Karunanayake added.
Ministry of Power and Renewable Energy Director (Development) Sulakshana Jayawardena said that in launching this programme in 2016, the Ministry’s plan was to add 200 MW to the national grid by 2020.
“We are already reaching that goal; we are planning to launch another 800 MW system by the year 2025 and add 1,000 MW of solar power to the national grid,” he said, adding that the measures are being implemented to add 300 solar power projects providing 1 MW each in Phase II – competitive bids have been called.
Accordingly, by now, tenders have been awarded for more than 126 MW. The procurement process is being implemented for competitive bidding for another 150 MW.
Under Phase III, steps are being taken to add five 10 MW power plants to the national system and under Phase IV, large-scale solar parks will be built in Pooneryn and Siyambalanduwa areas. This will include the construction of solar power plants floating on reservoirs – Maduru Oya has been selected for this purpose.
“At the beginning of the project, we agreed to review the progress and shortcomings of the project after adding the first 100 MW to the national grid. But we didn’t do it after adding 100 MW. The Government decided to review after adding 200 MW. When reviewing the project, we found that the cost of purchasing solar power under net metering is Rs. 45 per unit. By the other two methods, it is Rs. 22 per unit,” Jayawardene stressed.
According to him, a committee has been appointed to look into the inconsistencies within these systems. The committee is currently conducting the study.