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Power sector: Improving Sri Lanka’s resilience

02 Apr 2022

  • Country should maximise prudent use of indigenous energy sources
  • Awarding energy projects without competitive bidding is illegal: Fernando
  • Says SL MoU with Adani Group on $ 500 m renewable energy projects illegal
  • Maximize use of renewable power, but have adequate redundancy
By Asiri Fernando Sri Lankan citizens are today under immense pressure due to the ongoing economic crisis and the linked energy crisis. Prolonged power cuts are complicating  the lives and livelihoods of Sri Lankans while disrupting critical export industries. Sri Lanka’s power sector has over the last two decades become more and more dependent on external energy sources, expertise, and funding, thereby linking Sri Lankan energy security to international market variations and leaving the country in a vulnerable position. Every fossil fuel-run power plant in Sri Lanka is influenced by international markets and regional and extra-regional actors. In the past, The Sunday Morning has highlighted concerns about maintenance agreements with the Chinese builder of the Norochcholai Coal Power Plant, which has had a poor track record and is now a subject of inquiry by the Power Ministry and the Public Utilities Commission of Sri Lanka (PUCSL).  The Yugadanavi Power Plant, once the conversion is complete, will be linked to a US-based company for maintenance, operation, and supply of Liquefied Natural Gas (LNG). Multiple diesel- and furnace oil-fired power plants of the Ceylon Electricity Board (CEB) and Independent Power Producers (IPP) remain linked to international fuel supply chains. It is in this backdrop that the Government recently entered a Memorandum of Understanding (MoU) with India’s Adani Group, assigning two large-scale renewable energy generation projects in Mannar and Pooneryn in the Northern Province, estimated to be valued at $ 500 million and expected to generate 500 MW of electricity once completed. While the Sri Lankan Government and India were quick to hail the agreement, which came days before a significant financial aid package to the island from India, local industry leaders have called the deal ‘illegal’ and question why the Government continues to commit to projects that would ‘bleed’ dollars from Sri Lanka into overseas entities. Solar Industries Association General Secretary Lakmal Fernando speaking to The Sunday Morning said that the MoU entered into with the Adani Group was illegal due to it being in violation of the Electricity Act. “When it comes to the Electricity Act, the Government can’t offer any projects to anyone without it going through a competitive process. At present energy purchasing is based on competitive bidding, and anything over the 10 MW scale needs to be done through a competitive bidding process,” Fernando stressed. Fernando argued that the Government offering a prospective supplier $ 0.65 cents per unit for a period of 20 years was detrimental to national interest and customers.  “By entering into a long-term illegal agreement which is pegged to a dollar value, the Government may deprive the power consumer of the opportunity to enjoy energy supply at an affordable price. This is no different than buying fossil fuel-based energy,” Fernando charged. “The fact remains that when you offer a US Dollar tagged price for a feeding tariff, you end up paying a large amount of money and it will be repatriated to another country,” he pointed out, adding that foreign entities were being allowed to profit unreasonably from the natural resource of Sri Lanka while Sri Lankans were paying a high tariff for electricity. Fernando said that moving forward, the most efficient and cost-effective energy generation options were from the field of renewable energy, which was abundantly available across the island and in its coastal waters. He stressed that Sri Lanka would be better placed to manage its energy security if renewable energy projects were offered to local industry through a competitive and transparent process. According to Sustainability and Renewable Energy Specialist Dr. Vidhura Ralapanawe, Sri Lanka needs to maximise the use of indigenous (renewable) energy sources in order to improve energy security and ensure the customers get the best deal on energy bills. Such an approach would see domestic power users burdened less by a power tariff which is not significantly tied to fossil fuel market fluctuations or exchange rate risks and allow Sri Lanka to exert better control over her power sector. Such an advantage may allow local industry and the export sector to get the most competitive pricing on power tariff and be less prone to international disruptions, which will help them remain competitive. In order to ensure Sri Lanka’s energy security is met and the best tariff is offered to customers, Dr. Ralapanawe opined that when Sri Lanka enters into large-scale power projects with international bidders, it needs to have a well-formulated energy security framework to follow and it must utilise the right expertise in properly structuring tenders by employing suitable specialists with experience in such projects. Dr. Ralapanawe told The Sunday Morning that Sri Lanka needed to ensure renewable energy project tenders were internationally bankable to ensure their long-term viability and profitability.   “Sri Lanka needs a dedicated energy procurement agency. India did this by creating a new entity called the Solar Energy Corporation of India, which was staffed by experienced professionals, including procurement specialists,” he added. According to him, it is prudent to negotiate long-term tenders in a transparent and competitive manner with safeguards put in place to address maintenance, emergency situations, and anticipated global disruptions. According to the Sustainable Energy Authority (SEA), which regulates the renewable energy sector, through which Sri Lanka expects to supply 70% of the national power demand by 2030, one approach to mitigate the impact of international and local disruptions to the energy supply is to invest in the rapidly-developing battery storage technologies. Sri Lanka Sustainable Energy Authority (SLSEA) Chairman Ranjith Sepala told The Sunday Morning that battery storage was one of the most suitable ‘gap-filler’ technologies which would allow Sri Lanka to better position renewable energy as the main power generator for Sri Lanka. According to Sepala, the SEA is already in discussion with several leading battery producers to bring the advanced technology to Sri Lanka and manufacture it locally. Responding to a query, CEB Spokesman AGM Andrew Navamani said that Sri Lanka should move quickly to maximise renewable energy use for power generation while maintaining an adequate capacity of firm energy and fossil fuel power energy as a redundancy measure to bridge gaps and reductions in renewable power generation. Such a move would enable Sri Lanka to ensure energy security and reduce dependence on external factors. “Sri Lanka needs to expand its non-conventional renewable energy capacity to the maximum. It is a goal that each country should try to reach. However, there should also be sufficient firm power available to meet power fluctuations. This firm energy as a redundancy can be in the form of conventional renewables or fossil fuel-fired plants,” he explained.    


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