• Drivers and barriers of investing in clean energy

By Sarah Hannan Sri Lanka has been doing quite well on the renewable energy front in recent years. The country’s energy mix consists of about 45% renewable energy, out of which 35% is hydropower and 10% is other renewable energy. The hydropower capacity in Sri Lanka is almost fully developed in large-scale hydropower generation stations, and therefore does not need to be developed further. This provides an opportunity to develop other renewable energy sources such as solar, wind, biomass, etc. During a recent panel discussion titled “A New Decade: Investing in Clean Energy – Drivers and Barriers”, academics and experts deliberated the feasibility of Sri Lanka transitioning to generate 100% of their energy requirement via renewable energy sources and the challenges it is currently facing in the energy sector. The panel comprised of Commercial Bank of Ceylon CEO and MD S. Renganathan, Greenstat Hydrogen AS Chairman Sture H. Pedersen, SLSEA Director General Dr. Asanka S. Rodrigo, CEB Renewable Energy Development Deputy General Manager Eng. B.M.U.S. Banda, UoC senior professor in chemistry Prof. Nalin de Silva, and International Finance Corporation Principal Investment Officer Kamal Dorabawila. The discussion was hosted by the Norwegian Embassy in Sri Lanka together with the University of Jaffna and Western Norway University of Applied Sciences. Ensuring grid stability While the cost of electricity generation stands at about Rs. 20 per unit, the Ceylon Electricity Board (CEB) sells a unit at about Rs. 16 to the end customer. This indicates a big gap between the cost of generating energy and the selling price of energy. In order to bridge this gap, we need to invent resources to generate electricity at a cost that is lower than the selling price. CEB Renewable Energy Development Division Deputy General Manager Eng. B.M.U.S. Banda recalled that earlier, energy was purchased under a feeding tariff system where solar power was purchased at Rs. 22 per unit and power from mini hydro plants was purchased at Rs. 17 per unit. “We have stopped purchasing energy under the feeding tariff system and are now following a competitive bidding system which has proven to be successful. In the last tender, we got solar power at Rs. 12 per unit. In terms of solar energy, we are successful with the competitive bidding system. “In the wind energy sector, we noted two 10 MW tenders through which we got a unit at Rs. 12, confirming that we can buy energy at a lower cost of generation through competitive bidding.” According to Banda, the problem begins when more and more renewable energy supplies need to be added to the grid, which can then create an imbalance in the system. Solar-type renewable energies are constantly fluctuating and if more solar energy sources are added to the grid, it would compromise the stability of the grid. Sri Lanka plans to transition towards 100% renewable energy by 2050 by following a 20-year plan to achieve this status. “At present, Sri Lanka has about 900 MW of renewable energy in the grid, and by 2022, we are planning to develop the capacity share with 1,600 MW of hydropower, 1,450 MW of other renewable sources, and 2,720 MW in thermal. The energy share would then be 20% renewable, 22% hydropower, and 58% thermal,” Banda explained. A trying target In the renewable energy sector, the Government of Sri Lanka has planned several projects in order to achieve the 2050 target. With the ongoing projects, the CEB believes 365 MW will be added to the energy mix via wind and solar power generation by 2022, and the capacity will be improved with the addition of 600 MW generated from wind and solar by 2025. The government policy and the President’s manifesto clearly state that Sri Lanka should generate at least 70% of its energy capacity from renewable energy by 2030. Sri Lanka Sustainable Energy Authority (SLSEA) Director General Dr. Asanka S. Rodrigo stated: “The National Energy Policy (and Strategies of Sri Lanka) published in August 2019 indicates that Sri Lanka should move towards ensuring 50% of its energy is from zero-emission energy sources by 2050. There are a few projects under discussion to improve the capacity for renewable energy sources, but aspects such as the impact on the environment and transmission capacities need to be addressed before initiating the proposed projects.” The authority looks at several technologies at present with wind, solar, and biomass being the priority. For wind power generation, the authority is looking at developing inshore as well as offshore facilities. Moreover, it is also carrying out preliminary studies to consider wave energy and geothermal energy. With solar energy, the footprint is very high and most of the projects are lagging due to the delay in obtaining clearance for the selected land areas. University of Colombo (UoC) senior professor of chemistry Nalin de Silva, commenting on how investors should approach energy financing, stated: “Investing in energy needs to be approached from two aspects where technology needs to be imported and established, and investing in research that would lead to discoveries in the next two to three decades. “Unfortunately, investors are not keen on investing in energy research as the return on investment is not immediate.” Looking at energy research, Prof. De Silva shared that one can consider novel materials that could be beneficial in the future, apart from silicone semiconductors for solar cells, such as organic and hybrid materials. The next century will be the material century. Prof. De Silva also noted that Sri Lanka is blessed with nanomaterial, but unfortunately does not harness any of those materials. “We export ilmenite as it is, but if ilmenite is converted to titanium dioxide and purified nano titanium dioxide, our solar cell experts can use that to build solar cells rather than importing it from other countries. The value addition from ilmenite to titanium dioxide is tenfold.” Accommodating grid requirements We raised the question of what type of mobilisation of resources and technology would be needed to improve from the current 45% to 80% of renewable energy. Clean energy expert Dr. Vidhura Ralapanawe, sharing his observations, said: “The current plan will not accommodate such growth as the current 45% of renewable energy will reduce to 35% by 2030 and will reduce further to 30% by 2040. “While the world is increasing its renewable energy capacity in their energy mix, Sri Lanka seems to be reducing it. Sri Lanka has 32,000 solar rooftops totalling 250 MW of rooftop solar power, and the issue is not with the technology, but how we think about the grid.” He added that it was one thing to build a grid centred on fossil fuel and adding bits and pieces of renewable energy, and a completely different thing to visualise a grid which is centred on renewable energy. “To facilitate our current President’s vision, we should be able to convert a grid designed for fossil fuel to renewable energy. To get to the 80% renewable energy target, we would probably need about 13-15 GW of energy to be added to the grid in the next 10 years – that is about 1.2 GW per year. We will need about $ 10 million to mobilise. When it comes to coal power plants, every coal power plant that is added to the grid will reduce the capacity of renewable energy in the grid by 10% by 2030. Therefore, we need to rethink what we are doing and understand where the barriers are,” Dr. Ralapanawe concluded.