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Sri Lanka can export renewable energy: Lakmal Fernando

09 Jan 2022

  • A clear roadmap needed for 70% renewable energy target
  • Urgent need for reforms to power sector, particularly CEB
  • Local industry can meet 70% target
  • FDIs only for energy export
By Asiri Fernando Sri Lanka is blessed with a large renewable energy potential, with nearly 200 Giga Watts (GWs) of generation potential available to be harvested and exported to an increasingly power hungry South Asian subcontinent, industry practitioners say. However, Sri Lankans continue to find themselves plagued with power failures, announced outages, and an annual practice of seeking to purchase fossil fuel-fired emergency power at a higher cost. This, while the island struggles to manage its shrinking forex reserves. Several power outages in the last few years and in the last few months hit vital export industries at a time when the country is desperate for export earnings.  While the stated national policy of reaching 70% of the national electricity demand by 2030 by using renewable power sources is commendable, the local green energy industry has highlighted the need for power sector reforms, more transparency, accountability, and professionalism to reach the anticipated goals. In an interview with The Sunday Morning, Solar Industries Association General Secretary Lakmal Fernando discussed Sri Lanka’s renewable energy potential, industry outlook, and the challenges they face in developing the renewable energy sector. Following are excerpts from the interview: Sri Lanka has enacted a national policy of reaching a 70% renewable energy target by 2030. What is the industry perspective on this policy decision? Originally the plan was for 80%, it has been scaled down to 70%. Having a 70% target is better than having no target. Now, the country is aligning to deliver the 70% target by 2030. Sri Lanka has said it to the world and we have committed to it. This energy target of 70% is only for electricity, if we look at the entire energy landscape of the country, this can be two- or threefold higher. Right now, our electricity demand is about 16,000 GW hours and it will double by 2030. Sri Lanka plans to generate around 21,000 GW hours, primarily through solar and wind power, with a small percentage coming from other renewable sources. The 2030 target of 70% is achievable, but will be an uphill task. The policy is right. However, we have a situation where the country is dependent on a single buyer (utility supplier – Ceylon Electricity Corporation) situation. The buyer will have to fall in line with the national policy, keeping aside their incapability or incapacity to do their job. The single monopoly utility provider Ceylon Electricity Board (CEB) will have to devise mechanisms to effectively absorb the renewable energy to the national grid. If you look at the contribution made by solar energy to the grid, it is little over 500 Mega Watts (MWs). As of 31 December 2021, we have 416 MWs of rooftop solar and 96 MWs of ground-based solar generation. We want to grow this 500 MWs by tenfold over the next nine years. Has the renewable energy potential of Sri Lanka been mapped? If so, how much generation capacity does Sri Lanka have? According to a study by the Sustainable Energy Authority, Sri Lanka has an onshore and offshore wind power potential of 102 GW, with 106 GW potential of solar power. To reach the renewable energy target we will need only tap around 10 GW of solar and wind potential. Is the local renewable energy industry ready to support the growth needed to reach the set targets? We have 320 companies of solar rooftop energy in this country. We have the capability. We are currently working with the Public Utilities Commission (PUCSL) and the Sustainable Energy Authority (SEA) to train technicians for solar projects and thereby we plan to upskill the required work force needed by the country. Where we are lagging is when receiving support from the utility provider (CEB). What are the policy and administrative hurdles the rooftop solar industry is facing today? Currently we have around 500 MWs of supply and we are looking at taking this to a minimum of two to three GWs. For us to do this, we need to have an approximate compound annual growth of 20%. Starting at around 80 MWs per year. When we give an application to CEB or Lanka Electricity Company (LECO), at the moment there is a moving timeline for them to green light absorbing energy. When an application is filed, there is no certainty that you will get approval within a fixed time period. They give approval when they feel like giving it.  We have been trying to streamline this process with the aid of the SEA. We are trying to introduce an online application procedure. Such a procedure will ensure all concerned parties know when an application was filed, where the anticipated project is to be located and all the details needed. We are also working to get a mandated period to process the application, so that there will be no delays. Such delays cause projects to move slowly and sometimes the delays even affect completed projects from being connected to the grid. I think the current way of doing it is inefficient. With the 70% target, we (solar industry) need a clear roadmap to understand when projects are available, who will be in charge, and what the rollout timeframe is. Consistency is also needed; for example, when Indian Prime Minister Modi states that the Government wants 300 MWs of power generation for a state, people listen and work towards it and they deliver; that way you reach at least 200 MWs by the anticipated time. But in Sri Lanka, when the President says 80% renewable energy, the utility provider within months of the statement issues generation plans for 50%. This is ridiculous.  In terms of managing the drive towards the renewable energy target, Sri Lanka has the Ministry of Power, a State Ministry for Renewable Energy, the CEB, and the SEA. Are the role and task of these organisations clearly defined for the purpose? The SEA has been the regulator. It has not been executing its powers for some time. However, I feel it is now moving forward in a good direction. I personally think that having two ministries to deal with power with a cabinet minister for power and a state minister for renewable energy is a good move. Given the 70% target, I feel that the renewable energy portfolio should also be a Cabinet portfolio, because then matters will be addressed faster than they are at present. How much investment needs to be brought in for renewable energy and what do you think needs to be done to build investor confidence? What is needed is 10 GWs of electricity. We have enough investors in Sri Lanka who can provide the 10 GWs. What we need is proper legislation. We have raised this matter with the regulator. The recent expression of interest called by the SEA for projects of 50 Mw and above saw a big response. There is 60 GWs worth of interest in terms of applications; mind you, some are applications for the same location or project. But this is an indication of the level of interest. Do you think power sector reforms are necessary? If so, to what extent? We know some reforms are being discussed. However, I feel that we need to go beyond what’s being discussed. Each person must be held accountable for his or her work. Now there is no accountability. Look at what happens with the power outages. There is no accountability. We see some junior people reassigned to a different place. I think that a few people are not allowing the majority at the CEB to do their job. The CEB officials should be made individually responsible to their sector – be it transmission, generation, or any other sector. Look at the impact the power outages are causing. Some of the key export industries are worried and some have already left Sri Lanka for more conducive investment destinations. A six-hour power cut causes the Sri Lankan economy to lose around Rs. 2 billion. The CEB is the biggest Government business. It must be run as a business. The CEB should not be run as a charity. It is very important to run it professionally. As an example, look at the National Health Service (NHS) in the United Kingdom; it is managed by professional management. Doctors should not run the NHS. Same with the CEB. Also, the hierarchy and how promotions are given at CEB needs to change, I think. When you join as an engineer, you already know where you can end up before retirement. This must be changed; promotions need to be based on performance and skill. The utility provider needs to be more transparent, accountable, professional, and run as a business. Today, you can’t go to any CEB office and ask ‘why this was done?’ They won’t tell you. There is no oversight or accountability. No one knows what happens. Also, remember, this is the biggest loss-making State entity in the country. Reforms are urgently needed and are long overdue. Is the current power transmission grid adequate to support the new supply by renewable sources and to meet the demands of the future? The national grid is weak. It cannot absorb this much power. We have to develop the grid. If we are to reach the new target set by the Government, grid improvements are a must. There is enough funding available with concessionary terms for developing countries like Sri Lanka to modernise her power grid. Some funding comes as grants. We need visionary leadership to manage such modernisation efforts. Given the volume of foreign currency needed to import coal and fuel to run thermal power plants, how beneficial is it to expand solar power in Sri Lanka? The current installed solar capacity brings around Rs. 22 billion in savings to the country each year. We need to understand that importing fossil fuels means losing dollars to overseas suppliers. But when you invest dollars or rupees into solar or renewable energy projects by local businesses, it is an investment, the profits don’t go overseas. We save foreign exchange and employ local staff, upskill them, and improve their livelihoods.  It has been reported that the Government is planning to offer Indian and Japanese conglomerates 500 MW worth of wind and solar projects. How does your industry view this move? As an association we are against it, because energy for domestic consumption should be from domestic investors. This money should stay in our country, not leave as someone else's profits. This type of project for the sake of investments should not be encouraged. It is not an investment when a foreign entity comes in and invests to sell to the local users, those profits leave the country. It's somewhat like buying coal, diesel, and LNG, with a placard that reads ‘green energy’. We should be trying to save our dollars from not going out. We feel that this 10 GW of renewable energy should be met by local investors. We have those who are capable of making the investments for the 10 GW projects. Renewable energy projects, when you take the investment, 10% is labour and 90% is for imported goods. We have local companies that can take up this challenge. We can do 10 GWs easily. What do you think about the future potential of the local renewable energy industry? There is great potential in Sri Lanka. We (Sri Lanka) have 210 GWs of renewable energy potential. We can export energy to South Asia.  As an example, Singapore is now buying 2 GWs of power from the Northern Territory of Australia, it travels 3,700 km through a powerline. We have 210 GWs of potential, by 2030 we need 10 GWs of that, maybe some more in the future. So, there is nearly 200 GWs of energy waiting to be harvested that can be exported, bringing in much-needed revenue to the country. We are only 50 miles apart from the Indian subcontinent. South Asia is growing, it’s power hungry. Just look at the energy needs of Bangladesh. Sri Lanka should be looking at power as our next major export. And we don’t have to pay a rupee for sunlight and wind. Where foreign investment can come in is to export the energy, for energy export, transmission infrastructure. Like the BOI concept, to export energy they can set up a company, invest, pay the Government royalties and taxes, and export energy.

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