The objective of any long term energy plan MUST be to supply power to the citizens and industry at reasonable rates, and for export oriented industry at rates at least as competitive with other countries with which we compete for a market. Sri Lanka’s electricity prices are unconscionably high. It affects both export industry and the tourist industry where the use of electricity is so high that paying competitive salaries to attract good staff is compromised due to it.
Let us look at the recent issues to focus the mind!
1 Lakvijaya or Norochcholai (coalfired) is getting back to production after a two month suspension for repairs and upgrading to 600MW from 300MW. This is the 25th breakdown since the expensive second hand old technology plant was imposed on us by China, at loans taken with exorbitant interest rates. It would best to buy it from a Chinese Company!
2 The MOU for Sampur (coalfired) has just been signed with India, at a complete disadvantage to Sri Lanka for an eventual 1000MW plant, with the first phase expected to come on stream in 2018.
3 With expectation that these two plants will require 2.5M Tonnes of Coal per annum, the cabinet this week discussed the need to secure uninterrupted supplies. One suggestion was to buy shares in two or three coal mines! Australia, Indonesia and China were countries where there were companies where strategic stakes could be acquired, especially now when coal prices were at relative historic lows!!!!
4 The closure of Lakvijaya did not seriously impact power as the hydro reservoirs were full, saving the CEB about 50B, and with the increase in Electricity tariffs coming at the same time, both the lower consumption and sometimes 85% of renewable energy was the result with wind kicking in 5%. CEB was able to drawn down its liabilities substantially.
5 The latest twist in the tail see link attached showing a conspiracy to purchase the equivalent of 450MW of power from small hydro projects is yet another scandal in the making where the consumer instead of being sold even cheaper power, will be taken for a ride. http://www.thesundayleader.lk/2013/10/20/sinister-deal-uncovered/
6 Please remember that the few windmills, (30 or so) can when there is wind produce 6% of the national requirement, and there are NO incentives to guarantee purchasing from them. It is an area that can reduce the cost of electricity generation substantially!
Given the above issues we must determine what are in the best interests of the Country. There will shortly be huge excess capacity of private sector thermal power plants, once the PPP agreements (private power purchase) expire. They are high cost due to the thermal power, but in future in a fracking world, oil prices are likely to drop substantially and can be bought for noting.
One must also estimate that in 25 years 50% of the motor vehicles will be hybrid, resulting in a huge decline in the need for fuel to power vehicles. Sri Lanka must also have a policy to attract such vehicles with duty concessions.
It must also be remembered that coal power stations are hugely polluting even if latest techniques are used, and can do irreparable damage to the environment. We have enough examples of such from overseas, and going into the Sampur project is an unmitigated disaster, as a renewable power source producing more than this could have been started with a lower investment, but with more spread out plants, with Wind and Solar being the remaining sources, as for all intents and purposes Hydro is maxed out, save for a few Mini and micro hydros.
All new building including homes should obtain energy certification, and so more energy saving, and renewable energy building systems can and should be encouraged with tax breaks. It is simple to send excess energy supplied back to the grid for payment, and that should be encouraged. It will be surprising how fast the energy usage from the grid will fall.
There is NO question that with an intelligent system of tax breaks and subsidies we in Sri Lanka can bring down the real cost of energy to consumers to 50% of the current rate, without incurring a subsidy from the state. The reason it has not is that the people who are currently running this sector put themselves first, without making the choices for the nation’s interest. There is too much money involved in swaying opinions of managers and politicians, who have right throughout made the worst decisions for the public.
Fortunately time has shown that there are more efficient Solar and Wind energy sources, and with a country and sea blessed with both we have an added advantage in being able to use the latest technology to our benefit. A sensible energy policy on terms outlines above, if started now can WITHOUT Sampur give us both the ability to reduce the cost of electricity, and produce 50% more of our current power within 5 years, with NO net cost to the Treasury. An integral part of this is the guarantee to householders that the National Grid will purchase all excess power from home solar or wind systems at the same rate.