Hydrocarbons are a relatively recent addition to Sri Lanka’s energy mix, which has long relied on hydroelectricity for much of its power generation needs. While coal and fuel oil have taken on an increasingly larger role in recent times, the government has also announced several ambitious goals in the field of renewable energy (RE). Mini-hydro, solar, biomass and wind are set to become among the main pillars of the country’s generating capacity by 2030. Achieving its goal presents the country with a number of challenges. However, national targets are also expected to pave the way for a rush of new investment in green technologies.
Facts & Figures
According to a May 2016 report from the Ceylon Electricity Board (CEB), the state-owned company that dominates the generation, transmission and distribution markets, RE’s share in the total generating capacity stood at 47% in 2015. The CEB’s hydro projects, many of which are large dams, accounted for around 36% of the total.
Non-conventional RE (NCRE), including solar, wind, mini-hydro, biomass, municipal solid waste and waste heat, made up an additional 11%. The CEB’s thermal coal plants accounted for 23%, with the remainder shared between thermal oil plants (14%) and independent power producer (IPP) thermal plants (16%), all of which are fuel-oil powered. The CEB expects to see a 5% annual growth rate in electricity demand over the coming years, heightening the need for a major expansion of power generation.
RE currently provides some of the cheapest power in the country. The major hydro projects, many of which were completed some time ago, operate at a unit cost of $0.0103 per KWh, against an average rate of around $0.1173 per KWh for energy provided by NCRE generators. Thermal-fired IPPs are more expensive still with a unit cost of around $0.2205 per KWh, though the CEB’s coal-fired plants come in at $0.0409, second to hydro.
Future Mix
RE is thus seen as an attractively priced means of boosting generation capacity to meet future demand, while also offering environmental advantages. When planning ahead to 2035, the CEB’s Base Case Plan for 2017-35 expects NCRE’s share in the energy mix to reach 22% by 2025, or around twice its current level. Major hydro projects will account for 22%, while oil will be phased out entirely and coal will comprise 45%. The remaining slice will be taken by a new, liquefied natural gas (LNG) segment. LNG’s share is forecast to reach 21% by 2035, while that of major hydro retreats to 13% and NCRE and coal remain largely stable.
Recent events may see some of these predictions revised, however. The decision in late 2016 to abandon plans for the Sampur coal-fired plant on environmental grounds has cast considerable doubt over the future of coal, with LNG looking likely to be handed an even bigger part of the country’s future energy mix, along with NCRE (see overview). Against this backdrop, Sri Lanka’s wind, solar, biomass, natural thermal and mini-hydro sectors have begun gearing up for what could prove to be a great leap forward.
Recognising The Resource
The importance that Sri Lanka is now attaching to RE has been recognised in the decision to rename the government’s top energy sector agency the Ministry of Power and Renewable Energy. The Sri Lanka Sustainable Energy Authority (SLSEA), set up back in 2007 to help the RE sector gain an ever larger market share, falls under the ministry. The SLSEA awards permits for RE projects, while the Power and Utilities Commission of Sri Lanka (PUCSL), the electricity sector regulator, issues generating licences.
The introduction of a standardised power purchase agreement, which sets various rates for each type of NCRE, has also played a part in the development of RE. Under the agreement, firms entering the sector can do so without having to negotiate a new agreement each time. The initiative is playing an important role in helping to encourage investment in the industry.
CEB figures from the start of 2015 show that from the 442 MW generated by the NCRE segment, some 293 MW came from mini-hydro, with 124 MW from wind and the remainder from other sources. Under the Generation Expansion Plan (GEP) for 2015-34, wind is expected to overtake mini-hydro by 2023 to eventually become the second-largest source of RE. By the end of the GEP’s timeframe RE is targeted to contribute some 1897 MW of installed capacity, made up of wind on 673 MW, biomass (719 MW) and solar (279 MW).
Harnessing The Wind
Reaching these targets will necessitate increasing wind power three-fold over a 20-year period. Sri Lanka’s first wind farm, a 3-MW project in Hambantota, was set up in 1999 and is still in operation today. The island is swept by two monsoons annually: the south-west monsoon, which lasts from May until early October, and another in the northeast, which starts in December and ends in February. The first of these is stronger, affecting the west coast and interior, mountainous regions. However, it is the south-eastern and north-western coastal areas, which are largely flat, that get the most effective and consistent wind. Therefore, wind-power developments have to date been concentrated in these areas of the island.
Puttalam, in the north-west, is the site for the Seguwantivu and Vidatamunai plants, of 9.6-MW and 10.4-MW installed capacity, respectively. Due to a government limit at the time of 10 MW on the size of individual ventures, two companies were set up in 2010 to run the plants. Both are owned and operated by Sri Lanka’s largest private wind outfit, Windforce.
A consortium, Windforce also owns the 10-MW Nirmalapura wind farm and the 10-MW wind facility at Uppudawula, in Kalpitya, which is operated by PowerGen and Orient Green Power. Aside from its other ventures, the consortium also has interests in the Northern Province, with new plants at Pollupalai and Vallimunai in Jaffna, operated by Joule Power and Beta Power, respectively.
Elsewhere in Kalpitya, three 10-MW wind farms have been rolled out in Mampuri. Developed by Senok, the first project was commissioned in 2010, with the other two following two years later.
Dwarfing all these farms is the CEB’s planned, 100-MW Mannar Island project. The farm aims to eventually capture some 375 MW of wind potential on this north-western island. However, environmental concerns had caused delays to its roll-out in late 2016.
Heating Up
Meanwhile, solar power is also expanding its market share. The segment is benefitting from the introduction of net metering, which has made rooftop installations economically viable for firms keen to offset power costs. Companies operating in the segment include Genso Solar, Lanka Solar Power and JL anka Technologies. As the cost of solar panels and other technologies has fallen, take-up has increased, with the tariff rates set by the PUCSL looking increasingly attractive. In late 2016 discussions were taking place among sector regulators on whether the tariff should be changed again to further encourage development.
The government has also launched a campaign, known as the “Battle for Solar Energy”, to promote home and business installation of solar panels, offering low-interest bank loans to cover the start-up costs, a significant barrier to market entry for many. In July 2016 the SLSEA announced that some 120,000 houses were using solar power from rooftop installations, with the authority hoping to see this number rise to 1m by 2020. These moves have also spurred the establishment of some larger-scale solar projects. The 1.2-MW Hambantota Solar Plant, a photovoltaic (PV) facility run by the SLSEA, was the first to be launched in the country, while Hambantota is also now the location for Sri Lanka’s largest solar plant, a 20-MW facility being developed by LAUGFS Gas, currently under construction. Saga Solar, meanwhile, runs a 10-MW plant – also in Hambantota – commissioned in October 2016.
Other planned plants include a $14.5m, 10-MW solar PV project to be built in the northern Vavuniya district by Vydexa Power Corporation, and a new facility supported by the Indian government in Trincomalee. The SLSEA has also put forward a plan to issue mini-solar power licences for plants under 5 MW in size.
Biomass Boost
Biomass, the third main NCRE source under development already has a footprint in the country. Tokyo Power runs two biomass plants in Sri Lanka, a 10-MW project in Trincomalee and a 5-MW facility in Mahiyanganiya. The 5-MW plant uses Gliricidia as its feedstock, a fast-growing tree highly prevalent in Sri Lanka’s dry zone, which is mainly sourced from plantations. This variety of biomass, grown on land not cultivated for food, is seen as offering great potential, although its development presents challenges. Labour shortages in many rural areas, where harvesting takes place, is one. A lack of local plants for burning the biomass, which dissuades farmers from planting crops suitable for biomass use, represents a second hurdle.
The introduction of incentives is likely to support the RE segment’s development going forward. In the meantime, solar and wind look likely to be the main players, as Sri Lanka moves towards a future built on an energy mix with a greater emphasis on sustainability.
