Damitha Kumarasinghe Pic by Nisal Baduge
By Chandeepa Wettasinghe
The government appears to be taking a big gamble in order to avoid a power crisis in 2018 by placing its trust in Standardized Power Purchases (SPPs) from future private sector power plants, many of which the 2016 Budget had already proposed to cancel.
The Public Utilities Commission of Sri Lanka (PUCSL) yesterday told a media briefing the Ceylon Electricity Board’s (CEB) 2015-2034 Least Cost Long-Term Generation Expansion Plan (LCLTGEP) was approved after almost a year and the power plants listed in the 2017-2014 LCLTGEP will start construction immediately to address the crisis.
“Around 1,275MW in additional capacity will come online in the next four years. These plants include two thermal power plants with a 170MW capacity in the South, 105MW gas turbines, a 300MW gas power plant and 700MW of renewable energy plants, including three hydro projects,” PUCSL Director General Damitha Kumarasinghe said.
The CEB-owned three hydro projects will add just 170MW to the grid and Kumarasinghe said the remainder will be filled
by SPPs.The average energy cost—without taking into consideration maintenance, distribution costs, etc.—for the CEB hydro is zero, while for renewable SPPs it is Rs.22.24 per unit, Rs.31.03 per unit for all thermal power excluding coal, and Rs.5.80 per unit for coal, according to the PUCSL projections for the next six months.
When Mirror Business inquired whether the SPPs for the remaining 530MW have already been negotiated or if more investors are needed to fill the gap, Kumarasinghe said the power sector regulator is unaware of it.
“We don’t know that. You will have to ask about that from the Sustainable Energy Authority,”
When Sustainable Energy Authority Chairman J.D.K. Wickramaratne was contacted, he said he was not completely sure of the details of the latest LCLTGEP.
“I’m not completely sure, but I think the PUCSL takes into consideration the SPPs that have been processed. There are some SPPs that are yet to be processed as well. Off hand, I can’t recall the exact numbers,” he said.
However, Wickramaratne said that the 2016 Budget proposal to cancel all awarded SPPs that have not been utilized will come into effect by the end of this year.
“When we told the companies that their SPPs are cancelled, they accused us of stealing from them to use the agreements for our benefits. We don’t want to do that. We want to help improve the country’s power sector. So we said we would extend the deadline by a year,” he said.
Wickramaratne noted that if the SPPs are cancelled, it would further delay the construction of the power plants.
The cancellation policy appears to be part of Prime Minister Ranil Wickremesinghe’s aim to bring Swiss Challenge procedures for unsolicited projects that were approved during the past regime, since Wickramaratne said that mini-hydro plants had been approved in the past based on unsolicited proposals.
Kumarasinghe said that the current installed capacity of 3,900MW is expected to increase to 4,955MW by 2020, since the net capacity increase is 1055MW due to the retirement of old gas, diesel and oil power plants.
However, he noted that if the 2017-2034 LCLTGEP will not address the 2018 shortage, the retirements will be postponed and power purchase from the Embilipitiya Thermal Power Plant—which was brought out of retirement after the blackout earlier this year—will continue. Further, Kumarasinghe and other PUCSL officials said the forecasts have not been made about the changes to the power costs under the new plan.
Power sector expert Dr. Tilak Siyambalapitiya this week pointed out that the average energy cost alone could increase to Rs.10.98 per unit under the new plan, compared to Rs.7.68 per unit generated so far this year.
He noted that this is due to the energy mix shift, as hydro’s share will decrease to 27.9 percent by 2020 from 34 percent in 2016, while renewable SPPs will increase to 19.5 percent from 14 percent, coal will decrease to 27.7 percent from 40 percent and oil will increase to 24.9 percent from 12 percent.
The 2018 power shortage is created due to the postponement of the now cancelled Sampur Coal Power Plant, which was listed in the 2013 LCLTGEP, being delayed from 2018 to 2021.
The original 2015-2034 LCLTGEP had not addressed this mismatch and the PUCSL had rejected the plan. A revised plan was also turned down earlier this year due to technical shortcomings in it, including in the demand projection methodology, which had not taken into consideration the factors such as the industrialization planned by the government, as well as insufficient alternative power generation options.
“The CEB told us that some of these things can’t be corrected in such a short time, so they said they will include it in the 2018-2034 plan. We have also asked them to submit and gain approval for long-term plans a year in advance,” Kumarasinghe said.