Lack of cohesive policies stifle renewable energy potential

Mini hydro developer and operator Resus Energy PLC said that the non-conventional renewable energy (NCRE) sector could have accelerated to greater heights, had the policymaking bodies and implementation agencies worked together.

“We firmly believe that if not for the obstacles the developers are faced with, largely due to the lack of congruence between policy setting and implementation agencies, the NCRE sector could have grown into much greater heights,” 

Resus Energy Managing Director Kishan Nanayakkara said.
He said that it had been disappointing to see the various pro-renewable energy policies, which were being published never being implemented.
Nanayakkara welcomed the cost-based and technology-specific tariff, which were introduced in the recent past.

Resus Energy Chairman Suren Madanayake noted that just a 3 percent increase in the avoided cost tariff in 2015 compared to a 28 percent increase in 2014, which indicates the pressures to decrease the avoided cost tariff in the coming years. This is possibly due to the lower prices of oil.   Avoided cost refers to the tariff paid by the Ceylon Electricity Board (CEB) to private energy companies to purchase a unit at a price equal to the most expensive power generation method of the CEB—which is thermal power.

“Therefore, the development of new projects under the cost-based-tariff system is imperative to nullify the potential negative impact that could arise from the plants operating on avoided-cost-tariff,” he said. 

Power purchase agreements for older power plants have an avoided cost tariff, which have provided mini hydro companies with massive profits, due to the negligible power generation cost of hydropower.
Nanayakkara said that a possible acceleration of economic growth would increase electricity consumption, which will require more investments into power plants, which in turn have been discouraged with increased taxes and the worry of imposing a capital gains tax.  

“This could contribute to consumption-led growth and an increase in the levels of electricity consumption, giving the industry the impetus to further grow and expand. The government’s target to become a nation self-sufficient in energy by 2030 shall open up more opportunities for private developers in the NCRE segment,” Madanayake said.

Experts have however pointed out that the abnormality of the Sri Lankan economy—of having a service-based economy at this point of development—has decoupled economic growth and electricity demand, as many services do not require the levels of electricity that industries require.
It has also been pointed out that no major power projects are in the pipeline between now and 2023, which could lead to a power crisis. 

The CEB is therefore focused on improving the management of demand.