Rooftop solar sector demands substantial tariff hike

26 August 2022 07:23 am - 13 - {{hitsCtrl.values.hits}}

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From left: Solar Industries Association (SIA) Secretary Lakmal Fernando, President Kushan Jayasuriya, Vice President Parakrama Jayasinghe and SIA Ex-Co member Prabath Wickremasinghe
Pic by Pradeep Pathirana

Demands tariff hike in line with recent increase in input costs
Says few investments into rooftop solar industry have come to a standstill with steep depreciation of the rupee
Points out that due to the commercially nonviable tariff regime, new investors have either canceled or delayed rooftop solar projects
Proposes govt. to introduce preferential interest rates for rooftop solar projects

By Nishel Fernando
Sri Lanka’s Solar Industries Association (SIA) yesterday urged the government to immediately grant a substantial hike in feed-in tariffs (FIT) for rooftop solar producers in line with the recent increase in input costs in order to revitalise rooftop solar production and to ensure the country’s energy security without burdening electricity consumers further by increasing electricity tariffs.

New investments into rooftop solar industry have come to a standstill with steep depreciation of the rupee, abnormally high interest rates, rising inflation and the Ceylon Electricity Board’s (CEB) failure to settle payments to rooftop solar producers. Despite the significant surge in input costs, the CEB maintains feed in tariffs granted to rooftop solar producers at Rs.22 per unit, which was last updated in 2016.

Due to the commercially nonviable feed-in tariff regime, investors have either canceled or delayed most of the upcoming rooftop solar projects. Banks are also refusing to finance rooftop solar projects due to this unfeasible feed-in tariff regime and CEB’s failure to settle payments owed to solar producers.

“Hence, we are urging the government to grant a financially-conducive feed-In tariff rate, which would attract new investment, allowing the rooftop solar sector to increase its conurbation to the national grid,” SIA Secretary Lakmal Fernando told reporters in Colombo yesterday.

The Ministry of Power and Energy has appointed a special committee for the rooftop solar industry to update the existing feed-in tariff rate granted to the producers. Though, the committee was scheduled to announce the new FIT rate this Tuesday, it was delayed by another week. According to SIA, 90 percent of solar system setting up costs is linked to imports. When the last feed in tariff revision was granted in 2016, the rupee/dollar exchange rate was around Rs.140 compared to the present Rs.360.

Moreover, Fernando noted that investors are forced to buy US dollars at grey market rates of around Rs.420 due to the shortage of forex in the banking sector.

Further, CEB has failed to settle Rs.28 billion worth payments to the country’s renewable energy producers. As a solution to this, SIA proposed the government to introduce a new facility termed ‘net billing’. Under this facility, the CEB would be able to offset retail electricity purchases of solar power producers automatically in the monthly electricity bill.

The proposed facility is expected to benefit particularly the household rooftop solar producers.
In addition, SIA also proposed the government to introduce preferential interest rates for rooftop solar projects. With the benchmark Treasury bond rates hovering around 27 percent, SIA President Kushan Jayasuriya pointed out that similar returns must be assured for rooftop solar investors in order to undertake such projects.

SIA warned that the CEB would be compelled to import more petrol and diesel for power generation with the failure of Unit one of the Norochcholai coal power station, ultimately resulting in another steep increase in electricity tariffs, unless the government comes up with a plan to rapidly absorb the excess energy produced in the renewable energy sector.

Fernando pointed out that rooftop solar is the most feasible method of adding renewable power to the national grid in the short-term, with the lowest cost and within the fastest deployable time range (1 day-4 months).

In addition, SIA believes that the country could add 1GW of solar rooftops per year for the next three years, which could save foreign exchange worth over US$ 3 billion over the same period.

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Comments - 13

Eng. M A P Hemachandra Friday, 26 August 2022 06:53 AM

When you calulate accrding to present interest rate it is not ecconomical to install Solar powe. It is more eccinomical to invest that amount in FD ( lowest rate at present is 14%). For a 3.5KW solar system you have to invest Rs.1.5 Mn. Interest generate fro that is in exxcess of paying monthly bill. In this case who will invest fo Solar? If the Govt. arrange subsidise rate for import of equipmentrequired this will not happen. If you increase the tarriff by another 100% you are not ecconomical by installing solar. CEB mst cut off their HIGHER expendure on generaing electriciy and cost of sola installation to encourage peple who are willing to install Home Solar systems.

No way price hike for them Friday, 26 August 2022 10:34 AM

These supplier is unreliable. In western country the tariff given to rooftop solar is much less than for other provider, because roof top solar causes either too much or too little and required re-building even high voltage lines. Unlike hydro or coal, when there is shade production goes does suddenly, when there is lot of sun they put out more electricity causing reliable source like generator to have to change output. The suppliers like these were already profitable enough. Any extra to roof top solar will only mean greater burden to the general public.

sam Friday, 26 August 2022 11:41 AM

Roof top solar in every house, business and industry is the only solution for a poor country like ours. Govt must extend a helping hand through banks for people to obtain solar power.

Only provide for new large projects not waste on these Friday, 26 August 2022 01:38 PM

All around Europe, and even Japan nuclear energy is what's looked at positively now. All these years of being fearful of it are gone, as the wealthy countries are also having energy issues. If our meagre CEB income is wasted on existing roof top solar business, it will be without funds for genuinely large reliable projects. Solar in Western country is only reliable if having big battery included, as then combined installation can provide for day and night. Roof top solar by is itself considered to destabilise in developed nations, and tariffs to existing installation are absolutely minimal, and new ones are blocked. This roof top solar is like Palm oil cultivation in previous coconut estates. Seems good in early days on paper, but bring disaster.

Do not settle payments to these suppliers Friday, 26 August 2022 01:41 PM

Good to see CEB is not settling payments. These fellows can't provide reliably. Oh it's raining, cannot do, oh it's dark, can't provide for evening needs and other rubbish. Unless they can provide 24 hours reliable power, these fair weather suppliers deserve only what they get and nothing more.

Ram Friday, 26 August 2022 02:08 PM

Our building has got fixed 11 solar system for 5500 kwh monthly harvesting. Still we are receiving electricity bill for 0 usage and no details of consumed units exported units etc. And we wereally not paid even a single cent. Many complains to cab officials and to DO of CEB no reply. How can the public to expect to install Solar system on a huge investment.

Rohana Friday, 26 August 2022 02:10 PM

Why so many negative comments about solar panels? It is about household getting more per extra unit they generate. It is only a fair ask since CEB have doubled the electricity tariff.

Keith owen Friday, 26 August 2022 02:31 PM

"In addition, SIA believes that the country could add 1GW of solar rooftops per year for the next three years, which could save foreign exchange worth over US$ 3 billion over the same period." Adding 1GW of solar would cost about 1 billion Dollars, so 3 billion Dollars over 3 years, I don't know the SIA have come to the conclusion that it would save $3 billion. The Gov is struggling to find money to import food and other essentials at the moment so solar equipment won't be high on their list of priorities, but SL has the potential to produce a decent amount of solar power if a longer term plan is drawn up.

Sokrates Friday, 26 August 2022 02:40 PM

The fairest and most honest way would be for the electricity if the meter to run forward when power is drawn from the grid and run backward when power is fed into the grid. Either the consumer then has to pay at the end of the month or the CEB has to pay the consumer at the same rate.

Solar salesman/talkers money grab Friday, 26 August 2022 02:50 PM

@Ram Seems like you're talking nonsense to say you don't consume from the grid. Yo never use electricity after dark, or before sunrise? Also what about when it's raining for days, you don't use electricity at all. Even if you claim you don't use lights and go to bed as soon as it's dark, how about your fridge. You have it turned off for times when solar panel not effective. Unless you have a petrol or other fuel generator our claims seems nonsense, and more solar sales talk. You can't do without the other generators in the country who are more reliable than you. You solar salesmen want to make other generator go broke for your insane appetite for easy money during these hard time.

No need for these imports Friday, 26 August 2022 02:54 PM

Solar businessman want to import to install more. If Air Con units are no use, then these roof top solar is completely unnecessary to import. Adani is creating a 300MW or larger solar system. That one has backup and reliability and units charged to CEB depending on time of day, so CEB buying kilowatt as suits general public needs. These roof top solar types want to waste the dollars we have instead of using for essential food stuffs. When the country is again afford all imports, then you can talk about your ineffective roof top solar system imports, and sell to the elderly and naive.

Parakrama Jayasinghe Friday, 26 August 2022 05:38 PM

Unfortunately there are several negative comments by people who have not bothered to understand the current realities. The most important being that the initial capital investment which is unfortunately is Forex mainly is a one time investment and the benefits are ongoing for a minimum of 20 years at no further out flow of FOREX. Consider the alternatives it replaces either coal or oil both of which consumes FOREX continually for ever at ever increasing spat’s in $s and Rupees. There are many other benefits of generating electricity using the valuable resource given to us by nature free of charge. Also what ever tariff is paid goes to the consumers and not to the contractors. When CEB bumps up the Consumer tariff to cover the excessive cost of generation it is passed on to the consumers both by the electricity bill and indirectly by the Treasury covering the enormous losses incurred by the CEB

IMF watching payments to suppliers Saturday, 27 August 2022 07:59 AM

IMF will delay funds if tariff hike is given to these business people, and we then all suffer. Already the IMF ask about electricity tariff increases to consumers, and if the price paid to any supplier in increased, IMF will want even higher prices to consumers. Rooftop solar if does new or not does not matter. We can continue with how things are without having even greater problems for the general public by giving more money away suppliers.

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Rooftop solar sector demands substantial tariff hike

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