Power struggles

Last week the Sri Lanka Environmental Authority in collaboration with the Department of Economics at Colombo University held a panel discussion on some of the emerging challenges facing the Sri Lankan power sector. The conclusion at the end of the two-hour session was more or less open-ended, with those in attendance coming away with more questions than answers.

What was made abundantly clear is that resolving Sri Lanka’s looming power crisis is an extremely nuanced affair, with some questionable Government decisions thrown into the mix. Last October the Sampur Coal Power Plant project was terminated 10 years after it was first announced, a decision which came as relief to all those who had opposed it over environmental concerns. That joy was short-lived however as the Government shortly thereafter began calling for tenders for a diesel power plant, calling it instead a liquid natural gas (LNG) plant so as to appease environmentalists.

At the discussion last week, this point was discussed in detail highlighting the fact that diesel power generation is even more detrimental to the environment than coal, not to mention more expensive. The reasons behind such decision-making on the part of the Government are only known to them, but speculation has been rife. 

All this contrasts sharply with the Government’s stated sustainability goals. The latest set of National Energy Policy and Strategy goals is expected to call for improved energy efficiency, care for the environment, an increased share of renewable energy and the securing of future energy infrastructure among other things.

This is where long-term policy planning is paramount. Even with plans focusing on renewable energy laid down, many energy stakeholders insist Sri Lanka has to revert to regressive polices on the basis that coal would be cheaper in the short term. While they are right in this, energy investment is done based on long-term trends and returns. The world is moving towards renewable energy. It must also be pointed out that the CEB’s own archaic and bureaucratic systems have hindered the significant rolling out of renewable projects earlier compounding operational losses by the State institution.   

The world is spending heavily on renewable energy and finding its higher returns are reshaping the direction of the energy industry for decades to come. Renewables provided more bang for the buck last year because the cost of installations and financing declined, says the latest report released by the International Energy Agency.

A Bloomberg analysis on the report found the capacity of new renewable energy installations coming online surged 40% in five years even though investment in those technologies slid 2% to $ 288 billion.

The findings indicate the world is shifting slowly toward less polluting forms of energy, helping policymakers develop in the poorest areas while limiting greenhouse gas emissions blamed for global warming. Finance is driving the shift with more diverse sources of funding. Project finance loans surpassed company balance sheets as the biggest source of capital for renewables last year, the IEA data shows.  

Energy should be a platform for sustainable growth and not limited to just narrow decisions based on short-term costs. The time has now come for action.