Power policy

Thursday, 29 June 2017 00:00 -     - {{hitsCtrl.values.hits}}

The Government has taken a landmark step to convert the proposed Sampur power plant into a solar venture, in keeping with a strong push for renewable energy seen around the world. 

Earlier this year, the Public Utilities Commission of Sri Lanka (PUCSL) instructed the Ceylon Electricity Board (CEB) and its subsidiaries to absorb domestic solar producers into the national grid within two weeks of their application. This, together with the decision to convert Sampur into solar, appears to be progressive policymaking, but Sri Lanka’s power industry is still hampered by cost and inadequate incentives.

Last September, the Government launched a ‘battle for solar energy’ initiative which aims to add 220 megawatts of clean power to the country’s energy grid by 2020, or about 10% of the country’s current daily electricity demand. By 2025, the country hopes to boost its solar power output to 1,000 megawatts to meet fast-growing power needs, but shifting away from coal and other fossil fuel power to renewables will be a challenge. Solar power has the potential to meet 32% of Sri Lanka’s annual power demand of around 10,500 gigawatts – but so far just 0.01% of that potential has been developed, according to the Sri Lanka energy sector development plan for 2015-2025.

Currently about 3% of Sri Lanka’s energy demand is met by renewables such as wind and solar. Hydropower provides about half of the country’s electricity during the wet season but during the dry season, between August and October, 81% of the island’s power needs are met by fossil fuels, over half of that from coal. The cheapest entry-level home solar panel installation costs over Rs.200,000 because the materials must be imported and face import duties. Compared to that, even larger users of household power pay only around Rs. 5,000 a month in electricity bills.

For the smallest-scale users of one to 30 units of electricity a month, electricity costs Rs. 7.85 a unit, while large household consumers – those above 180 units – pay Rs. 45 per unit. The potential loss of that subsidy for poor households is one barrier to faster uptake of solar energy. Even though companies have tied up with banks to offer loans and easy payment schemes it could still take families years to break even and they could have repairs before payments are completed. This simply does not make economic sense to families though possible power cuts might provide some motivation. This is where large solar plants could make more sense.

Cheaper costs for panels, free installation, Government help in maintaining panels, and a higher government payment for solar energy produced for the national grid, are some of the incentives recommended by experts, but it would mean larger allocations of resources than what might be possible for an already fiscally-constrained Government.

Pressure to keep electricity prices low for consumers meant shifting to cleaner energy was unlikely to be cost-effective in the short run. If it can stick to its guns and ensure that long-stagnated plans such as Sampur finally get off the ground, renewables could well end up as the solution to a projected power shortage in 2018 and finally bring Sri Lanka’s power sector out of the dark ages.

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