25 years of mini hydropower in Sri Lanka 

•  Industry succeeds in revolutionising communities and stimulating economic development  

By Hiyal Biyagamae 

The Small Hydro Power Developers Association (SHPDA) recently celebrated the silver jubilee of Sri Lanka’s grid-connect mini hydropower industry, highlighting how small hydropower (SHP) implementations across the country had impacted many communities in rural areas by creating employment opportunities, stimulating economic development, strengthening the capacity of existing infrastructure and local institutions while minimising negative environmental impacts. State Minister of Solar, Wind and Hydro Power Generation Projects Development Duminda Dissanayake, Secretary to the Prime Minister Anura Dissanayake, officials from government agencies, banks and members of SHPDA were present at the event. 

The first modern small hydropower project was commissioned in Sri Lanka on 10 April 1996. Two and half decades after renowned educationist and meteorologist Premasiri Sumanasekara of Vidya Silpa (now VSHydro Ltd.) connected the first plant to the national grid in Dick Oya, 230 projects totalling 440 MW have been supplying electricity to Ceylon Electricity Board (CEB). 

The geo-climatic condition in Sri Lanka is favourable for mini-hydro development, and several past studies have assessed the potential for the development of mini-hydro resources. A comprehensive study has been carried out as part of the Dam Safety and Water Resources Planning Project (DSWRP) of the Ministry of Irrigation and Water Resources, focusing on 13 river basins of the country. The study has concluded that the total mini-hydro potential in the country is 873 MW. 

As of 2020, the total grid-connected mini-hydro capacity is 412 MW which comprises 387 MW developed by the private sector. In this long-term generation expansion plan, the mini-hydro capacity is expected to grow moderately within the next 20 years as most of the attractive resources and sites have been developed. 

History of mini hydropower development 

 The history of small hydropower generation in Sri Lanka spans over a century, and it is mainly associated with the power generation for the large-scale tea plantations in the colonial era. Since then, the small hydro capacity grew gradually until the 1960s, when the electricity grid was extended to provide electricity supply. In the 1990s, CEB’s assistance was provided for the development of the mini hydropower sector with the required assistance to the private sector, which includes training and capacity building, pre-feasibility studies and resource assessments. The procedure for electricity purchases from Small Power Producers (SPPs) by the CEB was regularised beginning in 1997 with the publication of a standardised power purchase agreement (SPPA) which included a scheme for calculating the purchase price based on the avoided cost principle. 

Further, the National Energy Policy in 2006 identified fuel diversification and energy security in electricity generation as a strategic objective and the development of renewable energy projects was identified as a part of this strategy. Given the above, action was taken to introduce a three-tier tariff instead of avoiding cost-based tariffs from 2008. Currently, the technology-specific cost-reflective tariff introduced in 2012 is in force. 

While lack of access to electricity holds back economic development, mini hydropower plants created new opportunities for local businesses by providing power infrastructure. The many small hydropower projects across the country created conditions for communities to improve their quality of life, create employment, increase the standard of public service provision, improve overall health and education and achieve greater autonomy. Reliable access to electricity through these developments allowed local enterprises to expand and create new business opportunities through higher efficiency and productivity and reduced costs. Furthermore, lack of electricity constitutes a significant barrier to human, social and community development, specifically impacting vulnerable groups, including women and young people. 

Industry stalwarts including Premasiri Sumanasekara, Dr. Romesh Bandaranaike, Dr. Nishantha Nanayakkara, Anil Makalanda, Bathiya Ranathunga, Riyaz Sanghani and Prabath Wickramasinghe have been leading this association since its inception. In 1998, industry representatives formed the ‘Grid Connected Small Hydro Developer Association’ to be the voice for the industry to resolve issues and identify opportunities. When the industry achieved 125 MW in 2007, the association was renamed to Small Hydro Power Developers Association. 

Reminiscing old memories of Dick Oya Project 

Addressing the gathering, Prabodha Sumanasekara, Managing Director at VSHydro Ltd. and the son of Premasiri Sumanasekara, reminisced about the Dick Oya Hydropower Project and those who made it a reality. 

“I was very fortunate that while being a student, I saw this entire project unravel. For me, it all began with a paper advertisement in February 1993 when CEB announced that they would purchase all power produced by private generating plants at the cost of Rs. 2.60 per unit. Having canvassed for this a very long time with several others, I remember my father’s excitement at this announcement. In the true entrepreneurial spirit, he proclaimed that his company Vidya Silpa will build the first grid-connected hydropower plant in Sri Lanka.” 

“Immediately after the advertisement, my father mobilised his team to locate the best possible location to build the first project, and he chose the Dick Oya just before it reached Castlereagh reservoir to locate the plant. He mobilised his team to do the surveys and a preliminary project study was done in record time,” said Sumanasekara. 

According to Sumanasekara, the project had full implementation to proceed within one month because of the intervention of the Secretariat for Infrastructure Development and Investment (SIDI), which was operated under the Ministry of Policy Planning and Implementation, and directives from the Ministry through Dr. P. Ramanujan to the then District Secretariat of Ginigathena, who gave full approval to divert the water and construct the necessary structures on the river reservation within three days. Before the Sinhala New Year of 1993, construction of the weir and intake started and the project gradually took shape. 

“It was after constructions commenced, the real challenges came, including the financing. My father had convinced his Chinese supplier to bear a part of the plant cost in exchange for a share in the project. However, the project needed much more funds and entered DFCC Bank. My father was a long-term client of DFCC. Former Chairman Nihal De Silva and CEO Moskevi Prelis had long nurtured his building laboratory science equipment for schools. So the responsibility of funding this high risk investment was placed in the hands of Prelis and his team at DFCC. Mr. Prelis in turn, picked Sunil De Silva to lead the DFCC team in financing the project.” 

“I vividly remember many meetings held at Mr. Prelis’s office, strategizing on how to fund the project to complete despite not having an agreement in hand. I remember their frequent visits to the construction site and intense technical discussions,” reminisced Sumanasekara. 

Dick Oya was initially planned as a 650 kW plant, but the CEB announced that all grid-embedded plants should have a minimum capacity of 1 MW. Sumanasekara said the head of the project had to be increased by 15 meters to achieve this, resulting in a huge amount of rock blasting. DFCC provided project financing with no additional collateral and when that was not enough, DFCC agreed to bring in equity investment to reach the closure of the project. 

Sumanasekara also said that 1996 was a period of frequent power shedding by CEB where the importance of additional private power was deemed necessary in Sri Lanka. 

“I remember Prelis and De Silva personally appealing to the higher management of CEB to accept the power from the plant into the grid. It is not that anyone in particular at CEB was opposed to this, but the whole concept of private power in the CEB system was alien to the CEB engineers. I remember the many discussions we had with CEB engineers, particularly with Shavi Fernando, Bandula Tilakasena and others.” 

Finally, the CEB engineers agreed to allow the plant to be embedded into the grid. They built the transmission line to evacuate the power, but they wanted system protection. So their requirement was an industry standard called G59. 

“My father’s previous experience in small hydro was limited to building several plants for the tea factories in Sri Lanka. He had not heard of G59. This was when the CEB engineers assisted him with the technical details and designs for the G59 protection and a G59 protection relay bank was built at site with the active participation of the CEB system engineers in a matter of days,” said Sumanasekara. 

On 10 April 1996, the plant was ceremoniously declared open by the former chairman of CEB Leslie Herath, Moskevi Prelis and Premasiri Sumanasekara, symbolising the corporation between the CEB, financiers DFCC and the developer. 

“History was made, and all of us here know the exponential development of the sector after 1996,” Sumanasekara concluded. 

No SPPAs in the last seven years 

 Speaking at the event, Small Hydro Power Developers Association President Thusitha Peiris said that the government had approved no standardised power purchase agreements (SPPA) to build a single mini hydropower plant during the last seven years in Sri Lanka. 

“To carry out a project of this nature, we have recommendations from 19 government agencies. After obtaining those recommendations, it usually takes about three and half years to complete a project. Accordingly, during the last 18 years, an average capacity of about 25 MW was only connected to the national grid through SHPs. Why I said 18 years without saying 25 years was because no SPP agreement has been issued for any SHP project in the last seven years.” 

Pieris mentioned that in such a context, only 12 to 14 projects have been constructed per year on an average where at least 7,500 workers have been employed for the construction work. In addition, 65% of the total cost of such projects has been added into the flow of the national economy, helping that valuable contribution circulated within the rural economy to elevate people’s livelihood. 

During his speech, he thanked all stakeholders who had assisted the industry to thrive during the last 25 years, including the Government, CEB, Renewable Energy Authority, Irrigation Department and several other government agencies. He especially remembered the support extended by DFCC Bank. He said how DFCC’s Former Chairman Nihal Fonseka, Former CEO Moskevi Prelis and a few other officials provided necessary financial assistance to Premasiri Sumanasekara to build the first hydropower plant in 1996. 

“At that time, DFCC’s financial support helped the industry to make Mr. Sumanasekera’s innovative concept a reality. We will never forget that. Based on that experience, Sri Lanka’s leading financial institutions over the past 25 years have offered necessary financial aid to launch nearly 230 projects, supporting local entrepreneurs,” said Peiris.  

Pix by Upul Abeysekare