Averting a power crisis

Influential unions within the Ceylon Electricity Board (CEB) headed by the engineers union continue to push policymakers towards coal insisting it is the only way for the country to avoid a looming power crisis in 2018 and roundly ignoring potential for renewable sources of energy. But is the issue as one-sided as presented?

The Public Utilities Commission of Sri Lanka (PUCSL) last month approved the long-term generation plan of the CEB, which covers the years up to 2034. In it the CEB had previously stated the Sampur coal power plant would only come into play from 2021 and therefore the State monopoly has till April of 2017 to propose an alternative. Therefore it is clear the absence of a second coal power plant would not be the cause behind a possible power shortage in 2018. 

However, the PUCSL does agree that a power crisis is in the pipeline, mostly brought on by increasing consumption and the CEB depending excessively on a combination of coal and hydro power for the better part of the last decade. This has left thermal and renewable energy at low levels, the latter in particular still makes up less than 10% of the country’s total generation. Everyone agrees that more investment is needed in the sector but no one can agree on what type of generation to spend money on. 

The PUCSL in approving the CEB’s generation plan has insisted on rapid implementation of several new power plants to avert a possible energy shortage and demanded a detailed timeline be submitted before the end of this month. The plants include two thermal power plants with the capacity of 170 MW in the Southern region, 105 MW gas turbines, a 300 MW natural gas power plant and several renewable energy power plants with the capacity of 655 MW that include three major hydropower plants. Accordingly about 1,230 MW would be added to the national grid during the next four years.  

Even though the plan has been laid out the engineers 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.