Powering solar

Thursday, 26 January 2017 00:00 - - {{hitsCtrl.values.hits}}

The Public Utilities Commission of Sri Lanka (PUCSL) has instructed the Ceylon Electricity Board (CEB) and its subsidiaries to absorb domestic solar producers into the national grid within two weeks of their application. The move is progressive as domestic solar increases in popularity but in terms of reach 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 1 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.

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.

Sri Lanka has historically looked to the least expensive option to generate power to hold down costs for consumers. Currently, because the cost of imported solar equipment is high and coal is relatively cheap, coal is the cheapest option – as long as issues like the environment and health aren’t taken into account. But increasingly they are coming into focus.

Pressure to keep electricity prices low for consumers meant shifting to cleaner energy was unlikely to be cost-effective in the short run. The Government is therefore caught between a rock and a hard place in terms of promoting domestic solar power but it is worth the extra resources because it is the best option for the future.