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Sri Lanka cautioned on rising renewable energy costs
14 Apr, 2014 09:43:51
Apr 14, 2014 (LBO) - Sri Lanka's central bank has sounded a note of caution of caution over the rising burden of renewable power on consumers as the proportion of non-conventional renewable power (NCRE) increases in the grid.
Sources such as large conventional hydro plants have always been cheap and are widely used the world over without any political propaganda or tax payer money to subsidize them.

In Sri Lanka in particular power sector analysts have said some renewable feed-in tariffs were among the highest in the world

"Although the country is keen on including more renewable energy to its total generation plan due to its sustainable and renewable nature, the current tariff of NCRE sources keep rising compared to other conventional energy sources," the Central Bank said in its 2014 annual report.

"Hence, the acquisition of advanced technology to improve cost effectiveness is important to ensure that the public is not burdened by rising tariff of NCRE."

Sri Lanka has a target of increasing non-conventional renewable energy to 20 percent by 2020 from the current 10 percent.

Critics say the global renewable lobby is a powerful special interest group that had managed to grab billions of dollars of tax-payer money especially in developed nations by propagating highly refined arguments.

Renewable energy companies have also benefitted from 'climate change' where carbon dioxide emissions are blamed for warming temperatures, though the latest data seem to indicate that the world has not warmed for over 15 years, despite millions of tonnes of the gas being pumped into the atmosphere.

The Central Bank's warning for more efficient technology comes as the renewable lobby in Sri Lanka has used even more innovative methods than the rest of the world based on economic nationalism to gain even higher profits.

In the last tariff decision the mini-hydro companies were offered a flat tariff of 16.70 rupees per unit, but those using 'local' inputs were given an even higher rate of 17.15 rupees.

For wind, a tariff of 20.62 rupees was inflated to 21.22 for using 'local' inputs.

Biomass dendro get a tariff of 25.09 rupees, municipal waste 26.10 rupees. In the tariff decision, rates moved up between 20 to 38 percent , despite the earlier rates already being some of the highest in the world.

Analysts have said that Sri Lanka's current power tariffs for larger households are probably the highest in the world (about two to three times the generation cost) and have also tilted the playing field in favour of solar power companies.

Solar is the expensive form of renewable energy costing over 35 rupees a unit.

CEB has lost some of its best customers to solar companies through the net metering process, though it has allowed large domestic customers an avenue to escape the unjust tariff.

The high household tariff was a quasi-taxation income re-distribution tool aimed at cross-subsidizing losses on small households, though net metering has allowed it to subsidize solar power companies instead, critics say.

In Sri Lanka the rising cost of new renewable feed-in tariffs are partly due to currency deprecation which pushes up costs of imported capital equipment.

Mini-hydro feed in tariffs are among the cheapest. Almost all sources non-conventional of renewable power except waste heat are several times more expensive than coal which costs about 10 rupees a unit in Sri Lanka.

Ironically currency depreciation is also strongly linked to subsidies in the power and energy sector, where bank credit and money printed to keep interest rates down has triggered almost all recent balance of payments crises episodes.

If the rupee is continuously depreciated by the central bank, non-conventional energy such as wind where more than 20 rupees are paid for a unit, may become relatively less expensive in the future, analysts say.

Unlike larger plants state-run Ceylon Electricity Board is expected to purchase all the output from small renewable plants, whether it is required or not, which can mean it's own cheaper plants are run at a lower capacity at certain times of the year or day.

The Central Bank said there 262MW of renewable power, 11MW or biomass power and 6MW or dendro power 1 MW or solar power.

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READER COMMENT(S)
4. Avinda Apr 16
Vinod I challenge you to provide a breakdown both hardware and software cost of installation and average daily generation for 20 year life of solar panels. My numbers say conservative estimates Rs 25 per kWh (without bank interests and maintenance). I will give my if you can produce yours and how you arrived Rs 10 per kWh
3. sudam Apr 16
This article is incorrect.
CEB never signed the LKR16.70 per unit tarrif. The CEB defied the PUSL directive and calculations and did not sign any agreements.

In fact CEB signed blank PPA's so that they can change it later.

2. Vinod Apr 15
This article has many errors, and is lacking an authors name. For the record...

The tarriff's mentioned for wind power are not applied long term. The stated rate is paid only for the first 8 years and then reduces progressively (50%,36%)for the remaining life of the project, usually 25 years. State royalties are paid only after price drop. Thanks to impatient investors "Lobbying" this "unique" formula was derived by the energy purchases branch at the C?EB.

This is wrong in many ways because the cost of renewable energy is pushed higher (artificially) than it should be AND risk of owners neglecting the plants after 10 or so years is Very likely. As usual all of these cubicle dealings are not debated in the public domain even they it is a state enterprise. The team with the most rewarding influence benefited key players.

The cost of Solar installations are not Rs. 35! That is the credit median homeowners receive when they install a net metering system. The cost per kWh from a modern rooftop solar plant is less than Rs. 10 per kWh (9.71 to be exact in Galle zone) since they will produce energy for at least 20 years. Myth's talked about too much sadly become truth's to the passing listener.

The C?EB's Saradhiel aka Robin hood formula of tariff calculation is the biggest scam ever perpetuated on an ill informed customer base. Their other practice of making people pay for infrastructure like poles, lines, meters BUT retaining full ownership is questionable too. But hey "This is Sri Lanka noh?"

Renewable energy is only part of the solution it could never exceed 1/3 capacity on an Island grid. SL needs to look at producing electricity from wind and solar as a commodity for export and just get access to 24 hour loads. Saving 25% on a fuel bill is not pocket change.

Forecast is for 9.6 hours of full sun, is your roof doing anything for you today? wouldn't you rather be harvesting?

1. Dammika Apr 15
Well said Central Bank!
Under the guise of renewable power a few individuals have grabbed tax payers money for the last 15 years. We are a poor country struggling to develop. We should capitalize on conventional power. Let the polluters such as US and Europe first turn to NCRE.