Damitha Kumarasinghe

Installed Capacity 3,041 MW (2011) Electricity Generation 10,714 GWh (2010)

Hydro : 46% Thermal : 47% NCRE : 07% Total Renewable : 53%

New Fuel: Coal Electrification- end 2010- 90%

Target Achieve 100%-2012

NCRE identified as fourth resource in the electricity sector fuel diversification and security strategy. (large Hydro, Oil, Coal and NCRE) Endeavour to reach minimum of 10% supplied to the grid by 2015. Strategy shall not cause any additional burden on the end use customer tariffs. If justified, Government may subsidize the energy utilities Proposal to establish Energy Fund fueled by cess, grants etc.
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Ministry of Power and Energy

Policy maker

Sri Lanka Sustainable Energy Authority

- Resource allocator/ promoter

Public Utilities Commission of Sri Lanka

- Regulator (FiT and Licensing)

Ceylon Electricity Board

- Purchaser / Transmission licensee

(GWh GWh) Units Generated (GWh)-2010

NCRE 7% Thermal 47% Hydro 46%

(Including Off-Grid) Contribution from Renewable Sources (Including Off-Grid) - 2010

Wind 10% Biomass 11%

Mini Hydro 79%

Mini hydro dominates - 79% Best Mini-hydro Sites are already harnessed New Energy Sources: take-off is necessary Possible Candidates: Wind, Biomass FiT should be able to give sufficient incentive for developers to invest

Feed in Tariffs introduced in 1996 (Standardised PPA in 1997) Sri Lanka was the 9th Country that FiT was introduced (Renewables 2010- Global Status Report)
Until 2007 it was avoided cost (of the utility) based most Mini-hydro plants on avoided cost based FiT 2008 onwards Cost based
Technology-specific

250 213 200 181 161 150 119

112 100 73 88

50 23.6 8.6 0 1999 2000 2001 2002 11.1 31.2

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2003

2004

2005

2006

2007

2008

2009

2010

Hydro Energy (Mini Hydro) Wind Energy Biomass -Dendro Energy Biomass Agricultural & Industrial Waste Municipal Waste Energy Waste Heat Recovery Energy Any Other introduced on 2011
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A production incentive Common rate for resources dispersed all over the country, gives incentives to develop the best siteseconomic allocation of resources Developer take all the technology and resource risks Predictable prices (cost based FITs) and cash-flow for the developer; attracts investment Ability to promote relatively new technologies by fixing attractive prices at the beginning- if you have technology specific FITs All should go well if correct prices are set to achieve the Policy objectives

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Used: Parameters Used

Return on Equity: Equity Internal Rate of Return to be
higher than typical Cost of Equity- given for 15 years

Cost of Debt (6 year loan repayment) Initial Investment Plant Capacity Factor Operation and Maintenance Cost Fuel Cost

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1)

Three-tier Tariff: comprises of

Escalable Base O&M rate Escalable Base Fuel Rate Non-escalable fixed Rate Vary on:
Yr 1-8; loan, ROE, Fuel and O&M Yr 9-15; ROE, Fuel and O&M Yr 16-20; O&M, Fuel and incentive

Royalty to Government

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2) Flat Tariff-2011
Technology Mini- Hydro Mini-Hydro- Local Wind Wind-Local Biomass (Dendro) Biomass (Agri. & Ind. Waste) Municipal waste Waste Heat Recovery Rates(LKR/kWh) 13.04 13.32 19.43 19.97 20.70 14.53 22.02 06.64 Rates($/kWh) 0.12 0.12 0.18 0.18 0.19 0.13 0.20 0.06

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SL has used FITs since 1996 to buy NCRE based electricity Initially used Avoided Cost based FITs- only attracted Mini-hyrdo plants as the prices were not attractive for other technologies
Distorted/ subsidized fossil fuel cost to the utility

Cost based technology specific FITs introduced in 2007; mini-hydro, wind, biomass, MSW. Attracted other technologies like Wind and Biomass (in addition to traditional mini-hydro), already 30 MW wind online and wind & biomass plants in the pipe line
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Difficulty in estimating capital costs of relatively new technologies to Sri Lanka (wind, biomass, MSW) Best sites for mini-hydro is over, need to capture low head sites and less attractive sites in the FIT fixation exercise Difficulty in assessing proper O&M costs; no experience in running plants of some technologies (MSW, biomsss)- due to lack of pilot scale plants Lack of formal market for fuel (biomass, agri waste) makes it difficult to predict fuel prices
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SPPA, energy permit, and License given for 20 years, what happens beyond that period?; repowering contracts, extension and pricing? Local authorities requesting Royalty for the resources, how to handle? Increasing financial burden on the end consumer
How to set the portfolio of technologies to sustain the NCRE industry? Cost of externalities

How to treat technologies like Solar, which are costly.

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Mini Hydro: 179 MW resource permit issued Wind Biomass : 100 MW resource permit issued : 71 MW resource permit issued

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Sri Lanka has achieved 7% of electricity generation from NCRE technologies through FIT Change of FIT methodology from Avoided Cost to Cost Based Technology Specific has encouraged technologies like Wind and Biomass Investors are Enthusiastic and more than 350 MW of NCRE based projects are in pipeline FIT has paved the way for rapid development of renewable energy

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