The proposed revision of the purchase tariffs for Non-Conventional Renewable Energy based electricity generation plants is fast becoming an obstacle for Sri Lanka’s strategic plan for renewable energy.
The plan aimed at producing at least 1,000 MWs by 2020 using solar, wind, mini hydro and dendro power sources, will be affected greatly as independent power developers will not invest in future projects, due to the high cost factor, a leading mini hydropower developer said.
The Public Utilities Commission (PUCSL) is planning to introduce the new tariff rates for mini hydro power plants on a micro examination of cost, completely ignoring the macro importance of the mini hydro industry to the national economy, Asoka Somaratne, Chairman, St. Anthony's Mini Hydro Power (Pvt) Ltd, told the Business Times.
If the PUCSL, based on a micro examination of the current factors of cost, tries to reduce the present tariff for mini hydro power plants it will deal a blow to the government’s strategic plan to optimize the renewable energy resources including mini hdyros.
The reduction of the tariff will kill the present interest in mini hydro power projects and slow down the pace of development. Thus this issue must be looked at from the national perspective, he said, otherwise mini hydropower developers will have to shut down their plants and no investor will set up hydropower power projects in the country.
Mr. Somaratne revealed that the Government has given high priority to developing its remaining hydro-power resources in the island to reduce dependence on costly fuel imports as well as for their potential to earn carbon credits in the initiative to reduce the effects of global warming. The Sustainable Energy Authority was established to promote renewable energy sources in the country under the directions of the President and with the setting up of mini hydro power plants by private sector developers, during last few years, the country has been able to save a considerable amount of foreign exchange as a result of the reduction in the fuel bill.
It has also earned foreign exchange by way of carbon credits, he said.
Around 600 new small scale hydro power projects have been identified which are capable of adding around 500 MW of power to the national grid, he said. Of this total, both CEB and private sector developers have developed 148 MW and provisional approvals to develop the remaining capacity had been already issued. Potential hydro power sites have capacities ranging from a few hundred KW to 40 MW, he said.
The entire potential can be harnessed in three years with committed state facilitation, he added. If the purchase tariff is reduced under the new price revision from the current rate of Rs. 14.30 per KW hour, no investor will set up hydropower plants in the country, Mr. Somaratne said. Rapid development in the sector depends on a sustainable tariff scheme that is transparent and equitable, he added.
The PUCSL has decided to consult the stakeholders in determining Feed-In-Tariffs for Non-Conventional Renewable Energy (NCRE) based electricity generation. In addition to the stakeholder representations, PUCSL will consider the General Policy Guidelines issued to the Commission and other policies of the Government when determining the final tariffs to procure NCRE-based electricity under Standardized Power Purchase Agreements, a senior official of the PUCSL said.
He revealed that they have already received complaints from 40 mini hydropower developers and no final decision has been taken on the new tariff structure. However he added that the electricity should be supplied to consumers at a reasonable rate and the producers should not expect high profit margins. Stakeholder representations are sought in writing and are expected only on the areas of proposed policy of offering cost based technology specific purchase tariffs, he said.
Mini-hydro power is the cheapest source of power to the country compared to other renewable energy sources. The total installed capacity of the mini-hydro power plants to the national grid is 181 megawatts. It contributes 546 Giga Watt hours (GWH) which is 4 % of the national demand. There are over 100 small and large companies involved in the mini-hydro power sector including Vallibell, Hemas, Vidullanka, Central Finance and Jafferjee Brothers.