NewsGeneration situation and economics of Sri Lankan power sector

March 26, 2013

“When we talk about power generation situation, we have to consider three issues namely; adequacy of generation, cost of generation and the generation mix” said Dr. Tilak Siyambalapitiya, senior energy consultant, during an interview with EnergyzEE team.

Adequacy of power generation in Sri Lanka

What do you think about the current situation in terms of generation capacity in Sri Lanka?

“Sri Lanka has adequate generation capacity as for now, and if we continue with the generation projects that are ongoing as well as being planned, and build them on time, there should be no capacity shortages”.

Then why did we have power-cuts in August, last year?

“Last year was one of the driest years for hydro. As a result, annual hydropower generation dropped to 2700 GWh from the planned generation of 4100 GWh. But, one might ask, “there is so much of rainfall data for 100 years; therefore could this not be foreseen?” Yes, it is foreseen. If you take the long term generation plan published by CEB, the criterion on which generation planning is done is that the generation system should be able to meet the demand even if the third driest year in the history occurs again. If you take the long term plan prepared 10 years ago, we were to have the entire Puttalam power plant operational by now. But we have only one generator. Other two are still under construction. So if we had those two units as well, we would have an additional 600 MW.”

“Due to delayed implementation of the plan, we did not have adequate thermal capacity to meet this eventuality. And also, there were simultaneous outages of thermal power plants in August. Therefore we had shortages for a period of about three weeks. So if the plan was implemented on time, we would not have any difficulty at all.”

You have been continuously speaking about a similar situation occurring on the proposed coal power plant in Sampur.

“Well, our next crisis will be in 2017. In fact, electricity crises are easier to predict than human actions, because at least we have some data. I said average rainfall could have given us 4100 GWh last year, but actually we got 2700 GWh. We know the limits. Basically plus or minus 30% from the average is what we get. Therefore, although rainfall is so variable, we know the boundaries, and therefore we can plan for it.”
“Most of the current oil-fired power plants are to be retired by 2015. Given how projects are being implemented, 2017 is another critical year because Trincomalee power plant is not ready yet. Its construction work is yet to be started. To have a big power plant ready by 2017, the construction work should have started now. It takes a minimum of four years to build a big power plant. But we are nowhere near starting the work. Therefore, 2017 will be critical again.”

“And of course, if the rainfall is bad in 2017, the authorities can blame the weather. But we don’t have to blame the weather because the rainfall statistics are known. The ‘real reason’ is not the bad weather, but the delay in starting the projects. That delay becomes visible and acute, when rainfall goes below the average. As I said, if the plan is implemented on time, there should be no problem persisting. Otherwise, what are planning engineers for? CEB is maintaining four full time planning engineers just to plan the generating system in the future. There should be no problem if their recommendations are implemented.”

“The problem is, now people are arguing about ‘Coal Trinco’ (Sampur) power plant without making a decision. “Do we really need it?”, “Can’t we make it a gas-fired power plant?”, “Do we have to do it with Indians?” are such arguments. Therefore, the project is getting delayed, and we will be in trouble.”

Then what would be the solution for this, under your opinion?

“As I always say, decide first for the long term, and then look for any quick solution for that window. The mistake we have been doing in the past, since about 1992, is that we don’t make decisions on the elements of the long term plan. Then, say about two years ahead of a crisis, suddenly everybody wakes up and says that we must do something for this. Then various bright ideas come in; for example, one such bright idea is “Let’s advertise saying that we need 300 MW in two years. So, let the private sector propose how they can bail out the country with 300 MW and deliver in two years.” But we know that nobody can build a decent 300MW power plant in two years. The only thing you can do is buying a readymade one. You can’t get any readymade Nuclear, Coal or Gas power plant; the only readymade power plant you can get is an oil-fired one. So we get the private sector to do what they like, what they can do. The politicians and funding organisations such as ADB, World Bank would like that very much because we are getting private sector to do power generation; so we are breaking the monopoly of the government and CEB in the business of power generation. Nobody discusses the real issue that we are getting a wrong type of power plant. And that’s why we have a legacy of 10 oil-fired power plants, all done by the private sector. So all I say is, that’s a short term unqualified solution.”
“Let’s take things as of today. It’s true that decision on Trincomalee has been delayed. We can’t keep crying about what happened in the past. So today, we should fast track it, and see how we can get it by 2017. Even if we can’t get it by 2017, we can get it by 2018. Then of course, we know that a crisis is coming up in 2016, 2017. Then we can get CEB planners to quantify the likely severity of this crisis. Then if we can get over it by having load shedding for about two months selectively, then perhaps we can tell the customer in advance about the problem and keep them well informed until we recover it with our long term solution. So the solution to the crisis is deciding first and making realistic decisions.”

“We have been discussing with India for the last six years, in terms of this particular power plant, but still there is no conclusion. I don’t think any decent government or even a private sector company would negotiate anything for six years. If it doesn’t work out, you should look for some other opportunities. In my view, we have had enough discussions with India. For whatever reason, may be economic or political or whatever, they can’t reach an agreement.”

“But there are other avenues. We can invite joint CEB – private sector partnership. We have local companies who have now experience in building private power projects. And what we basically need is USD 500 million of investment, and it’s not a huge amount for our private sector now, but the offers must be competitively selected, and as the Electric Act says, Government must be a shareholder. Negotiated agreements with the Sri Lankan private sector have been seen to be very expensive.”

“Otherwise, Japanese may still be willing to finance the Trincomalee power plant, provided that it is a ‘super critical’ power plant. Super critical power plants operate at much higher temperatures and pressures, and they are usually about 2% more efficient than the conventional technology. But, there is a catch. Super critical power plants are big. The smallest unit size is 600 MW. So, as a single generator, 600 MW is too large in our tiny power system. The issue is the risk. If the big generator trips, there will be a system blackout. So, it’s also a choice that can be made, if we want, whether to take the risk or not. We can inform the public about the risk of possible blackouts, and make a decision to build a super critical power plant. But, as demand grows, that problem too will also fade away by 2020 or so. Our peak demand will be much higher then, and a 600 MW single generator will not be an issue.”

How do you compare the power generation situation in Sri Lanka with other developing countries in the region?

“If we compare ourselves with India, Pakistan, Bangladesh and Nepal, our immediate neighbours in South Asia, we are the only country that provides adequate electricity throughout the year. Nepal is having 12 hour load shedding in winter. In summer, Bangladesh sheds about 30% of the demand. India sheds 12% and Pakistan sheds up to 50%. There are electricity riots in Pakistan; people are going in procession asking the government to give them electricity. So, Sri Lankan generation situation is better when comparing with those four countries in the region.”
“However, Maldives is completely different from them. Maldives is a tiny neighbour but has a lot of financial resources. They provide 24 hour electricity to all the islands using diesel generators, at a subsidized price.”

“Elsewhere in the Asian region, most of the countries meet the entire requirement; there is no long term load shedding. In terms of adequate capacity, we are comparable with them. But, in terms of reliability, countries like Singapore, Malaysia and Thailand far ahead of us.”

“Overall in comparison with developing countries in the world, we are not at the top, but somewhere in the middle.”

The discussion continued to the areas of cost of generation and generation mix in Sri Lanka. You can meet Dr. Siyambalapitiya again through EnergyzEE soon. Stay in touch with EnergyzEE.

Article By: Kalindu Sachintha Wijesundara – See more at:

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