CEB’s Least Cost Plan draws flak | Sunday Observer

CEB’s Least Cost Plan draws flak

18 June, 2017

The Ceylon Electricity Board’s Least Cost Long Term Generation Plan (2018-2037) received a lot of flak when the regulator of the energy sector the Public Utilities Commission of Sri Lanka (PUCSL) held its second public consultation this week.

Energy experts, economists, environmentalists and policy planners who presented their views and proposals on CEB’s proposed electricity plan decried that the plan was not in tandem with the country’s policies and was ill-conceived.

LCLTG - methodology highly flawed

Dr. Janaka Ratnasiri, an energy sector consultant who was once a chief technical adviser at the Ministry of Environment speaking on the methodology said, generation costs depend on both capital and fuel costs. The capital cost calculated by CEB in this report however, is based on figures estimated during pre-feasibility studies carried out many years ago, while the fuel prices are based on past data.

“The Plan assumes this price difference to be valid throughout the entire planning period, which is an incorrect assumption,” he said. “Both, the capital cost and fuel price are subject to fluctuations, due to various market forces including changes in supply and demand for fuel.”

He added that no one can say with certainty what fuel prices would be in the next 20 years or how the coal plant price would change relative to the Liquified Natural Gas (LNG) plant price.

“The schedule of adding coal plants and LNG plants up to 2037 based on just one set of prices determined several years ago, is therefore highly flawed.”

According to him when the future generation capacity addition have been identified, quotations should be called separately for plants operating on coal and LNG, giving detailed specifications on performance, emissions and environmental requirements.

He explained that the selection of a power plant - whether coal or gas - is best made after comparing prevailing prices, specific generation costs and performance against specifications.

Legal validity of Plan in question

Dr Ratnasiri also called for the Plan to be rejected outright simply because it does not conform to the Amended Electricity Act 31 of 2013. According to Section 43 (8) of the Plan, future electricity generation should be determined on the basis of least economic cost.

“Economic cost would mean externality costs, including damage to the health of people, ecology and climate system,” he said. “The CEB Plan, however, has not included the cost of externalities saying that “unless country and locations specific study is carried out, it is difficult to estimate the (external) damage cost with reasonable accuracy” (p. 7-25).”

This lack of accuracy he said applies to other parameters including plant cost and fuel cost.

“As such, the LTGE Plan has no legal validity as it does not conform to the provisions in the Amended Electricity Act.”

Uma Oya

Referring to the Uma Oya Project, he said, water will be diverted to the Kirindi Oya driving a 122 MW power plant expecting to generate 290 GWh annually.

Currently, Uma Oya joins the Rantembe Reservoir, water from which feeds a 49MW power plant generating 239 GWh annually.

In addition, water collected in the Rantembe Reservoir after generating power is taken in an open canal for irrigating land on the East of the Mahaweli River.

When Uma Oya water is diverted to the South, there will be depletion in both the energy generation of the Rantembe plant and the amount of water sent for irrigation to the Mahaweli system.

“However, no reference has been made for this depletion in the Plan, he pointed out. It may be noted that this project has already caused several adverse social, physical and environmental impacts including damages to many houses, which have not been addressed in the EIA Report.”

Nuclear plant for Sri Lanka?

CEB’s plan also proposes a 600 MW nuclear power plant as a candidate plant from year 2030. The Ministry of Power and Renewable Energy is at present initiating a feasibility study assisted by the International Atomic Energy Agency (IAEA) to prepare a feasibility report by the end of 2020.

“According to the Plan the current generation cost of nuclear plant is estimated to be UScts/kWh 12.94 at 80% plant factor, which is almost double that of coal power plant which is UScts/kWh 6.77, and this will not conform to the least cost criterion,” he said.

“Sri Lanka being a country with a high population density, a nuclear plant will not be socially acceptable as it involves many risks and with issues relating to disposing of spent fuel, nuclear power has no place in the country’s energy mix.”

PUCSL role in question

Meanwhile, Dr. Thilak Siyambalapitiya, an energy expert, questioned the regulator PUCSL’s role in formulating and decision-making citing that the Commission has an enormous responsibility as an independent regulator to ensure that this plan is fool-proof.

Long term solutions should be considered first he added stating that it should be followed by short term solutions, demand response and emergency power as the last resort.

He added that the share of electricity generation from all forms of oil up to April 2017 was a staggering 42%.

He queried, when will the Commission stand-up to Government pressure (to build more diesel power plants), and order CEB not to build any more diesel power plants? When will Sri Lanka reach the 10% limit on diesel/fuel oil in the national policy ?

Plan focuses on base load

Vidhura Ralapanawe, an energy and environment expert, commented that the plan focuses too much on base load power while favoring fossil fuel at the expense of renewable energy. Other pointers he mentioned were that the plan is based on centralised generation and transmission when it could be based on distributed generation/storage.

He also spoke on the concept of “clean coal” adding that there was no mention of it in the generation plan despite it being widely boasted about. Referring to clean coal technologies he said it encompasses a “portfolio of technologies that include very high efficiency and very low environmental impact.”