Energy crisis: Private sector to the rescue | Sunday Observer

Energy crisis: Private sector to the rescue

The government has again resorted to buying emergency power from private suppliers this year due to the delay in adding new power sources to the national grid.

Minister of Power and Renewable Energy, Ranjith Siyambalapitiya speaking at a function in Galigamuwa on Tuesday said, there will be no power disruptions and that the country is not facing any electricity crisis.

Meanwhile, Secretary, Ministry of Power and Renewable Energy Dr Suren Batagoda told the Sunday Observer, “We will not be going into routine power cuts as all steps have been taken to renegotiate and renew Power Purchase Agreements with the private energy suppliers”.

The Cabinet approved extending an agreement on power procurement with a private thermal power supplier last month, for a further three years.

According to Dr Batagoda, renegotiations of Power Purchase Agreements, have reduced prices drastically. “Previously Asia power unit capacity cost was at rupees 31 now it is 24, ACE Matara unit cost was at 26 rupees and now its 24. Embilipitiya was less with a price of 21 rupees, yet they reduced it by 10 percent. This is the price for the capacity charge and the diesel price” he explained.

Meanwhile, Public Utilities Commission of Sri Lanka (PUCSL) refrained from commenting on the renegotiated prices stating that they have no knowledge of it, yet. Speaking to the Sunday Observer, Director General, PUCSL, Damitha Kumarasinghe said: “The PUCSL has still not received the Power Procurement Agreements (PPA) for our approval, therefore, we are not in a position to comment on the renegotiated prices.”

Commenting on the current status of energy supply and a possible crisis in the future if the Long Term Generation Plan is not adhered to, Kumarasinghe said, the best option is to implement the power plants suggested in the Long Term Generation Plan and not renew agreements with private power suppliers.

“What we should have done ideally is, have the sufficient power plants tendered and acquired according to the Long Term Generation Plan, not just extending a few plants. This has been continuously happening throughout 2015 until this year. If no proper power plant projects are started we will be inevitably facing a crisis. This is why PUCSL keeps pushing to float the tenders for the new projects.

Owing to the disruption in the weather pattern and continuing reduction of the water levels in the catchment areas the hydro power contribution to the national grid has substantially reduced.

“At present, the major hydro reservoir levels are close to but not lower than the past 7 years’ average. However, if the present reservoir drawdown pattern continues, the reservoir level will further reduce in the next 2-3 months, a report issued on the first quarter of 2018 by the Public Utilities Commission of Sri Lanka (PUCSL) states.

During the dry season, beginning from April to about August, as in the past few years, yet again, hydro power production has reduced, according to statistics issued by the Ministry of Power and Renewable Energy. However, as per PUCSL predictions, this will reduce further.

Castlereagh water levels as at Tuesday (10) was recorded at 7.18meters below spill level, Maussakalle 9.25 meters below spill level; and Kotmale and Victoria are recorded at 16.82 meters and 14.05 meters respectively, below spill level.

In its Short Term Electricity supply report, for the months of March-August, PUCSL claims, the peak demand was 2,430 mega watts.

The peak demand, which usually occurs during the months March, April and May, can only be met if all large thermal generator units are operating with no new plant additions or retirements, with a 5% reserve margin.

“If no new power plants are added, the available firm capacity is marginally sufficient to meet the peak demand, and the 5% reserve margin will not be maintained. But if the proposed 100MW plants are added, firm capacity is sufficient to meet the demand with a 5% reserve margin. However, after the expiration of the current PPAs of ACE Matara, ACE Embilipitiya and Asia power plants, the available firm capacity will not be sufficient to meet the system peak demand. For the system to be capable of meeting peak demand, without one of the large generator units and with the 5% reserve margin, the continuous operation of 20MW ACE Matara, 100MW ACE Embilipitiya and 50MW Asia Power plants as well as the 100MW thermal plant additions are required (total 320MW of thermal plants),” the report claims.

Dr Batagoda says, in order to go in for lower prices, it is a must to opt for coal, which is not an available option. According to him, the current trend is that the private sector is to generate the power.

“With the ongoing trends, all or a majority of power generation is through the private sector. By now, 270 wind, hydro and solar power plants are from the private sector in the country; and around 10 Diesel power plants are from the private sector,” he said.

The government in the meantime, has initiated projects with India and China to instal LNG plants, 500 MW each. “By now, we purchase around 120 MW from roof top solar panels. Another 30 – 40 solar power plants have been put up by private entities,” the Secretary added.

He explained that the cheapest option is coal power generation. However, according to the PUCSL, there is no change in the policy decision to not go ahead with coal.

“We have approved the generation plan for the last two years which does not include coal. We have not changed our stance on the matter,” Kumarasinghe added.

According to the Secretary, even the unit cost of LNG can be higher than the purchasing power from private entities.

“There are claims that due to delays, we had to opt for private procurement from Matara, Embilipitiya etc. but once the LNG 300 MW plant is constructed in Kerawalapitiya one unit will cost about 25 rupees. Claims have been that due to the delay in tendering new plants the loss incurred is fifty five billion rupees. But in reality, purchasing power from private entities are less costly, since we have no provision to opt for coal as an energy resource,” Dr Batagoda said.

However, considering the current circumstances, especially, in the hydro power generation the PUCSL recommends: If all large generator units are operating and no power plant retirements/ additions, the energy supply can be continued irrespective of the hydro condition. However, considering the frequent and sustained failures that occurred in Low Voltage Power System (LVPS) in the recent past, it is important to keep the generation system capable of supplying without one large thermal generator unit (270MW). For the system to be capable of supplying the electricity demand without 270MW thermal unit, an addition of the proposed 100MW thermal power plants as well as the continuous operation of ACE Embilipitiya, ACE Matara and Asia Power plants is required, to supply the energy demand, irrespective of the hydro condition.

Furthermore, the estimated energy deficit in April, May, June, July and August are 30, 45, 75, 75 and 110 GWh/month, respectively, since the hydro condition in these months may become lower than the average level. Hence, during the period, temporary measures, such as, obtaining the contribution from onsite generators available with bulk customers, should be implemented to avoid likely energy deficits. Further, NCRE capacity additions such as, solar rooftop connections should be expedited.