Powering sri lanka towards sustainability by Cabraal 03 Apr 2017

Powering Sri Lanka towards Sustainability AN IL C AB RA AL , P H D D IRE C TO R, E N E R GY FO RUM AP RIL 3, 2 017

Outline Commitments and Vision Long term generation expansion planning Recent events Prospects and trends ◦ ◦ ◦ ◦

Renewable energy Storage technologies Energy efficiency Fossil energy

Conclusions

Sri Lanka SDG commitment (2015) Sri Lanka SDG commitments by 2030 ◦ Poverty alleviation (SDG 01) ◦ Achieving food security (SDG 02) ◦ Affordable and Clean Energy (SDG 7) ◦ Universal access ◦ Increase RE use ◦ Double rate of efficiency improvement

◦ Education (SDG 04) ◦ Minimising income disparity (SDG 10) ◦ Urban development (SDG 11)

Presidential Policy Statement 8th Parliament, Sept 2015     

Meet basic energy needs through renewable energy Protecting against rising imported fuel prices Include environmental factors in decision making Build biomass power plants and benefit rural communities Remove subsidies for fossil fuel and support renewable energy  Obtain long term concessionary loans for clean energy from global funds

Sri Lanka Paris Climate Commitment (Sept 2016 )  20% GHG emissions reduction from power sector by 2030 compared to CEB LTGEP 2013-2032 baseline  Proposed Projects o 514 MW of large scale wind power o 115 MW of solar power o 105 MW of biomass power o 176 MW of mini hydro power o Demand Side Management (DSM) o Strengthen energy policies to increase RE from 50% to 60% by 2020 o Convert existing fuel oil based power plants to LNG (New) o Plus others in other sectors – transport, industry, forestry, waste…

Path to Sustainable Era (2017) Create enabling environment to move towards 100% renewable energy in power sector.

SLSEA Energy Management Action Plan (2016-2020)  Reduce total 2020 energy demand up to 1,100 GWh/year  Avoid 400 MW of new generation

CEB issued the long term generation expansion plan 2015-34 in July 2015

Long term generation expansion plan 2015-34 (July 2015)  By 2034 coal electricity increase 5 times  Carbon emissions rise 350% Other pollutions

◦ Particulates (PM) increase 750% ◦ Sulphur dioxide (SO2) reduce by half ◦ Nitrogen oxides (NOx) increase marginally

 Not considered:

◦ Coal ash. 3700 tons/day by 2034 ◦ Heavy metal pollution risk – sea and land ◦ Water - thermal and chemical pollution risk

 Renewable energy cost reductions not considered

PUCSL guidance to CEB (Sept 2016)…

Approved CEB short term 2017-2020 plan Rejected Sampur coal power plant Requested new plan for 2018- 2037, with priority to: ◦ Government policy framework ◦ Least cost principles ◦ Demand-Side Management (DSM) ◦ More renewable energy ◦ Improve consideration of environmental, health and other externalities ◦ Seek wider consultation

Recent positive news …

(1)  President launches one billion Gliricidia trees program  Sec. Batagoda, MOPRE announces intention to: • Build LNG terminal in Colombo port • Replace coal plants with LNG power plants

 Surya Bala Sangramaya • Add 200 MW of solar by 2020 • Roof-top solar and 60 x 1 MW solar • LECO low interest loans for roof-top solar • MOPRE discussing with ADB $175 million solar financing

 CEB 100 MW Mannar wind farm with ADB financing  Mahaweli Authority: Develop 100 MW floating solar plant

Recent positive news … (2)  CEB announces NCRE share to rise to 19% by 2019  PUCSL invites stakeholder feedback on LTGEP 2018-37 planning  CEB to use improved expansion planning software  Central Bank joins IFC Sustainable Banking Network to promote ‘Green Financing’  MOPRE rejects unsolicited 100 MW Korean solar project in favor of competitive tendering  News reports of EAM Solar ASA (Norway) unsolicited solar proposal for 400-900 MW – 12 US cents/kWh

LTGEP 2018-37 planning: Credible data, realistically used is key!

ALL OUR DATA IS GROSSLY INACCURATE… BUT I NEED DATA FOR POWER PLANNING

IF I CONCENTRATE HARD ENOUGH I CAN FORGET THAT THE DATA IS BAD, THEN IF CAN USE IT

I HAVE TO GIVE HIM CREDIT; POWER PLANNING IS HARDER THAN IT LOOKS

With credit and apologies to Dilbert

Does Sri Lanka have adequate renewable energy resources?

Readiness to integrate increased variable renewable energy into power grids  Is existing planning software capable of handling variable RE? No, but CEB getting new tools  Is Sri Lanka power system ready now to absorb large share of variable renewable energy? Not yet  Must improve system control and operations  Increased flow of energy from distributed generators  Efficient electricity-demand and grid management  Technologies and procedures for grid stability and control  Increase use energy storage – hydro, batteries Source: IRENA

Solar costs declining  CEB 2018-37 LTGEP assumption: • LKR 210 per watt in 2017 • LKR 135 per watt by 2025

 India 2016-17 Benchmark LKR 120/watt  India 50 MW floating solar – LKR 177 per watt  Sri Lanka 1-10 MW-scale solar ~LKR 180/watt now

Wind costs declining  CEB 2018-37 LTGEP assumption: LKR 230,000/kW  India 2016-17 benchmark LKR 143,000/kW  Performance is improving

Storage costs declining

Renewable energy becoming competitive with fossil energy electricity

Decline in solar electricity prices Due to technology cost drop, low cost financing, favorable solar conditions and competitive procurements rather than Feed-in-Tariffs Turkey USc 6.7/kWh

Source: World Bank

Biomass power  President’s 1 billion Gliricidia trees target = ~800 MW  Is there adequate land and how to access it?  Farmers need high fuelwood price, but then electricity cost high  Gliricidia: Net income ~Rs. 16,000/acre/year + leaf income  Compared to net income for: Coconut – Rs. 30,000/acre/year, Rubber – Rs. 44,000/acre/year

 Setting target not enough. Need advisory service, R&D for:  Yield improvement and new high-yield crops  Better cropping, intercropping and harvesting practices  Improve technology  Cost reduction

 UNDP biomass projects help but more needed

Managing solar & wind variability Solar and wind variability a concern – Short term, diurnal, seasonal ◦ Battery and hydro storage for quick response backup ◦ Hydro, CCGT, GT, IC generators work better with variable RE than coal ◦ Short and long term solar and wind resource forecasting tools improving ◦ Improve system controls and management

Variability also affects demand, fossil fuels and hydro Hydro Variability

Coal Price Forecast

1 60 2013 IEA: current policies 1 40 Actual 1 20 US$/ton nominal

Wind Output Variability

1 00 Oct 2014 World Bank 80

July 2015 World Bank

60

Oct 2016 World Bank Jan 2016 World Bank

40 201 1

201 3 201 2

201 5 201 4

201 7 201 6

201 9 201 8

2021 2020

2023 2022

2025 2024

Operation DSM: Improve efficiency & reduce peak load  SLSEA issued National Energy Management Plan 2016-2020  Estimated national cost: Rs. 120 billion over 5 years  Expects to save 1,104 GWh by 2020 at a cost of Rs. 5.45/kWh  Reduce peak demand by 400 MW  Thrust areas:  Appliance/equipment efficiency in all end-use sectors  Green buildings  Smart homes

Must validate coal/LNG assumptions  Correct capital and O&M cost estimates  Use realistic duration from approval to start-up  Norochchalai 23 years, Sampur 10 years and cancelled

 CEB assumes 4 years for new coal plants

 Check plant efficiency assumptions  Account for uncertainty in LNG/coal fuel prices  Include credible environmental damage costs  Reassess valuation of Sri Lankan life: Can we accept scaling value by GDP?  Include air emissions plus solid waste (ash) and water impacts  Account for ecological damage  Realism of use of environmental controls

Sri Lanka must improve its record of getting climate funds  Global Environment Facility: Since 1992 only US$ 25 million  Carbon funds: • Private sector – US$ ???

• Sri Lanka Carbon Fund and Sri Lanka Climate Fund ???

 Future plans  ADB to apply to Green Climate Fund for Mannar wind farm  WB Climate Finance for RE – US$ 12 million was to be approved Oct-2016

 Other suggestions  Biodiversity fund for burying transmission line through Vankalai Sanctuary for Mannar wind farm  SL Climate Fund – Seek carbon financing for portfolio of roof-top solar projects  Seek Climate and Biodiversity funds for large scale floating solar

 We must do much better!

Conclusions  Positive signs of Government commitment to clean energy  Excellent renewable resource potential  Renewable energy technology costs declining and performance improving  There is realization of need to move away from coal power  Need strong, consistent Government policy, planning and support  Low cost financing essential  Must leverage financing from concessional climate funds and international sources

 CEB must commit to Government policy and give fair chance to clean energy