Sri Lanka's Power Monopoly Draws Fire at Public Hearing on Proposed Tariff Hike. Costs Claimed by CEB are Murky and Efficiencies of Plants are not Independently Audited

04th April 2013, www.lankabusinessonline.com

Costs claimed by Sri Lanka's power monopoly Ceylon Electricity Board are murky, the efficiency of expensive plants and other costs are not independently audited, respondents at a public hearing on a proposed tariff hike said.

Disallowing around 30 billion rupees from the tariff filing also raised more questions about cost transparency he said.

Siyambalapitiya said the inclusion of three retired power plants for dispatch in 2013 by the CEB, and PUCSL’s assumption that such energy can be provided by hydropower plants, were both irresponsible actions.

He said CEB's tariff methodology misinterpreted an established tariff methodology. A bulk supply account which was supposed to have been set up in 2011, which would make many costs transparent, was still not in existence.

Siyambalapitiya said the regulator should also have clawed back 13 billion rupees allowed in 2011. The claw back alone could cut the tariff by 6.0 percent.

He said transmission and distribution losses of both CEB had Lanka Electricity Company (LECO) had come down to 12 percent ahead of target for which they should be commended.

But the CEB's transmission unit had losses of 4.4 percent which was higher than the 3.0 percent target for 2012.

There was no independent calibration of transfer metres between transmission and distribution and also between generation and transmission and most were related parties.

Tilak Siyambalapitiya, a top energy sector expert said the basis on which power plants were to be used in 2013 (dispatch schedule) was unknown.

The dispatch schedule was not according to the tariff methodology required by the regulator but even if another methodology was used, it has not been disclosed, he told a hearing called by the Public Utilities Commission of Sri Lanka.

The efficiency of the plants was not known, he told a public hearing on a proposed tariff hike called by the regulator. The actual heat rates were supposed to be tested by a certified technical auditor.

"Where are these tests?" he asked.

Sri Lanka's thermal plants have peculiar costs with combined cycle plants being more expensive than less efficient than smaller diesel plants.

Laxman Siriwardene, from Pathfinder, think tank said costs at the CEB; a state monopoly was not transparent.

He said the regulator itself has removed 15 billion rupees in costs and refused to allow three plants whose contracts had expired.

Siriwardene said while there was a principle that tariffs should be cost-reflective, there was no way to determine the actual costs. He said there was no information about other expenses of the CEB which had 17,000 employees.

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Feasibility of Solar Electricity in Sri Lanka. Overview of Solar PV Installation in Hotel Industry by SWITCH-Asia Greening Sri Lanka Hotels Programme

29th March 2013, www.dailymirror.lk, By Srilal Miththapala & Suranga Karavita

An overview of the state of Solar PV installation in the Sri Lankan hotel industry was carried out recently by the SWITCH-Asia Greening Sri Lanka Hotels programme project team. While doing this study, the project team also analysed the impact of the proposed electricity increases on domestic Solar PV installations as well. A ready reckoner feasibility chart for evaluating financial feasibility of Solar PV installations for residences was also prepared. The following paper discusses these aspects.

Introduction

Of late, there has been much discussion about the generation of electricity from solar energy. This is usually called solar photovoltaic generation (Solar PV), where an array of solar cells, typically mounted on the roof of a building, will capture the solar energy and transform it to electrical energy.

In a conventional or standalone system, the solar electricity has to be stored, since usage (demand) does not always coincide with supply (generation).  Hence, in a typical installation, electricity is generated in the form of direct current (DC) and usually stored in batteries. The size of such battery banks required will depend on the size of the installation and the days for which the system can operate on battery power alone, with no input from other generation sources.

In addition, the system requires an inverter to convert the electricity stored in the battery in the form of direct current (DC), to alternate current (AC) at a higher voltage, to be compatible with the downstream installation. The cost of a battery bank can be as much as a Solar PV panel for a well-designed system, which can provide power for several days when the Solar PV is not generating electricity. Batteries are still in the development stage and they are prone to premature failure. So, it is common that in Solar PV installations with a battery bank, some of the batteries have to be replaced before the specified lifetime.

Cost of installation

The high cost of Solar PV panels and the large amount of batteries required for storage resulted in the cost of such installations being prohibitively high and not feasible for installation as alternate energy sources.

With rapidly increasing electricity rates, reduction in price of Solar PV panels and  acceptance by the Ceylon Electricity Board (CEB)  to trade electricity units with the grid, Solar PV installations are at present becoming more financially attractive.

‘Trading’ of electricity

This ‘trading’ of electricity units, recently allowed by the CEB, is referred to as net metering or grid tie. This is where an electricity consumer is able to generate electricity at the consumer’s own premises, using any form of alternate energy source and can then synchronize the electricity thus produced with the CEB system and ‘export’ it to the CEB.

The consumer is not paid for this ‘exported’ electricity but is given credit (in kWh), which is set off against his normal electricity consumption off the grid. There will be metering for consumption as well for export of energy to the CEB network.

Each month, consumption and export of energy will be compared. If the export is more than the consumption, credit is given (in kWh). If consumption is higher than export, the consumer is charged for net amount of consumption (consumption - export).

 This is effectively a ‘win-win’ situation for both the consumer and the electricity service provider (the CEB or LECO). The consumer benefits by being able to export the electricity he generates without having to store it, thereby reducing the need and the cost for a storage battery bank.

From the CEB’s/LECO’s point of view, there is some form of electricity demand reduction from the grid, since the consumer is now producing some quantum of electrical energy.

At present, the cost of investing in a grid tie Solar PV is around Rs.350,000 per kW and the cost of investing in a conventional Solar PV system is around Rs.700,000.

Solar PV installation in hotel industry

In spite of grid tie options being available, the reduction in cost of Solar PV panels and increased cost of electricity, Solar PV for larger industrial applications is still not financially attractive, due to the long pay back periods of around 15 years for a grid tied system and around 30 years for standalone systems.

Hence, from the surveys and studies carried out by the SWITCH-Asia Greening Sri Lanka Hotels programme, it has been found that Solar PV installation in hotels is still few and far between. In fact, from the 350 odd hotels working with the Greening Hotels programme, there are only three hotels, which have some form of Solar PV installations.

Ulagalla Resort

This 80 roomed resort hotel in Anuradhapura has been the trailblazer in taking a bold step in installing the largest Solar PV system in a hotel so far. It has a bank of Solar PV panels covering 900 sqms, generating 120 KW of electrical energy, which amounts to about 40 percent of the hotel’s total electrical demand.

The system operates on a net metering platform and cost about Rs.125 million for the entire installation, which was done with the commissioning of the hotel in 2010. While certainly the hotel has taken a bold and pioneering step in having such a large Solar PV installation, payback periods are still quite high.

However, the hotel has been able to market this unique installation to give it a strong identity as a hotel which embraces good sustainable consumption practices.

Jetwing Sea and Jetwing Blue

When the former Jetwing Seashell Hotel was refurbished and relaunched as Jetwing Sea, a self-contained (inclusive of battery bank) Solar PV was installed for one wing of the guest rooms in the hotel. The installation cost was about Rs.12 million in 2010 and generates approximately 15 kW.

Former Jetwing Blue Oceanic was also refurbished and relaunched in the same year as Jetwing Blue and a Solar PV system, similar to Jetwing Sea was installed of capacity 20 kW, at a cost of Rs.16 million.

More than being a financial consideration, here again, it has become a unique selling proposition (USP) and a powerful marketing tool. The hotel proudly advertises itself that most of its rooms’ electrical energy is powered by the sun and each room has an indicator to show when the room is powered by solar (green light) and when it is powered by the mains, during low sunlight periods (red light).

Hence, other than for selective marketing and differentiating propositions, currently, larger Solar PV installations, either grid tied or standalone systems do not seem to be that viable in large scale hotel applications.

Solar PV for residences

However, with the rapid increase in electricity rates for residential buildings which consume higher loads, grid tie Solar PV installations are becoming a very much more feasible option. 

Provided adequate roof area or space on the ground is available, any residence utilizing more than 300 units of electricity (kWh) per month, with the grid tie Solar PV installation at current cost and new electricity rates (which are being proposed),  will pay back in just about less than six years. 

The project has developed a ready reckoner, which gives a quick approximate indication of the financial feasibility of a Solar PV installation for residences.

It is evident from the table below, which shows the co-relation of payback periods for Solar PV installations and units consumed, it is evident that the moment a domestic consumer exceeds the lower thresholds of consumption of around 250 units, the effective electricity charges increase exponentially, bringing the payback period rapidly down to  seven years and less.

(Srilal Miththapala, an Electrical Engineer by profession and a senior tourism professional and Suranga Karavita, a Mechanical Engineer, are Project Director and Industry Technical Services Manager of EU SWITCH-ASIA Programme Greening Sri Lanka Hotels project implemented by Ceylon Chamber of Commerce respectively).

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South Korea's $2mn Grant for Energy Efficient Street Lamps in Sri Lanka to Cut Costs by 80pct

18th January 2011, www.island.lk, By Ifham Nizam

The South Korean government will provide a grant of nearly USD two million to the Lanka Electricity Company (Pvt) Ltd (LECO) to convert conventional street lamp bulbs into energy efficient ones in the coastal belt. LECO provides 10 per cent of the country’s electricity consumers especially with a focus in the coastal belt.

The Company’s Chairman Chandana J. Haputhantri told The Island’s Financial Review yesterday the Korean Government will support as a pilot project after inspecting the energy efficiency program to cut energy costs by 30 per cent using automatic switch on and switch off method.

Haputhantri says Rs. 400 million is spent annually on street lights coming under the LECO area. However, there is a 30 per cent reduction following the induction of the automatic system. He says by using energy efficiency bulbs the cost to maintain street lamps could be cut down by 80 percent.

The LECO Chief also says they recorded an income of around Rs. 14 billion last year and anticipates a figure of around Rs. 18.5 Billion this year. Last year Rs. 12 million was spent on purchasing power.

With the intention of improving their service to the consumer plans have been implemented to increase that figure to Rs. 15 million this year. Through this LECO anticipates a profit of Rs. 796 million, against the profit of Rs. 264 million (before tax) recorded last year.

He says LECO which lays claim to a prudent history of 25 years, can be identified as a company that provides the same quality service as the CEB.

"Furthermore, we are committed to serve the people through being environmentally friendly, satisfying the customer through innovative services, dedication and providing the best service through a talented and contented workforce," he added.

LECO provided their services to 392,782 consumers in 2004, have been efficient enough to improve that figure to 473,813 this year.

Although LECO is reaping the benefits of providing the consumers a better, trusted service, through its favourable infra structure, they are committed to developing constant quality development programs.

In addition to these consumer oriented programs, plans are currently under way for the progressive development of more efficient street lighting.