CEB’s Least Cost Long Term Generation Plan 2018-2037 Faces Public Scrutiny

June 30, 2017

In line with the duty of developing and maintaining an “efficient, coordinated and economical system of electricity supply for the whole of Sri Lanka”(CEB Mission), the Ceylon Electricity Board (CEB) has submitted its Least Cost Long Term Generation Expansion Plan 2018-2037 (LTGEP) for the approval of the Public Utilities Commission of Sri Lanka (PUCSL). The LTGEP draft report is the key document which defines Sri Lanka’s plans for generation expansion while providing information on the demand forecast, economic, environmental and other parameters used to guide future investment and implementation plans as well as the energy mix used to meet expansion needs including the component of renewable energy sources.

The report was made available for public comments via the PUCSL website and a public consultation was held in order to facilitate public participation in the decision-making process of a national document which would have a decisive role in defining the country’s future pathway for energy security, and sustainable economic growth.

Parameters Specified in LTGEP

The data in the LTGEP records that the average growth of generation demand for the period from 2018-2022 is expected to be at 5.9 percent per annum, while peak demand is expected to increase at 5.1 percent per annum. Further, from the year 2030 onwards, the day peak is expected to surpass the night peak.

With the installed capacity at the end of 2016 at 4054 MW, the LTGEP identifies plans to have an installed grid capacity of 4269 MW at 2018 and a capacity of 10783 MW at the end of 2037. For this base case projection, the energy mix proposed consist of already committed plants and new additions of coal, major hydro, pumped storage hydro, combined cycle, oil and gas turbine plants and other renewable energy plants.

Given the least cost economic valuation, the LTGEP identifies coal as the least cost generating energy source, and the major source of power during the 20 year period with its share reaching 40% by 2025 and 50% by 2034. Contrary to the increasing capacity of coal in long term energy plans, the contribution from renewable energy power plants is said to be more than 40% by 2025 and 33% by 2034, manifesting a declining trend.

Overall, the Base Case plan in the LTGEP has delineated the development of 1500MW LNG, 2700MW Coal, 105MW Gas Turbine and 320MW Furnace Oil Power by 2037 as well as renewable energy development of 1205MW Wind, 1392MW Solar, 215MW Mini Hydro and 85MW Biomass. More specifically, the total addition of renewable energy within the 20 year period is mentioned as 1205 MW of wind power, 1232 MW of Solar power 200 MW of Mini Hydro power and 80 MW of Bio mass Power.

Public Comments for the LTGEP.

The assumptions and scenarios included for generation planning in the LTGEP was subject to public scrutiny at the public consultation held at the Bandaranaike Center for International Studies. The consultation saw a wide participation of key stakeholders representing various state entities, private sector organizations and institutions, CSO organizations, private citizens and other interested parties.

One of the main areas of contention was that the Base Case scenario found in the LTGEP did not align with the national policies on power and energy. “The Long Term Generation Expansion Plan developed by the CEB contradicts the government’s policy of moving towards a zero emissions pathway through renewable energy development as mentioned in several key documents including the presidential manifesto and the National Energy Policy developed by the Ministry of Power and Renewable Energy”, said Mr. Asoka Abeygunawardana, Chairman of Strategic Enterprise Management Agency (SEMA). The national policy clearly defines the energy sector target as to move towards meeting the total demand for electricity from renewable energy and other indigenous energy sources by 2030.

Moreover, the proposed Base Case Scenario, with the inclusion of coal plants violates several national commitments made. Nationally Determined Contributions (NDCs) submitted to the United Nations Framework Convention on Climate Change (UNFCCC)  in 2016, recognizes the country’s commitment of reducing GhG emission through cuts in the coal and liquid petroleum fluids in the energy sector, with a simultaneous focus on developing renewable energy sources. As a member to the Climate Vulnerability Forum, Sri Lanka has committed to become zero emission by 2050.

In addition, several environmental organizations and concerned citizens pointed out to the LTGEP sole focus on the economic valuations based on least cost scenarios, thereby ignoring or discounting the cost of externalities and environmental cost embedded. The implementation of future coal power plants, particularly the proposed Foul point in Trincomalee was raised as a case in point due to the detrimental impact posed on the unique eco-systems and public wellbeing of the area.

Inconsistent Methodology for Economic Costs

Several speakers including representative from the Petroleum Resources Development Secretariat and other independent consultants raised the issue of the inconsistency of the methodology being used to calculate the economic costs. The report’s heavy dependence on capital cost and fuel cost which have also been based on outdated data was reiterated. According to some of the speakers the price of fuel was based on the  market prices and not on economic prices, and failed to capture the declining value of the Sri Lankan Rupee. This was highlighted as leading to miscalculations in the estimation of the least cost scenarios pertaining to coal. Adjustments made would point to a lower generation cost for Liquefied Natural Gas (LNG) than for coal.

Mr. Tilak Siyambalapitiya referred to the current trend of drifting towards increasing use of diesel and other liquid petroleum fluid in order to fulfill the country’s energy needs.  “The share of electricity generation from all forms of oil up to end April 2017 was a staggering 42% “ he said.

The viability of the integration of supercritical coal power plants and the pump storage power plant in the LTGEP is questionable.

Also mentioned as issues was the lack of attention given to the Demand Side Management activities which is said to be the cheapest option. In addition, several other presenters pointed to the untapped potential of renewable energy in the case highway solarisation.

Given the consideration and opinions expressed at the public consultation, PUCSL has requested CEB to amend the draft document of the Least Cost Long Term Generation Expansion Plan 2018-2037 in line with the government policies. It would be interesting to observe how the Plan would reflect the comments and input provided, and the requests for more focus on renewable energy and climate friendly energy initiatives will be reflected in the final version of the Plan.

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