Will CEB make an effort to comply?

President’s target on renewable energy share in power generation:

by Dr Janaka Ratnasiri

IMPLEMENTING THE NEW POLICY DIRECTIVE OF PRESIDENT

As described in detail by the writer in an article published in The Island of 25 and 26 September, a press release issued by the President’s Media Division on 14.09.2020 said that the President had directed that plans should be made to generate 70% of the country’s overall electricity requirements from renewable energy (RE) sources by 2030. Apparently, this has been decided at a meeting that President had with the State Ministry of Solar, Wind and Hydro Power Generation Projects Development and the Power Minister at the Presidential Secretariat on the 14th September. The Press Release also said that The Government has made the promotion of renewable energy a top priority and President advised the Secretary to the President to issue a gazette calling for all the institutes to assist in this endeavor. See http://www.pmdnews.lk/70-of-electricity-demand-will-be-generated-using-renewable-energy-by-2030/.

However, as required by Section 5 of the Sri Lanka Electricity Act, No. 20 of 2009, to give effect to this policy decision, it has to be referred to the Cabinet to get its approval and incorporate it in the General Policy Guidelines in respect of the Electricity Industry. Thereafter, the PUCSL will be able to direct the CEB to comply with the new policy guidelines. Being a matter concerning RE share in power generation, the relevant cabinet paper will have to be presented to the Cabinet by the Power Minister. The general practice is for the Secretary to the Ministry to draft the paper in concurrence with the Minister. The question is how long the Power Ministry will take to attend to this.

CEB’S LONG-TERM GENERATION EXPANSION PLAN

According to the Sri Lanka Electricity (Amendment) Act No. 31 of 2013, any capacity addition to the country’s power system requires that the new plant shall comply with the provisions in the CEB’s Long-term Generation Expansion (LTGE) as well as the approval of the PUCSL and the Cabinet. The LTGE Plan for 2020-2039 prepared by the CEB in May 2019, when submitted to the PUCSL for approval, PUCSL returned it saying that it did not confirm to the Policy Guidelines of the Ministry on Electricity Industry as decided by the Cabinet in March 2019 which had specified a target of 50% as share of renewable energy (RE) sources to be achieved by 2030 and also saying that it did not include the externality costs.

In response, the CEB has revised its LTGE Plan and resubmitted it to the PUCSL in March 2020. (See https://www.pucsl.gov.lk/lcltgep-2020-2039/). However, the revised plan too has a RE share of only 35% as in the original draft and it has not been adjusted to achieve a target of 50% of RE by 2030, though requested by the PUCSL. By its letter dated 28.05.2020, the PUCSL has reiterated that the CEB Plan be revised to achieve the requisite target of 50% of RE share by 2030. However, with the President giving specific directions recently to generate 70% of electricity from renewable sources by 2030, there is an urgent need for the Policy Guideline document to be amended through a Cabinet decision to give effect to the President’s new directive. The CEB will then have to revise its LTGE Plan to comply with this policy.

BUILDING THE FIRST GAS POWER PLANT IN SRI LANKA

The Chairman of the Ceylon Electricity Board (CEB) was reported in the weekly Sunday Morning of 18 October 2020 as having said that the power purchase agreement (PPA) for the 300 MW combined cycle gas turbine (CCGT) power plant to be built at Kerawalapitiya selected after calling for tenders in 2016 would be signed once the Cabinet approval is received for it. (http://www.themorning.lk/300-mw-kerawalapitiya-lng-plant-ceb-awaits-cabinet-nod/). Though the CEB Chairman has said that approval of the Cabinet has been sought for the PPA to be entered into with the supplier of the CCGT power plant, according to the Sri Lanka Electricity Act No. 31 of 2013, once the project is approved by the Cabinet, the PPA needs the approval of the PUCSL only.

It may be noted that the CEB invited proposals through a 500-page Requests for Proposals (RFP) for this power plant in November 2016. However, the decision on the award of the tender took more than 3 years for reasons described in detail by the writer in several of his previous articles published in the Island including the one that appeared on 19.08.2019. The writer pointed out that the CEB should be held responsible for delaying this project.

The writer understands that the award of the tender to the local tenderer, Lakdhanavi Ltd, who had submitted the lowest tender was approved by the Cabinet last December. Further, soon after President Gotabaya Rajapaksa assumed office, he has instructed the award be made to this tenderer. It is therefore surprising that the CEB is seeking the approval of the Cabinet again for the project and in addition is seeking the approval of the AG’s Department for the PPA, which are not necessary according to the provisions in the Electricity Act.

According to a report appearing in the Sunday Times of 25.10.2020, the matter has run into a controversy as the AG’s Dept. has not granted its approval for the PPA. Apparently, some changes have been proposed by the tenderer whereas the RFP has not made provisions to make such changes after the bids are closed. Nevertheless, the CEB as well as the Ministry are in agreement to the changes and want to proceed with the signing of the PPA.

The report says that the Minister will submit a Cabinet Paper seeking its approval to authorize the CEB to sign the PPA with Lakdhanavi at the agreed levelized tariff and issue a letter of intent to build the power plant. (http://www.sundaytimes.lk/201025/news/power-plant-ministry-ignores-ags-advice-seeks-go-ahead-from-cabinet-421184.html). If the RFP did not have provision to make any changes after the bids are closed, it is a lapse on the part of the person who drafted the RFP and should have been rectified at the beginning and not brought up nearly 4 years later and cause further delay.

CEB’S IMMEDIATE PLANS FOR POWER SECTOR DEVELOPMENT

In the CEB Chairman’s statement given to the press, he has also given the following list of additional major thermal power plants planned to be built within the decade.

A 300 MW CCGT power plant operating with gas to be built by a local contractor

A 300 MW CCGT power plant operating with gas to be built jointly with India and Japan with financial support from the Asian Development Bank (ADB) as a joint venture with CEB.

A 600 MW coal power plant as an extension to the existing coal power plant at Puttalam.

According to a report appearing in the Island of 26.10.2020, the CEB Chairman has stated that “the government would go ahead with the fourth power plant at the Norochcholai, as soon as the Environmental Impact Assessment (EIA) was completed. He has further said that the Cabinet had already endorsed the plant’s fourth unit although the AG’s Department and the PUCSL were still studying the proposal. (https://island.lk/govt-to-go-ahead-with-fourth-coal-plant-at-norochcholai-once-eia-is-ready/).

In the writer’s above article, he pointed out that in order to achieve a target of high RE share in the energy mix for power generation, all the existing and proposed coal power plants and diesel operated generators will have to be removed and correspondingly increase the share of RE sources such as solar, wind and biomass power plants. In the President’s vision for clean energy, coal has no place, which unfortunately the utility has still not understood.

The meeting that the President had with the Power Ministry and Renewable Energy Ministry on the 14th October would have been attended by the CEB Chairman. Hence, he would have been aware of the President’s directive when he made his statement to the press last week proposing to build new coal power plants. In any case, the President announced his policy to give high priority for RE sources in his manifesto. It appears that the CEB is not keen in meeting the President’s target of achieving 70% share of power generation from renewable resources since it is planning to build more coal power plants which will make it impossible to achieve the President’s target.

BRINGING LIQUEFIED NATURAL GAS (LNG) FOR THE NEW POWER PLANTS

The new CCGT power plant is required to operate with natural gas once it is available and until such time, it is permitted to operate with petroleum oil – fuel oil or diesel oil. In order to realize the President’s vision to have the existing CCGT plants converted to gas and to operate new CCGT plants to be built soon, it is necessary to have LNG available in the country by the time these power plants are built. However, the importing of LNG for operating the power plant has been a problem because there are no suitable locations to build a land terminal on the West coast close to Colombo and even mooring a floating storage and regasification unit (FSRU) off the West coast has been a problem.

But acquiring and operating a land terminal or a FSRU are complex affairs and under the current situation, the country lacks the necessary expertise to venture into such an exercise. Realizing this, India, Japan and South Korea offered assistance in this regard, but authorities here are somewhat reluctant to accept such assistance. As described previously, even the selection of a CCGT power plant on BOOT basis and signing its PPA could not be accomplished by our professionals even after a lapse of nearly four years despite the fact that several CCGT power plants are in operation in the country and CEB has entered into PPAs with hundreds of independent power producers in the past. Therefore, one cannot imagine how long our professionals would take to finalize a PPA for a hitherto unknown operation of a FSRU or an LNG land terminal.

There are several other options available for bringing LNG into the country. One is to use a mini-terminal at Dikkowita adjoining its fisheries harbour for which the Cabinet approval has already been granted. LNG is brought to the terminal in small shallow carriers which could be accommodated in Dikkowita terminal. After re-gasification, the gas could be taken to the power plant site using pipelines. The writer understands that Its commencement is awaiting the approval of the relevant regulatory authorities. It appears that there is no one in authority willing to take a decision on this matter.

Another option available is to make use of insulated standard containers conforming to specifications of International Standard Organization (ISO). These containers could be used both for transport and storage until the gas is used in the power plant. Once a container is brought to the Port in a standard container carrier, it is unloaded on to a trailer drawn by a prime mover and taken to a yard close to the power plant site. As and when required, a container is moved to a platform built close to the power plant and LNG is fed to a re-gasifier with storage from which the gas is fed to the power plant. There is no additional infrastructure required to import these containers other than what is already available within the Port. The only requirement is that it needs the clearance from the Ministry of Energy, Ports Authority, Motor Traffic Dept. and the Central Environmental Authority.

A third option is to negotiate with China who is building an LNG terminal within Hambantota Harbour to feed its 400 MW CCGT gas power plant currently being built there to supply power to industries in the Chinese Industrial Estate planned in Hambantota. If the capacity of this terminal is increased, the additional gas could be brought to the city in a pipeline laid along the highway reservation for operating the gas power plants planned near the city. In addition, the government should be able to provide a bunkering service to LNG operated vessels passing Hambantota for which Singapore is already building the necessary infrastructure.

A fourth option is to develop Trincomalee Harbour as a hub for natural gas distribution. LNG could be brought in large carriers to Trincomalee Harbour which has the ideal depth and area to build a large land terminal. Once re-gasified, gas could be stored and brought to the city and other load centres through pipe lines. Surplus gas could be supplied to South India who has been negotiating for decades to bring gas from suppliers in the region including Myanmar, Turkmenistan and Iran. Sri Lanka need not spend any capital on the project other than providing the land and regulatory mechanism while building the actual facility could be assigned to an investor with good track record.

CONCLUSION

With the President announcing his new policy on incorporation of 70% of power generation from renewable resources, the Ministry Policy Guidelines on Electricity Industry needs amendment through a Cabinet decision to give effect to this policy decision. Further, the CEB will have to revise its long-term generation expansion plan to align with this policy as its current plans only yield a RE share of only 35%.

Achieving a 70% target of renewable energy share in power generation by 2030 is feasible both technically and financially as pointed out by the writer in his recent articles which appeared in the Island of 25th and 26th September. However, the question is whether the CEB is willing to give up coal enabling it to meet the President’s target.

There are several options available for bringing LNG to the country to make achieving this target feasible. However, a suitable regulatory mechanism needs to be put in place before such mechanisms are implemented along with necessary facilities for monitoring of operations and ensuring safety protocols are adhered to following acceptable international procedure including guidelines laid down in international classified societies.

With the President giving the leadership for adopting cleaner technologies for power generation, it is essential that the relevant organizations, particularly the CEB, do their utmost to achieve his targets without giving lame excuses or its engineering staff threatening trade union action to get the President to change his policy as they have done in the past.