Sri Lanka plans to connect up to 2,800 Mega Watts of renewable energy into the national grid over the next three years, Power and Energy Minister Kanchana Wijesekera said.
“We can connect about 2,800 Megawatts to the existing grid,” Minister Wijesekera said. “We cannot do it in a year. We have a three-year plan.
“We think we can reduce the generating cost from 47 rupees a unit to about 40-35 rupees.”
Sri Lanka has an archaic power grid which cannot absorb power from different locations. Several billion dollars are needed to upgrade the grid but the projects are on hold pending debt restructuring following a default.
Sri Lanka has already raised the price of rooftop solar to encourage generation, he said.
Sri Lanka’s existing generation capacity is 4,200MW with about 35 percent of the total energy coming from a 900 MW coal plant complex.
Cost of solar panels and other equipment had gone up after the central bank printed money to suppress interest rates and the rupee collapsed from 200 to 360 to the US dollar in 2022.
Sri Lanka is engaging in never ending utility price increases saying ‘painful reforms’ are needed without changing the law to curb the ‘flexible’ policies of the central bank which lead to repeated mis-targeting of interest rates and currency collapses.
Sri Lanka’s renewable power producers are struggling to stay afloat due to payment arrears from state-run Ceylon Electricity Board and inability to buy critical spares for maintenance, industry officials said.
The newly formed Federation of Renewable Energy (FRED) said the CEB had 10-months arrears totaling 35.18 billion rupees dating back to October 2021.
“Some renewable energy suppliers have stopped their plants and we are in the verge of bankruptcy,” Prabath Wickramasinghe, Past President Small Hydro Power Developers Association said.
In September the CEB started to process the October 2021 arrears of 5 billion rupees. The industry has already sent the August bills.
“Due to the inability to maintain and buy critical spares some developers have stopped their plants,” Wickramasinghe said.
When the renewable operators stop their plants, the energy has to be replaced at higher costs, he said.
Renewables are now paid 17-18 rupees (lower for some older plants), compared to 35 rupees or more for coal and around 100 rupees for diesel, the industry said.
The CEB has not been given a tariff hike by the regulator and the political leadership since 2013, despite a falling rupee and rising fuel costs leading to frequent losses unless there is heavy rain.
When there is heavy rain the CEB can generate power from hydro plants fully owned by the utility which are depreciated and cost around 2 to 3 rupees a unit.
