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Sri Lanka Renewable Power sector on the verge of collapse

In the midst of a hard-hitting economic crisis deepened by an acute shortage of foreign reserves, Sri Lanka’s renewable energy sector is grappling to survive due to non-payment of their dues for the supply of power to the national grid.

The Federation of Renewable Energy raised concerns of a concerted effort to scuttle the progress of the sector to boost profitability of the Ceylon Electricity Board.(CEB).

The CEB owes 137.9 billion rupees to independent power producers and the Ceylon Petroleum Corporation amid sudden cost rises which were not compensated by a rise in revenue, Power and Energy Minister Kanchana Wijesekera said.

The CEB owes renewable independent power producers 28.5 billion rupees, other thermal power producers 76.8 billion rupees, rooftop power owners around 1 billion rupees, Minister Wijesekera disclosed. .

Federation representatives remarked that on the back of an unfavourable tariff structure its membership has not received payments for 10 months and warned of a prolonged more intense power crisis should the Government and authorities continue to ignore the prospects of renewable energy.

Had Sri Lanka’s energy authorities not suspended connecting new mini hydro projects to the grid in 2015, and expanded solar and other renewable energy sources to 25% of grid capacity, the country would not face a massive power crisis as it does today, the Federation stated.

But no Government paid attention to this matter, whilst certain officials have provided wrong advice for vested reasons, they said.

The renewable energy sector provides over 1,300 MW in energy to the national grid through mini hydro, wind, solar and bio mass projects. This constitutes 14% of the current national energy mix that consumes over 17,000 GWh annually.

Small hydro plants provide 426 MW of power, whilst roof-mounted solar contributes 627 MW and another 121 MW from ground solar systems.

“We continue to engage all segments of Government to encourage them to expand interest and investment in the renewable energy sector, and to recover our payments. We have connected 1,300 MW. Despite non-payment by the CEB, we are not disconnecting our supply.

“This has been taken for granted. If we discontinue our supply, all segments of Sri Lankans and industry will suffer and power cuts will become longer, but we won’t do that. We don’t want to make things worse. But they are not paying us in a timely fashion because we are keeping it connected,” said Lakmal Fernando.

The Federation says renewable energy offers the best and speediest solution to the country’s burgeoning energy crisis, and the decision by the CEB to halt the expansion of mini hydro and other renewable sources is costing the country over $ 800 million annually due to dependency on fuel and coal powered plants.

It costs Rs. 17 per unit to generate a unit of electricity via renewable sources, whilst the costs spikes to Rs. 37.50 and Rs. 106 for coal and fuel respectively. The renewable energy bill is currently only 5% of the CEB’s total expenditure for generation, but they still continue to hold payments lamented the Federation.

The industry body also pointed out that due to non-payment by the CEB some service providers have been forced to borrow at exorbitant rates to maintain operations.

It added that banks have begun to list the renewable energy sector as a high-risk segment, and this would augur badly to attracting new investments in the area.

They said over 150 MW of small hydro projects are awaiting clearance, whilst there lies potential for 700 MW of rooftop solar systems.

Despite the Ministry of Power calling for Expressions of Interest for projects above 50 MW and receiving 6,000 MW worth of applications, very little progress has been made in the matter.

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