25 May 2022 01:08 am Views - 772
In many ways ours is like the island of lotus-eaters. Presence of bad politics, corruption, unproductive public service, a monarchical culture and a crooked economic structure for half a century, have not deterred us. All is hunky-dory until we are hit by a crisis. Then we have a quick fix and doze in apathy until the next one hits us.
Power crisis again
Now a power crisis has hit us again. Again - because this is not the first one. This is the second major one in two decades. Last one was in 2002. Both sealed the fate of the governments. In between there were others. There were also some near-major ones averted, either because nature came to our rescue with rains ramping up hydropower generation in the eleventh hour or we had enough forex to buy fuel even at high market prices.
Previous crises were a result of capacity shortage. This time it is a result of fuel shortage. Indeed, it is a fuel crisis, leading to power and other crises. Fuel shortage has hampered cooking, transportation and thermal power generation. Little that we realise the power crisis could have been far worse, if not for the good rains we received since the beginning of last year. So, if we think our lives are in a chaos now, it could have been far worse if nature was unkinder.
Even though the north-east monsoon (December-February), which feeds the Mahaweli basin with the highest capacity of hydropower installations was rather subdued, intermittent rains from February to end of April, which usually is a very dry period, enabled hydropower generation at a high level. We are now having inter-monsoon rains and will head towards south-west monsoon end of May. That may help Laxapana Complex and Small Hydropower generation in Kelani, Kalu, Walawe and Gin Ganga basins.
Good rains maximised hydropower generation at zero input cost. That saved substantial forex that was to be spent on fuel to operate oil and coal powerplants, which could have critically imperilled the forex reserves much earlier. It also saved the state coffers running dry far earlier in having to procure fuel at astronomically high market prices, crippling our economy far worse much earlier.
Shortage of fuel results from forex scarcity and high market prices. Forex is brought to the country via exports, remittances, loans, aid and portfolio and foreign direct investments. Influx of forex gets impacted, if its sources get effected. That can lead to a scarcity of products that require forex, making the country insecure. That is what happened for fuel and some other essentials.
Hegemonic behaviour
Good policies, plans and plan implementation are required to counter the risks such as this. Now, as usual we can blame the politicians for this crisis too. But this one is manufactured by the public institutions with their hegemonic behaviour and firefighting. It is a result of nothing but poor execution of national policies.
This country has a good national energy policy. One was gazetted in 2008 and the other in 2019. If that was followed, this crisis could have been averted. 2008 policy features ‘energy security’ amongst its core elements. It says, “… the future energy mix will be rationalised, considering crucial factors such as the economic cost ..., reliability of supplies … and strategic independence.”
2019 policy specifically talks of forex and how to avert a crisis like this one. It says, “Energy supply from renewable energy … will be increased to reduce pressure on foreign exchange …” Its solution for the power crisis is centred on renewable energy. Ramifications of overdependence on fuel-burning power, in terms of economic cost, reliability, strategic independence and forex shortage, are now learnt the hard way.
There is a view that if we had a second coal plant (Sampur), this crisis could have been negated. Well, Sampur could have helped, if there was a capacity shortage. The blackouts are not a result of capacity shortage but having too much capacity in wrong types and too little in right types of powerplants. In fact, right now we have idling thermal power capacity because of fuel unavailability. Doesn’t that show a serious planning failure?
Although lack of fuel is currently due to lack of forex, in other instances, it could be due to anything that effects fuel delivery, such as transportation, production shortage, embargoes, so on and so forth. It can also be due to the unaffordability of astronomically high market prices.
Lack of availability and unaffordability are two facets of the same issue. Norochchalai coal plant’s generation cost was below Rs.10 per unit at the beginning. It is over Rs.35 now. That is over two times that of the Ceylon Electricity Board’s (CEB) average selling price of Rs.17. This is our cheapest thermal powerplant.
In case of furnace oil or diesel powerplants, the fuel cost alone is over Rs.75 unit. The annual fuel cost of the coal plant alone is now estimated to cost same as the annual revenue of the CEB. So, our energy security is compromised not just because of the dearth in forex but also due to the unaffordable generation costs.
Even if we did have forex to buy fuel, the state coffers could have run dry in a flash unless the costs were passed down to the consumers. Either way, it will end up in hyperinflation. It is this energy insecurity that the national energy policy was to address. But we miserably failed.
Poor policy execution
We failed because of poor policy execution. We failed to transform policy to plans and implement. We failed because our generation plans (Long-Term Generation and Expansion Plans or LTGEP) prepared by the CEB, which is responsible to plan and implement new power capacity, completely ignored the essence of the energy policy. Its hegemonic conduct, hypocrisy and motives were seemingly at odds with the national policy.
So, in 2015, the LTGEP estimated 3,200 MW coal capacity out of 5,600 MW new capacity planned for 20 years ahead. If the Public Utilities Commission of Sri Lanka (PUCSL), the regulator, didn’t reject that plan and it was implemented, we would be having 1,100 MW new coal-firing powerplants now in 2022, with no fuel to operate, with the burden to pay loan capital and interest thereon. Fortunately, those never saw the light of day. So, now if we are having too many wrong powerplants, we in fact nearly had even more. Hence, this crisis is not bad as what could have been. In fact, we have unknowingly averted a disaster.
Thankfully, the PUCSL kept rejecting the CEB’s subsequent plans too. Lobbyist and social groups also obstructed the attempts to construct new thermal plants through lawsuits and extensive lobbying. But since 2015, we are floating without an approved generation expansion plan. Every time the CEB is pushed back, a new plan is prepared with a minor dilution of coal power capacity. The LTGEPs from 2017 to 2022 see that the coal capacity only crawling backwards from 3,200 MW to 2,700 MW.
On the other hand, we should question whether this nation can sustain such a barrage of coal power amidst pledges made by virtue of being a signatory to Paris accord and the subsequent Nationally Determined Contributions (NDCs) placed before the UN. The NDCs are a “Climate Promise” we have given to the world, through which we target to reduce emissions by 30 percent. Twenty percent of this is to come from the energy sector.
Institutional hegemony is not all. We suffer even in the hands of individuals. In 2015, a senior CEB officer almost singlehandedly stopped procuring new renewable energy projects under feed-in-tariff system, citing a conflict with the Electricity Act. Feed-in-tariff, as opposed to tendered tariff, is a standardised tariff introduced to fast-track small-scale renewable energy development. Since 1996, it enabled an addition of over 1,000 MW renewables. That is bigger than the capacity of Norochchalai and over five times that of Victoria.
The last revised feed-in-tariff varied between Rs.15/62 and Rs.24/79, depending on technology. So, even at Rs.24/79, the feed-in-tariff is below the present fuel cost of the coal plant and third of the oil plants. Since the enactment of the Electricity Act in 2011, no one else found reasons to block renewables until this man unleashed his whims and fancies that dearly lost the country more than 500 MW, whilst others at the CEB, ministries, other agencies and developers haplessly looked on. That should have substantially averted the present crisis. If that capacity is to be procured now, it will cost the nation twice or thrice more. That is the magnitude of this crime.
That’s not all. This blockage also came at a time that the country had invested over Rs.25 billion to augment nine substations, build four new ones and expand the transmission network to integrate more renewables, particularly 300 MW small hydropower. Whilst the substations are now built and the loans raised thereon are serviced, the blockage saw that the new plants meant to be connected to those are not built. Even that’s not all.
These substations were to integrate some existing plants operating undercapacity with temporary connections to other feeders. But most of those are not connected because the inter-connection lines are not built. So, they have put the cart before horse. Therefore, even in the peak of rainy season, the time that the line breakdowns or stability issues are mostly experienced, renewable energy procurement cannot be maximised. That gap must also be met with coal or oil power.
It leaves us the question whether these actions are pre-empted by the motive to profit the diesel or the emergency power producers, who keep their plants permanently on this soil, knowing that they are called upon to chip in constantly. The CEB’s no love lost with renewable energy and the romance with thermal power is shocking. It is shocking at a time when the whole world is shifting towards renewables with technological advancement and plummeting costs. God knows why.
Is there a solution?
So, is there a solution to the power crisis and its recurrence? Unfortunately, there is no quick fix for the present and near-term crisis. Our lopsided energy mix takes time to be rectified. But - yes, there is a possibility of avoiding its recurrence in the medium term. For long-term, the enforcement of the energy policy and preparation and implementation of a LTGEP or a plan reflective of that is essential. That will effectively be a renewable energy development plan.
A bird in the hand is worth two in the bush. Our energy policy is sufficient to solve our crisis. We don’t have to waste months and years to prepare new policies and watch reams of sheets that carry information-garbage gathering dust.
As a medium-term measure, deploying already built infrastructure is the most cost effective and quickest. Therefore, the wind and solar PV projects that have been awarded under multiple tenders, stuck due to numerous reasons, need to be facilitated, with equal or more interest we show at present to fix the fuel crisis. This should give us about 200 MW within one to two years because both wind and solar have shorter development cycles.
Simultaneously, the small hydropower projects blocked should be unblocked and fast tracked. That could give us approximately 200 MW to 300 MW in the next three years. Though small hydropower has a two to three-year turnaround time, it is the most stable and least intermittent energy. It is firm energy in the rainy season.
The wind and solar PV tenders to be floated for over two years but mysteriously held back, should be floated forthwith. These should give us over 500 MW to 600 MW renewables in the shortest possible time with least incremental investments in transmission infrastructure. These are all expansions at utility scale. In addition, the rooftop solar expansion should be an essential variable in the plan.
Rooftop solar also takes us close to being off grid and potentially sorting out our energy security ourselves. 500 MW to 600 MW plus with rooftop solar should pull us over the medium-term challenge, especially with the possibility of the increase in electricity demand to be flat with the expectation that the country’s economic growth will be sluggish.
These numbers are ballpark but should not be too far off target. A proper modelling could refine them. But in modelling the garbage in puts garbage out.
So, what is important is to have the plan’s input parameters set in line with the energy policy. Even if we get a good plan, the success would depend on hard-pressed implementation of it. However, in an island of lotus-eaters where hegemony rules, that is going to be a herculean task, if inhabitants are in peaceful apathy till another crisis hits.
(Kishan Nanayakkara, a renewable energy advocate, can be reached via kishan@resusenergy.lk)