Flouting of competitive bidding process adopted for solar and wind power projects feared

• Two leading renewable energy players write to Power Minister expressing concerns
• Say undermining of competitive bidding process could derail govt.’s renewable energy targets
• 180 MW solar and wind power projects have been awaiting govt. approval for about 10 months

With 180 MW solar and wind power projects awaiting the approval of the government for over 10 months, two key players in the renewable energy sector expressed concerns on possible moves to undermine the competitive bidding methodology adopted to develop the country’s renewable energy sector.

LVL Energy Fund PLC and Energy Generations Holding Limited (EGHL) in a letter addressed to Power Minister Gamini Lokuge cautioned that any attempts to move away from the competitive bidding process would not only discourage investors but it would also create obstacles in achieving the government’s 70 percent renewable power generation target by 2030.  “Any effort to undermine this established practice of competitive bidding will not only dissuade serious and responsible investors like us from participating in the development of renewable energy projects in Sri Lanka but also will frustrate the government’s objective of achieving 70 percent renewable energy target by 2030,” LVL Energy Fund said. After finalising the necessary work, the Ceylon Electricity Board (CEB) submitted the bid documents for 140 MW solar and 40 MW wind power projects to the Power Ministry, over 10 months ago, for the approval of the Cabinet of Ministers, before floating these tenders. However, the CEB and interested parties in these projects have been kept in the dark since then. “We note that this delay is abnormal and contradicts with President Gotabya Rajapaksa’s plan towards reaching 70 percent renewable energy target by 2030,” EGHL noted. 

Joining LVL Energy Fund, EGHL also backed the competitive bidding methodology as the best way to develop the country’s renewable power sector, with least cost to the consumer.

Further, LVL Energy Fund pointed out that this methodology, which encourages competition, enables local bidders to come on par with global pricing.

“Judging from pricing attributable to past tenders, it is clearly evident that tariffs offered by the local bidders have been on par with those attributable to large solar and wind tenders worldwide,” the company said.

 According to a report published by the Power Ministry in 2017-18, the introduction of the competitive bidding process for wind and solar power projects contributed for 50 percent reduction in purchasing tariff in 2017.

Further, more and more countries globally are moving to competitive bidding, from the feed-in tariff method.
According to the International Renewable Energy Agency (IRENA), the number of countries adopting the renewable energy auction schemes rose to 109 in 2020, from just 16 countries a decade back.  At the same time, the weighted global average price of contracted solar energy fell from US $ 250/megawatt hours (MWh) to US $ 56/MWh and that of onshore wind decreased from US $ 75/MWh to US $  48/MWh. 

“We therefore respectfully request you to consider developing the renewable energy sector through a competitive bidding process that can ensure successful participation of local entrepreneurs and companies like ours. This will ensure retention of project returns within the country for further development of the sector. We emphasise that only such a selection process will ensure a least cost option to electricity consumers in Sri Lanka,”  LVL Energy Fund urged.  (NF)