damitha kumarasinghe - feed-in-tariff sri lankan experience

8/6/2019 Damitha Kumarasinghe - Feed-In-Tariff Sri Lankan Experience

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Damitha Kumarasinghe

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Installed Capacity 3,041 MW (2011)

Electricity Generation 10,714 GWh (2010)Hydro : 46%

Thermal : 47%

NCRE : 07%Total Renewable : 53%

New Fuel: Coal

Electrification- end 2010- 90%Target Achieve 100%-2012

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NCRE identified as fourth resource in theelectricity sector fuel diversification and securitystrategy. (large Hydro, Oil, Coal and NCRE)

Endeavour to reach minimum of 10% supplied tothe grid by 2015.

Strategy shall not cause any additional burden onthe end use customer tariffs.

If justified, Government may subsidize the

energy utilities

Proposal to establish Energy Fund fueled bycess, grants etc.

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Ministry of Power and Energy

Policy maker Sri Lanka Sustainable Energy Authority

- Resource allocator/ promoter

Public Utilities Commission of Sri Lanka - Regulator (FiT and Licensing)

Ceylon Electricity Board - Purchaser / Transmission licensee

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NCRE

7%

Thermal

Units Generated (Units Generated (Units Generated (Units Generated (GWhGWhGWhGWh))))----2010201020102010

Hydro

46%

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Biomass

11%

Wind

10%

ContributionContributionContributionContribution from Renewable Sources (from Renewable Sources (from Renewable Sources (from Renewable Sources (Including OffIncluding OffIncluding OffIncluding Off----GridGridGridGrid)))) ---- 2010201020102010

Mini Hydro

79%

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Mini hydro dominates - 79%

Best Mini-hydro Sites are already harnessed

New Energy Sources: take-off is necessary

Possible Candidates: Wind, Biomass

FiT should be able to give sufficient incentive

for developers to invest

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Feed in Tariffs introduced in 1996

(Standardised PPA in 1997)

Sri Lanka was the 9th Country that FiT was- o a a us epor

Until 2007 it was avoided cost (of the utility) based most Mini-hydro plants on avoided cost based FiT

2008 onwards Cost based

Technology-specific

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161

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213

150

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250

8.6 11.123.6

31.239

73

88

112

119

0

50

100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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Hydro Energy (Mini Hydro)

Wind Energy

Biomass -Dendro Ener

Biomass Agricultural & Industrial Waste

Municipal Waste Energy

Waste Heat Recovery Energy

Any Other introduced on 2011

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A production incentive

Common rate for resources dispersed all over thecountry, gives incentives to develop the best sites-

economic allocation of resources

Developer take all the technology and resource risks

Predictable rices cost based FITs and cash-flow for

the developer; attracts investment Ability to promote relatively new technologies by

fixing attractive prices at the beginning- if you havetechnology specific FITs

All should go well if correct prices are set to achievethe Policy objectives

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Parameters UsedParameters UsedParameters UsedParameters Used:

Return on Equity: Equity Internal Rate of Return to behigher than typical Cost of Equity- given for 15 years

Cost of Debt (6 year loan repayment)

Initial Investment

Plant Capacity Factor

Operation and Maintenance Cost

Fuel Cost

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1) Three-tier Tariff: comprises of

Escalable Base O&M rate

Escalable Base Fuel Rate

Non-escalable fixed Rate Vary on: Yr 1-8; loan, ROE, Fuel and O&M

Yr 9-15; ROE, Fuel and O&M

Yr 16-20; O&M, Fuel and incentive

Royalty to Government

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TechnologyTechnologyTechnologyTechnology Rates(LKR/kWh)Rates(LKR/kWh)Rates(LKR/kWh)Rates(LKR/kWh) Rates($/kWh)Rates($/kWh)Rates($/kWh)Rates($/kWh)Mini- Hydro 13.04 0.12

Mini-Hydro- Local 13.32 0.12

2) Flat Tariff-2011

n . .

Wind-Local 19.97 0.18

Biomass (Dendro) 20.70 0.19

Biomass (Agri. & Ind. Waste) 14.53 0.13

Municipal waste 22.02 0.20

Waste Heat Recovery 06.64 0.06

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SL has used FITs since 1996 to buy NCRE basedelectricity

Initially used Avoided Cost based FITs- onlyattracted Mini-hyrdo plants as the prices werenot attractive for other technologies

Cost based technology specific FITs introducedin 2007; mini-hydro, wind, biomass, MSW.

Attracted other technologies like Wind andBiomass (in addition to traditional mini-hydro),already 30 MW wind online and wind & biomassplants in the pipe line

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Difficulty in estimating capital costs of relatively newtechnologies to Sri Lanka (wind, biomass, MSW)

Best sites for mini-hydro is over, need to capturelow head sites and less attractive sites in the FIT

Difficulty in assessing proper O&M costs; noexperience in running plants of some technologies(MSW, biomsss)- due to lack of pilot scale plants

Lack of formal market for fuel (biomass, agri waste)makes it difficult to predict fuel prices

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SPPA, energy permit, and License given for 20 years, whathappens beyond that period?; repowering contracts,extension and pricing?

Local authorities requesting Royalty for the resources, how tohandle?

Increasing financial burden on the end consumer How to set the portfolio of technologies to sustain the NCRE industry?

Cost of externalities

How to treat technologies like Solar, which are costly.

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Mini Hydro: 179 MW resource permit issued

Wind : 100 MW resource permit issued

Biomass : 71 MW resource permit issued

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Sri Lanka has achieved 7% of electricity generationfrom NCRE technologies through FIT

Change of FIT methodology from Avoided Cost toCost Based Technology Specific has encouragedtechnolo ies like Wind and Biomass

Investors are Enthusiastic and more than 350 MWof NCRE based projects are in pipeline

FIT has paved the way for rapid development ofrenewable energy

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damitha kumarasinghe - feed-in-tariff sri lankan experience

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