Non-implementation or weak implementation of long-term power generation plans made in 2006 has cost the country approximately Rs 78.2 billion in 2016. The Public Utilities Commission of Sri Lanka (PUCSL) revealed this shocking figure in a report released last week, ‘Electricity Supply 2020 and Beyond’.
According to the report, if the Ceylon Electricity Board (CEB), implemented the recommendations contained in the Least Cost Long Term Generation Expansion Plan (LCLTGEP) of 2006, the actual
unit generation cost in 2016 would have been Rs. 9.32 per Kilo watt hour (US Cts 6.40/kWh) approximately.
“However the actual unit
generation cost has become Rs. 14.79/ per Kilo watt hour (US Cts 10.16/kWh), which is Rs. 5.47/ per Kilo watt hour (USCts 3.76/kWh) higher than what was originally planned. The resulting cost overrun can be approximated to about
Rs. 78,210 million for 2016 alone,” the report says.
The main factor that contributed to this colossal cost over run was the dependence on high-cost diesel oil power units. Actual contribution from oil-based generation in 2016 was 4,529 giga watt hours, six times the contribution from oil-based generation for 2016 envisaged in 2006. According to the report, the forecast share of energy from hydro plants for 2016 remains approximately the same level despite minor fluctuations. However, the actual share has been slightly less than forecasts.
The 2006 forecast envisaged the share of energy from coal to be 70% in 2016. However, the actual share has been 35%. The actual share of energy from Non-Conventional Renewable Energy (NCRE) in 2016 was 9%, which remains in line with 2011 forecast. The NCRE share does not appear in the 2006 forecast because the generation planning exercise back then did not consider NCRE generation. As a whole, there is a marked difference between the actual and forecast energy figures for 2016, the report shows.
“The actual available capacity for 2016 has been 3,856MW whereas the forecast capacity for 2016 had been 4,828MW in 2006. This amounts to a 25% difference with the actual value. The actual capacity includes a NCRE capacity of 477MW, which was not considered in 2006. As such, the forecast capacity should be adjusted to show the NCRE capacity as well, which will then result in an even wider discrepancy, an industry expert told the Sunday Observer.
“Generation plan 2006 envisaged 2,100MW of installed coal power plants to be available by 2016. However, the actual installed coal plant capacity is only 900 MW. About 1,200 MW of coal power plants that were expected to be operational by 2016, have not materialized.”
However, not more than 600 MW is available on any given time. The actual capacity contribution from oil plants in 2016 remains approximately the same level as the 2006 forecast with respect to overall figures. However, the actual combination of oil-fired plants as at 2016 is significantly different from what was expected in 2006.
The Gas Turbine additions of 520 MW proposed in 2006 plan has not been implemented, while the Kelanithissa Small Gas turbines with a capacity of 68 MW (run with expensive thermal oils) and Sapugaskanda Diesel plants (72 MW) have not been retired as envisaged in 2006 plan.
The continuing cost of thermal oils, at an average unit cost of Rs 27.28 in 2016, is the largest cost overrun for any project in Sri Lanka.
The shortcomings in implementation of the plan had also resulted in short term energy shortages in a number of instances during last 24months, which led to planned and unplanned load shedding in following instances: February 26-27, 2016, March 14-17, 2016, October 17- 19, 2016, and July 24-28, 2017.
The Sunday Observer first reported the inordinate dependency on thermal oils by the CEB on April 23, 2017 in our report titled ‘Unexpected rains prevent power shortfall’.
The report said that the total generation from IPP and Emergency Thermal units on Wednesday, April 19, 2017 was 27.9 percent of the total power generated that day.
The Sunday Observer noted that the cost of purchasing privately supplied emergency power ranges from 28 US cts per unit (the latest purchased) to 58 US cts per unit for power agreements signed during the previous government.
“Last Wednesday emergency power was being supplied by the following suppliers ACE Matara, Asia Power, Sojitz Kelanitissa, West Coast, Nothern Power, Aggreko-Galle, Aggreko-Kurunegala2, Aggreko-Hambantota and Aggreko-Pallekele.
In addition to these expensive suppliers, 22 percent of peak power came from thermal oil, which is the next most expensive power intake after emergency power. While Hydro has contributed the highest at 36.6 percent,” our report said. Secretary to the Power and Renewable Energy Ministry, Dr. Suren Batagoda was to deny that blackouts occurring in intervals within several areas of the country could be attributed to the incapacity to generate to meet the demand.
However, the PUCSL report shows that blackouts did occur in July.
The PUCSL is recommending an emergency purchase of 60MW additional thermal generation capacity to be available in September and 110 MW additional thermal generation capacity (without considering 60MW addition in September) to be available in October, for the energy demand to be fully met.
