ECONOMYNEXT – Sri Lanka will transfer to full aggressive bidding for brand spanking new energy vegetation from June 2025 underneath an electrical energy regulation now in impact, officers stated, as a part of efforts to chop era prices and sustainable reductions retail costs, officers stated.
Below the brand new electrical energy regulation, the sector will probably be unbundled. Some adjustments to the regulation are deliberate by the present administration, however unbundling of the sector will go forward, officers have stated.
Aggressive Prices
Decrease price era is a key purpose of the sector with the present administration having promised the general public decrease electrical energy costs over time.
“For that we have now to go for principally aggressive bidding,” Udayanga Hemapala instructed an power sector discussion board organized by the Asian Improvement Financial institution workplace in Colombo.
“And I believe most of you recognize after June 25 we can’t go for this G-to-G or EOI. We can’t go ahead with all these items and we have now to go just for the aggressive bidding.”
There are round 40 initiatives for which Expressions of Curiosity (EOIs) had been known as throughout an financial disaster when prices had been excessive because of Sri Lanka’s default and a world power commodity value spike amid cash printing by the US Federal Reserve and European Central Financial institution.
The US and ECB began financial tightening in mid-2022 and gasoline and coal costs have since eased.
There was opposition to power vegetation in Sri Lanka with out aggressive bidding. A controversial cope with India’s Adani, in a excessive wind potential space at a excessive value, was additionally claimed to be a ‘authorities to authorities’. It’s now in court docket.
RELATED Sri Lanka legislators slam 49 renewables plants without tender, Adani deal
Feed-in-tariffs have additionally come underneath fireplace by some critics, for prime prices, selling corruption and lobbying.
Feed-in tariffs had been halted for a interval as they had been unlawful underneath the sooner regulation, with aggressive bidding for smaller vegetation bringing low costs as much as 2019, however they had been then introduced again amidst intense lobbying in 2020.
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The contracts executed in rupees, nonetheless, have introduced advantages because the central financial institution printed cash and busted the foreign money underneath versatile inflation focusing on and different methods together with suppressing price via ground charges.
Following the financial excesses of the central financial institution, energy builders are actually looking for greenback denominated tariffs.
Standardized energy buy contracts had been signed for mini-hydro and others 15 or 20 years.
The feed in tariffs introduced in quite a few mini-hydro operators, wind vegetation and a few biomass vegetation together with waste to power.
Non-conventional Renewables
Sri Lanka now has 330 energy vegetation in operation with a capability of 775 MegaWatts, that contributed about 16 p.c of power in 2023, the final full 12 months information that has been revealed, Ceylon Electrical energy Board Chairman Tilak Siymabalapitiya instructed the ADB seminar.
There are 210 mini hydro vegetation, 19 wind vegetation of which 18 had been underneath the standardized contracts, he stated.
Sri Lanka’s state-run Ceylon Electrical energy Board ran on 100% renewable till the Eighties, however was pushing for decrease price coal after main hydro’s ran out.
Because the coal vegetation, and remaining giant hydro had been additionally opposed by environmentalists and political lobbies Sri Lanka ended up with excessive price liquid gasoline energy, analysts say.
Sri Lanka provided web metering from 2008 and a purchase again program from 2016.
Now there are 1,200 MW of rooftop photo voltaic.
Issues have been raised at excessive costs paid for some rooftop photo voltaic. There was a surge after excessive costs for electrical energy for giant home customers, analysts say. (Sri Lanka to pay rooftop solar higher than Adani wind rate)
“In fact economics and the position of rooftop photo voltaic has to a big extent is misunderstood,” Siyambalapitiya stated.
“And I hope that rooftop photo voltaic will even transfer to aggressive bidding shortly utilizing a distinct enterprise mannequin. As a result of lastly the good thing about renewable power has to move on to clients as nicely. In the identical means the buyers are protected.”
Sri Lanka has to improve the grid with giant investments to have the ability to take up solar energy, as the present grid was not constructed for two-way energy exchanges, resulting in voltage surges for homes near transformers and grid instability issues.
The issues could possibly be solved by spending more cash on grids and in addition residence batteries.
Sri Lanka has a 70 p.c renewable power goal by 2030 for which it’s also wants grid scale batteries and a pump storage vegetation.
Some international locations are actually phasing out feed in tariffs, whereas some have suspended them or diminished the value paid amid grid instability and excessive prices. In Asia, Vietnam, which has a big coal base, has been a frontrunner in shopping for renewable energy via feed in tariffs together with from giant vegetation.
Learn Extra: Vietnam proposes removing FiT for more competitive renewable energy prices
Vietnam has additionally launched Direct Energy Buy Agreements between renewable vegetation and enormous clients and self-produced self-consumed energy.
https://en.evn.com.vn/d/en-US/information/Communication-Supplies-on-Decree-No-802024ND-CP-regulating-Direct-Energy-Buy-Settlement-DPPA-Mechanism-between-renewable-energy-generators-and-large-power-consumers-60-206-500506
Germany, a rustic which pioneered feed-in tariffs at a time when renewables weren’t commercially viable, used so as to add a renewable surcharge to the invoice of consumers. The surcharge was scrapped in 2022 as inflation hit 40-year highs in Germany.
German trade can also be in bother and has been shifting in a foreign country into different European nations and Asia which have decrease power prices amid a part out of coal energy.
A choice to additionally scrap nuclear energy vegetation which had been already constructed worsened the issue. Entrance runners within the present election cycle are pushing to convey nuclear energy again.
Germany nonetheless has coal vegetation to take up the slack when renewable era reduces. Additionally it is importing electrical energy from France which has 70 p.c nuclear power.
READ MORE German Coal Power Output at One-Year High Amid Low Wind Speeds
When coal energy ends, subsidies to renewables will even finish in Germany. Options proposed embody paying capability expenses for dispatch. (Colombo/Feb08/2025)
