(20/07/2017)- Public Utilities Commission of Sri Lanka (PUCSL), the electricity sector regulator, granted approval to the alternate Least Cost Long Term Generation Expansion Plan (LCLTGEP) 2018- 2037 of the Ceylon Electricity Board’s (CEB), with the view of ensuring energy security and continuous supply of electricity in Sri Lanka.
The LCLTGEP has been compiled based on the results of the latest electricity expansion planning studies conducted by the CEB for the planning period of 2018-2037 which includes several optional plans.CEB recommended the base case plan under least cost principals to be implemented for the next 20 years.
PUCSL held a public consultation on the LCLTGEP 2018-37 where stakeholders were given an opportunity to raise concerns over the plan.
PUCSL also undertook lengthly studies on all the optional and recommended plans that CEB submitted.
In these studies, PUCSL accommodated the adjustments of updated fuel prices, the cost of externalities (social and environmental costs) to identify the least cost plant addition sequence based on the most sustainable technology to avoid electricity shortfalls in the country.
PUCSL approved 242MW of Major Hydro, 215MW of Mini Hydro, 1389MW of Solar, 1205MW of Wind,85MW of Biomass, 4800MW of Natural Gas, 330 MW of furnace oil based power and 105MW of Gas Turbine power to be added to the electricity generation system in 20 year period.
The same plan was studied and proposed as an alternate plan in the LCLTGEP 2018-37 by CEB. However, it was not proposed as the base case plan by CEB under least cost principals, considering the cost of investment which was USD 15,607.70 million (LKR 2,323.67 billion- without updated fuel prices and externalities costs)
But, after adjusting the updated fuel costs and externalities PUCSL derived at the same alternate plan under least cost principals with the investment cost of USD 13,336 million even lower than the proposed base case plan of CEB.
The investment cost of the proposed base case plan of CEB stood at USD 14,894.64 million (without updated fuel prices and externalities costs).
“CEB has based its fuel cost assumption from Lanka Coal (coal price for Puttlam coal plant), Ceylon Petroleum Corporation (oil prices) and Japanese Crude Cocktail (JCC) basis (NG prices). However, those costs are not fully reflected in the published Platts (Singapore), JCC and NEWC indexes (Australian coal index published by www.Globalcoal.com) at the end of the year 2016. During the presentation on the draft LCLTGEP by CEB, it was revealed that it relied on two years (2015 and 2016) average market prices for fuel cost estimates. Using such long term (2015 and 2016) average, when the current prices are substantially different appears to misrepresent the actual pricing at the time of preparation of the plan. Most notably, they have used the existing market prices for oil products (which is with taxes, etc and excessively higher than the border prices),” PUCSL said in the decision.
PUCSL stressed that the proposed generation expansion plan 2018-38 has also not considered the externalities costs, thus as stressed by many stakeholders does not reflect the true economic costs of power generation.
“Ideally, externalities depend heavily on the site specific environmental conditions, plant technology and fuel used. Thus, site specific studies are required to reliably determine the figured on externality cost for a particular technology. Lack of such data in Sri Lankan context is the main shortcoming. Yet it is not recommended to fully ignore such costs, just because accurate, specific data is not available.” PUCSL said.
All the renewable addition that CEB suggested in the proposed plan remained same, but with updated fuel prices and cost of externalities under least cost principals coal power plants were not qualified for the 20-year plan.
In total, the Indian Ocean Island plans on 8371MW of new additions (including the committed power plants) to the national grid in the period of 20 years from 2018.
Sri Lanka expects a 5.0% energy demand growth and a 4.5% peak demand growth rate for the period 2018-2037.
PUCSL stated fast implementation of the approved plan to avoid an electricity shortfall or procuring emergency power in the future.
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