Renewable energy: Power Ministry withdraws proposal

The Power and Energy Ministry has withdrawn its own Cabinet paper on revised feed-in tariffs for renewable energy after deciding it was too complicated, authoritative sources said.

Despite the Government’s pledge to generate 70 percent of Sri Lanka’s electricity through renewable sources by 2030, new projects are blocked by the continued failure to introduce “a viable tariff ” Federation of Renewable Energy Developers Vice President Manjula Perera said.

The Ceylon Electricity Board (CEB) has failed to pay companies with existing projects for the past 13 months. This amount is more than Rs 40bn and bulk of it is owed to banks, he also said.

A committee was appointed to review and revise the existing feed-in tariffs. This is a policy tool designed to promote investment in renewable energy sources, and usually means promising small-scale renewable energy producers—such as solar or wind energy—an above-market price for what they deliver to the national grid. The industry made representations saying, “To date not a single project has achieved financial closure under these feed-in tariffs.”

The Ministry then drafted a Cabinet paper, a copy of which the Sunday Times saw. It said the committee, through lengthy discussions and stakeholder consultations, developed “a novel cost-reflective tariff methodology which dynamically re-orients the renewable tariff with the macroeconomic environment of the country.”

The Cabinet paper also contained a large number of pages of data and equations which industry sources said “nobody could understand.” It was eventually not presented. However, the question of a viable feed-in tariff remained, Mr Perera said.

The industry was deadlocked at a time when a drought was predicted next year. With a depressed monsoon expected, hydro-power levels would be low, industry sources said, adding that, “We will be tied to extremely high energy consumption from oil.”