PUCSL warns of shortcomings in Sri Lanka’s power supply : Report

Sept 20, 2017 (LBO) - Public Utilities Commission of Sri Lanka (PUCSL), the island's power regulator has warned of serious consequences to be expected and also continue in the next few years if the timely implementation of long term generation plan is not ensured, a statement said. "Shortcoming of implementation of Sri Lanka’s Least cost longterm generation expansion plans (LCLTGEP) has resulted in cost overruns, load shedding, and unplanned power procurement in the past few years...," the PUCSL said. "....and these consequences are expected to be continued in the next few years if timely implementation of long term generation plan is not ensured." The report “Electricity Supply 2020 and Beyond: Challenges and Recommendation” recommends short-term, medium-term and long-term solutions to ensure long-term energy security in a sustainable manner. The report discloses that due to planned plants not being built as per the timeline, unforeseen power procurement and change of power mix have resulted the increase in the average unit cost of electricity. In 2016,actual power purchases from oil based plants have increased by 6 times than planned for 2016. This report analyses the situation of Country’s electricity supply, foretasted data, power plant schedule with the actual situation and how LCLTGEP’s prepared from the year 2006 to 2016 by the Ceylon Electricity Board (CEB), the state utility has affected the electricity supply situation at various junctures. “Uncertainty associated with base demand, the forecast is another noticeable feature, particularly since 2011 plan," the statement adds. However, CEB has identified this, as a problem and is trying to improve the accuracy of base demand forecast by adopting new forecasting tools. Despite, the electricity demand is expected to be more stochastic in nature all over the world in the long run. It added, that no generation plan that had been considered in this analysis has foreseen the present situation. Thus, the actual outcome has been way different from what was conceived in the past plans. The report describes how the shortcoming of implementation of LCLTGEP has affected the electricity supply of Sri Lanka and investment in the industry. The PUCSL recommends the following short term and medium term actions to ensure the continuity of electricity supply until 2020 and the long term actions are recommended as permanent solutions to ensure long term energy security in a sustainable manner. Short Term (Next 6 Months) The energy supply is expected to be sufficient in short term (next 6months) under most probable hydro condition and no additional measures will be required. However in an event of an extraordinary low rainfall scenario, (If the hydro reservoir levelsfall below the dash line in Figure 9 of Annexure I) the following actions are recommended.

1. For September- October period:-

Electricity demand can be fully catered if 60MW of additional generation capacity is available from Septemberonwards and110 MW of additional generation capacity is available from October onwards. The following options are available for the required capacity additions.

1. Procurement of electricity from 60MW emergency power plants (PPA expired in mid-August).
2. Operating the SojitzKalanithissa power plant (which is unavailable due to Steam Turbine failure), on open cycle mode (110 MW).

• Acquiring more capacities under Self-Generation scheme.

1. Disconnection of bulk customers who own on-site generators from the system to minimize inconvenience to consumers, in case of sudden load shedding requirement.
2. For November- February period:-
3. Immediately starting the tendering process for procurement of 150 MW thermal generation capacity for 10 months period from November 2017.However, the decision of entering in to a Power Purchase Agreement (PPA) should be subject to the hydro reservoir level as at the end of October. Committing to a PPA can be recommended if the reservoir levels are below 630 GWhand areat a decreasing trend.(Low hydro scenario Figure 9 of Annexure I).
4. It is recommended to call tenders to obtain the 150 MW capacity as several generation plants (eg. 3×50 MW generation plants), keeping the flexibility to procure lower generation capacity depending on the hydro condition. The size and location of the plants shall be decided by the Transmission Licensee subject to transmission constraints in the national grid.

• Options such as open-cycle operation of SojitzKalanaithissa Power Plants or extension of expired PPA for 60MW emergency power plants (expired in August 2017) should be given due consideration by transmission licensee in making a decision on power procurement, to ensure the least cost criteria.
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2018. However, if the Transmission Licensee decides to procure capacity lower than 150 MW in November 2017, it is recommended to take initiatives to procure said total 150 MW thermal generation capacity from February 2018 to August 2018. The actual capacity addition should be done considering the actual hydro condition at the time of entering in to the PPA (if reservoir level is below 615 GWh and not showing an increasing trend by February 2018, it is considered a low reservoir level - Figure 9).
2019. Special attention should be given to ensure continuous fuel supply to all thermal power plants under both hydro scenarios.
2020. In addition to what had been discussed above, both rooftop and scattered solar plant additions should be expedited.

  Medium Term (2018-2020)

1. The proposed plant additions (both thermal and renewables) in Least Cost Long Term Generation Expansion Plan (LCLTGEP) 2018-37 should be conducted according to the CEB implementation plans presented at the Sub-Committee on Power and Renewable Energy meeting held on August 10, 2017 (Annexure II).
2. Transmission system should be timely expanded according to the new plant additions expected.
3. Groundwork on development of Natural Gas Infrastructure should be started immediately to ensure fuel availability for all existing and future Gas Turbines and Combined Cycle Plants.
4. Continuous fuel supply to all thermal plants should be ensured throughout the period.
5. Even with recommended capacity additions, timely measures should be taken to avoid energy deficits that are likely to occur in the first half of 2018 and also in March and August in 2019 and March 2020, under dry conditions ( Recommendations for January and February 2018 given in the above section on recommendations for Short Term ).
6. Demand Side Management measures (energy efficiency, conservation, peak demand shifting, etc.) should be expedited.
7. Immediate technical/ managerial solutions should be taken to increase the reliability of the NorachcholaiLakvijaya coal power plant.

Long Term (Permanent Solutions)

1. Liberalize the generation sector to espouse investments by amending section 8 and 9 of Sri Lanka Electricity Act, while creating a robust power procurement programme that can introduce price competition to electricity sector.
2. India interconnection project should be expedited.
3. Sri Lanka Electricity Act should be amended to allow wheeling.
4. Streamline the generation planning process and revise the format of LCLTGEP in line with exact provisions of the “Grid Planning Code”.
5. Fully ring-fencing Transmission Licensee should be followed by administrative separation to ensure that Transmission Licensee operates independently from CEB in broad national interest, to realise the objective of having a reliable, secure and cost competitive electricity industry.
6. The share of NCRE is forecasted to be increased with government policy targets. The planning process needs to take into account this and make amendments to the planning process to cater for new challenges posed by increased NCRE plant additions.

The report is available in the official website of PUCSL (www.pucsl.gov.lk) under highlights.