ECONOMYNEXT – Sri Lanka’s power generation costs are rapidly outpacing selling prices and a bounty from a 900 MegaWatt coal plant had now run out, and there is no relief on the horizon, executives at the island’s power utility warned.
“The last 300 Mega Watt plant was built in Norochcholai in 2014,” Saumya Kumarawadu, President of the Ceylon Electricity Board Engineers Union said.
“After that no low cost power plant has been built. So costs can only go up.”
Sri Lanka’s President Maithripala Sirisena cancelled a 500 MW coal plant in Sampur in Trincomalee in 2015 where land was cleared and the plant was on the verge of being tendered after delays for which the CEB itself was responsible.
Coal Bounty
With the help of the coal plant CEB’s average cost per unit sold plunged from 23.6 rupees a kilowatt hour (unit) in 2012 to 15.07 rupees a unit in 2015.
“This is how a 25 percent reduction in power prices was given in 2015 for the first time in the history,” Manawadu said.
“But now all new plants since then are producing power at higher prices. So costs can only go up.”
Average costs per unit sold (which includes all overheads of the CEB) had gone up to 18.09 rupees a unit in 2016 and 21.32 rupees in 2017 with higher cost liquid fuel plants being operated.
But the average selling price is now much lower. In 2017, the average selling cost was estimated at 17.54 rupees.
“The average selling cost is now lower than the generation cost,” Manawadu said. “That is why last year the CEB made a 45 billion rupee loss.”
The busting of the rupee by the central bank in a monetary debacle in 2015 and 2016 and preventing the rupee appreciating in 2017 as credit fell, is also inflating the costs of fuel.
When there is a drought, cheap hydropower also falls, adding to the problem.
Sri Lanka avoided power cuts during a drought with the help of the Chinese coal plants, which analysts say may be the highest return physical investment made by Sri Lanka since the Mahaweli hydro power complex.
The Chinese plants have come with some avoidable pollution problems because environmental and religious lobbies blocked a cleaner Japanese funded coal plant originally specified by the CEB.
In 2014 the coal plants produced 3,202 GWh out of a total of 12,357 generated with CEB hydros contributing 3,632.
In 2015 the coal plants produced 4,443 GWh as 13,090 GWh was produced to meet expanding demand with hydro also rising to 4,904GWh, helping CEB finances.
CEB fuel oil power fell from 1,696 GWh to 1,051. Private power fell to 2,690 GWh from 3,882 GWh
In 2016 the coal plants produced 5,047 GWh of energy, while hydro fell to 3,481 and the CEB had to produce 14,149 GWh of energy for the year.
In 2017 coal energy rose a little to 5,103 GWh as total generation rose to 14,671 GWh. Coal plants are now operating at near full capacity with the night load also picking up.
In 2017 CEB hydro generation fell to 3,059 GWh.
CEB’s fuel oil production went up to 2,297 GWh in 2016 and to 2,529 to cope with rising demand.
Private sector power purchases rose to 3,322 GWh in 2016 and to 3,978 GWh in 2017.
“The benefit the country got from coal plants are now over,” says Manawadu. “Now costs can only go up.”
Costs
The savings that a single 300MW coal plant can make runs into tens of billions of rupees a year.
Unlike hydro plants, which operate about 30 percent of the time in a given year which is called plant factor and even less in drought years, a thermal plant can operate about 60 to 80 percent of the time available in a year.
All CEB’s major hydro plants build since inception generated only 3,059 billion units of electricity in 2017. But the three coals plants with 900MW generated 5,103 billion units of energy
CEB engineers union says the utility’s hydro power costs are estimated at about 2.40 rupees per unit and coal at about 7.90 rupees a unit to produce.
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