Sri Lanka cautioned on rising renewable energy costs


Sri Lanka's Central Bank has sounded a note of caution and over the rising burden of renewable power on consumers as the proportion of non-conventional renewable power (NCRE) increases in the grid.

"Although the country is keen on including more renewable energy to its total generation plan due to its sustainable and renewable nature, the current tariff of NCRE sources keep rising compared to other conventional energy sources," the Central Bank said in its 2014 annual report.

"Hence, the acquisition of advanced technology to improve cost effectiveness is important to ensure that the public is not burdened by rising tariff of NCRE."

Sri Lanka has a target of increasing non-conventional renewable energy to 20 percent by 2020 from the current 10 percent.

Critics say the global renewable lobby is a powerful special interest group that had managed to grab billions of dollars of tax-payer money especially in developed nations by propagating highly refined arguments.

Renewable energy companies have also benefitted from 'climate change' where carbon dioxide emissions are blamed for warming temperatures, though the latest data seem to indicate that the world has not warmed for over 15 years, despite millions of tonnes of the gas being pumped into the atmosphere.

The Central Bank's warning for more efficient technology comes as the renewable lobby in Sri Lanka has used even more innovative methods than the rest of the world based on economic nationalism to gain even higher profits.

In the last tariff decision the mini-hydro companies were offered a flat tariff of 16.70 rupees per unit, but those using 'local' inputs were given an even higher rate of 17.15 rupees.

For wind, a tariff of 20.62 rupees was inflated to 21.22 percent for using 'local' inputs.

Biomass dendro get a tariff of 25.09 rupees, municipal waste 26.10 rupees. In the tariff decision, rates moved up between 20 to 38 percent , despite the earlier rates already being some of the highest in the world.

Analysts have said that Sri Lanka's current power tariffs for larger households are probably the highest in the world (about two to three times the generation cost) and have also tilted the playing field in favour of solar power companies.

Solar is the expensive form of renewable energy costing over 35 rupees a unit.

CEB has lost some of its best customers to solar companies through the net metering process, though it has allowed large domestic customers an avenue to escape the unjust tariff.

The high household tariff was a quasi-taxation income re-distribution tool aimed at cross-subsidizing losses on small households, though net metering has allowed it to subsidize solar power companies instead, critics say.

In Sri Lanka the rising cost of new renewable feed-in tariffs are partly due to currency deprecation which pushes up costs of imported capital equipment.

Mini-hydro feed in tariffs are among the cheapest. Almost all sources of non-conventional renewable power except waste heat are several times more expensive than coal which costs about 10 rupees a unit in Sri Lanka.

Ironically currency depreciation is also strongly linked to subsidies in the power and energy sector, where bank credit and money printed to keep interest rates down has triggered almost all recent balance of payments crises episodes.

If the rupee is continuously depreciated by the central bank, non-conventional energy such as wind where more than 20 rupees are paid for a unit, may become relatively less expensive in the future, analysts say.


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