Non Conventional Renewable Energy (NCRE) Sector Development in Sri Lanka

History

The Sri Lanka governmental policy directions for power sector envisages that the hydro power generation potential of the country will be developed to its full potential as it is the major indigenous resource for power generation as at present. Under this policy, all large-scale hydropower generation facilities are to be remaining under government control for the foreseeable future. Private sector financing will be utilized for power generation from small hydro power plants.

CEB Assistance Provided for the Development of the Mini Hydropower Sector Ceylon Electricity Board has promoted generation of electricity using Renewable Energy Resources since early nineties by giving the required assistance to the private sector, which includes training & capacity building, pre feasibility studies and resource assessments.

The procedure for electricity purchases from small power producers (SPPs) by the CEB was regularized beginning 1997 with the publication of a standardized power purchase agreement (SPPA) which included a scheme for calculating the purchase price based on the avoided cost principle. This was offered to all sources of power plants of capacity less than 10 MW.

The government has identified the development of Renewable Energy Projects, as a matter of policy to diversify the electricity sector from high cost thermal power generation. Therefore, required incentives and assistance was provided for the renewable energy resource development (Mini Hydro, Bio Mass, Wind, etc.,). Further National Energy Policy 2006 has identified fuel diversify and energy security in electricity generation as a strategic objective and development of renewable energy projects was identified as a part of this strategy. In view of above action has been taken to introduce a cost based, technology specific, three-tier tariff instead of avoided cost based tariff with effect from year 2007.

NCRE Tariff Announcement (2022)

Keys to Success

Long-term concessionary financing through RERED Project

As part of the commitment of the Government to accelerate the development of renewable energy generation as well as to integrate the use of non-conventional renewable energy within the power sector, GOSL approved the joint World Bank and the Global Environment Facility (GEF) assisted Renewable Energy for Rural Economic Development (RERED) project. Through the RERED project, GOSL aims to foster the rural economic development and improve the quality of life in rural areas by providing access to electricity, and expand the financial support for the mini hydropower projects with low cost funding. The executing agency of the RERED project is the Ministry of Finance and Planning. Project implementation, coordination and management are the responsibility of the Administrative Unit set up within the DFCC Bank.

Positive features of the Standardized Power Purchase Agreement (SPPA)

The SPPA was developed with the assistance of the World Bank and drafted with the standardized terms and conditions. All energy produced by the facility will be purchased by the CEB and no penalty for the non-delivery of energy from the facility.