Column published in Echelon business magazine, November 2016 issue.
Plugging into the Sun, with caution
By Nalaka Gunawardene
One of my favourite cartoons on energy was drawn by Australian cartoonist Ron Tandberg. It shows two men standing on a bare land and looking intently at the ground. Says one to the other: “There must be a source of energy down there!”
Overhead, meanwhile, the sun looms large and blazes away…
For too long, despite living on a tropical island, most of us have looked everywhere for our energy needs — except skywards. Is that about to change? Is the government’s new solar power drive likely to be a game changer?
Plugging to the sun is not entirely new: Sri Lanka has taken an interest in solar photovoltaic (PV) technology for over 40 years. The earliest PVs – which can turn sunlight into electricity — were installed in the village of Pattiyapola, in the Southern Province, where the United Nations set up a rural energy demonstration centre in 1975.
Those early prototypes had many problems which were fixed within a few years. By the mid-1980s, small, stand-alone solar PV units came on the market. This time, it was private companies that promoted these while the government’s power utility (CEB) was mildly interested.
In the late 1980s, three entrepreneurs – Lalith Gunaratne, Viren Perera and Pradip Jayewardene – pioneered local assembling and marketing of solar PVs. Their company, initially called Power & Sun (Pvt) Ltd, offered simple, easy-to-use solar units for rural homes that were not yet connected to the grid.
Branded as SUNTEC, their basic solar unit could power five light bulbs plus a radio and a (black and white) TV set. The introductory price in 1988 was LKR 7,000 (bulbs and battery cost extra). At the time, two thirds of all households did not have electricity so this generated much interest.
Power & Sun not only sold domestic solar units, but also ran rural workshops that trained youth on the basics of solar energy and equipment maintenance. By reaching out to the grassroots through innovative marketing schemes and tech support, the SUNTEC team ushered in a quiet revolution.
They not only provided clean, safe and cheap energy to rural homes but in that process, also raised people’s aspirations. They were no longer beholden to politicians with promises of ‘gamata light’ (electricity for the village), a common but often unfulfilled promise. (Read full Suntec story at: http://tiny.cc/SunTec)
During the 1990s, other companies — and non-profits such as Sarvodaya and SoLanka — entered the domestic solar market. The World Bank came up with a credit mechanism for solar units through SEEDS, the economic arm of Sarvodaya. Thanks to these efforts, over 100,000 homes adopted solar PV within a dozen years.
“The establishment of community-based solar photovoltaic programmes by non-governmental organizations…has developed a novel approach to bridge the gap between this state-of-the-art technology and the remotely located end-users,” wrote Lalith Gunaratne, a pioneer in off-grid domestic solar power, in 1994.
But the early appeal of solar PV diminished as rural electrification intensified. In some areas, families who had taken loans for their solar PVs defaulted repayment after the grid reached them. Sarvodaya, for example, was left with lots of half-paid loans and second hand solar units.
Nonetheless, that first phase of solar energy promotion holds valuable lessons still relevant today. For example, it’s not simply a matter of promoting PV technology but providing a package of training, maintenance support and on-going engagement with solar consumers.
While off-grid solar PV can still offer energy solutions to specific, isolated locations, a second solar revolution is urgently needed in cities and towns. It is the higher consuming homes, offices and other buildings that most drive the electricity demand which keeps rising by about 9% each year.
Bulk of the country’s electricity is generated using large scale hydro or thermal power plants (burning either oil or coal). The ratios vary from year to year according to data tracked by the regulator, the Public Utilities Commission of Sri Lanka (PUCSL). In a year of good rainfall, such as 2013, 50% of all electricity was generated using hydro, and another 9.85% through non-conventional renewables (NCR) like mini-hydro, wind, biomass and solar. Less than half came from thermal plants.
But in 2014, the last year for which PUCSL data has been released, hydro’s share dropped to 29.4% and NCR share remained about the same. The balance (over 60%) was generated by CEB’s oil or coal plants, complemented by private power producers burning oil.
The fuel bill weighs heavily on the country’s already overburdened budget. Low petroleum prices since 2014 have helped, but that is not a bankable option in the long term.
“Sri Lanka annually imports 2 MMT of crude oil, 4 MMT of refined petroleum products and 2.25 MMT of coal. This costs approximately 5 billion USD and covers 44% of the energy requirements. It also accounts to 25% of the import expenditure and almost 50% of the total export income,” wrote Chatura Rodrigo, research economist with the Institute of Policy Studies (IPS) in August 2015. (Petroleum also supports the transport sector that relies almost totally on this fuel source.)
Burning petroleum and coal also contributes to global warming and causes local air pollution – more reasons for phasing them down.
For all these reasons, scaling up NCR’s share of electricity generation mix is thus receiving more attention. This can happen at both power plant level (e.g. with wind power plants that could tap an estimated 400MW potential in Mannar), and also at household levels.
Decentralised solar power
Encouraging consumers to self-generate part of their electricity from renewables received a boost in 2009 with the introduction in net metering. This allows private individuals or companies to supply their surplus power – usually generated by solar panels — to the national grid, for which they receive ‘credits’ or rebates from the monthly bill. A two-way electricity meter enables this process.
During the past few years, hundreds of households and businesses have vastly reduced their electricity bills through this method. However, this made economic sense only to high end electricity users as the initial investment remained high.
The new solar energy drive, announced in August 2016, intends to change this. Known as “Soorya Bala Sangramaya” (Battle for Solar Energy), it is expected to make at least 20% of electricity consumers to also generate electricity using solar panels – they will be able to sell their excess to the national grid under a guaranteed tariff.
The new scheme will introduce two new concepts, viz:
- Net Accounting, where a consumer will get paid in money if her solar-generated power is greater than what is consumed from the grid. Tariff is set at LKR 22 per unit (1 kilo Watt hour) for the first 7 years, and at LKR 15.50 thereafter.
- Net Plus, where there is no link between how much electricity the consumer users from the grid (for which billing will happen), and how much of solar-generated electricity is supplied to the grid (which will be paid in full at the above rates).
The government’s plan is to add 220 MW of clean power from NCR to the country’s energy grid by 2020, which is about 10% of the country’s current daily electricity demand. Another 1,000 MW is to be added by 2025.
The solar PV technology market will be left to multiple private sector suppliers. In a recent TV talk show, deputy minister of power Ajith C Perera said national standards would soon be set for solar panels and associated technology.
Currently, installing 1 kWh of solar generation capacity costs around LKR 200,000. Investing this much upfront will only make sense for those consuming 200 kWh or more. Under the current, multi-tier tariff system, those consuming up to 30 units of electricity a month pay LKR 7.85 per unit while those above 180 units have to pay LKR 45 per unit.
How much and how fast Soorya Bala Sangramaya can energise the solar PV market remains to be seen. The Ministry of Power is talking to banks to encourage easy credit. PUCSL will need to monitor these trends to ensure consumers’ interests are safeguarded.
Promising as they are, renewables are not a panacea for all energy our needs. Some limitations apply, such as cloudy days that reduce sunshine and dips in wind blowing. Their contribution to the grid needs to be balanced by power from more conventional sources. At least until storage systems get better.
“Renewables have an important role in any developing country energy mix as a part of the national energy supply security strategies,” says Lalith Gunaratne. “Yet, thermal energy technologies like oil, coal and gas will not go away in a hurry. Most of them, unless we have large hydro, will provide base load power from large centralised stations for two or three more decades.”
The energy sector can become a sink for large volumes of public and private funds — unless there is an effective regulatory process.
Science writer Nalaka Gunawardene is active on Twitter as @NalakaG and blogs at http://nalakagunawardene.com.