Sri Lanka
Rapid Assessment and Gap Analysis
Sponsored by
Sri Lanka Office
September 2012
Sri Lanka
Rapid Assessment and Gap Analysis
ACKNOWLEDGEMENT
We wish to extend our profound gratitude to Dr Ananda Mallawatantri, Assistant Resident Representative
of UNDP for the trust and confidence placed on M/s Gamini Senanayake Associates (Private) Limited by
assigning this task.
We express our sincere thanks to the members of the resource panel for their valuable contribution in
generating ideas that could be used to formulate and develop projects, programmes and activities to
achieve the goals of SE4ALL.
We also express our sincere thanks to the staff members of Sri Lanka Sustainable Energy Authority and the
United Nation Development Programme for readily providing us with all necessary information and for
their unstinted support for the successful accomplishment of this task without which this would not have
been a reality.
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Rapid Assessment and Gap Analysis
List of Abbreviations
AC
ADB
ARECOP
AU
AWDR
AWPLR
BEASL
BOI
CBC
CBO
CBSL
CDM
CEA
CEB
CFL
CMA
CSR
DFCC
ECF
ECS
EE
EEI
E-FRIENDS
EM
EnMAP
ESCO
ESD
FECS
FMO
GCMH
GDP
GEF
GOs
GOSL
GWh
HH
HNB
IC
ICS
IDA
IDB
IDEA
IFC
JBIC
JICA
kg
kTOE
kWh
LECO
-
Air Conditioner
Asian Development Bank
Asian Region Cook stove Programme
Administrative Unit
Average Weighted Deposit Rate
Average Weighted Prime Lending Rate
Bio Energy Association of Sri Lanka
Board of Investment
Commercial Bank of Ceylon
Community Based Organization
Central Bank of Sri Lanka
Clean Development Mechanism
Central Environmental Authority
Ceylon Electricity Board
Compact Fluorescent Lamps
Colombo Metropolitan Area
Corporate Social Responsibility
Development Finance Corporation of Ceylon
Energy Conservation Fund
Electricity Consumer Society
Energy Efficiency
Energy Efficiency Improvement
Environmentally Friendly Solutions Fund
Energy Management
National Energy Management Plan
Energy Supply Company
Energy Service Delivery Project
Federation of Electrical Consumer Societies
The Netherlands Development Finance Company
Grid-connected mini hydro
Gross Domestic Production
Global Environment Facility
Government Organizations
Government of Sri Lanka
Giga Watt Hours
Household
Hatton National Bank
Internal Combustion
Improved Cook Stoves
International Development Association
Industrial Development Board
Integrated Development Association
International Financial Corporation
Japan Bank of International Cooperation
Japan International Cooperation Agency
Kilo Gram
Kilo Ton of Oil Equivalent
Kilo Watt Hours
Lanka Electric Company
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Sri Lanka
Rapid Assessment and Gap Analysis
LKR
LTGEP
LTNCREP
MBIs
MoF
MoPE
MW
NCRE
NDB
NERDC
NGOs
NREL
OGVH
p.a.
PCIs
PEP
PFIs
PMU
PUCSL
R&D
RE
RERBEG
RERED
RERED-AF
REREDP
RET
SARI
SEC
SEEDS
SEF
SGF
SHS
SLBDC
SLEMA
SLNEEA
SLSEA
SLSI
SPP
SPPAs
SRC
TBill
TBond
TERI
TOE
TV
UAFF
UDA
USAID
USD
WCO
Wp
-
Sri Lanka Rupees
Long Term Generation Expansion Plan
Long-term Non-conventional Renewable Energy Plan
Market Based Instruments
Ministry of Finance
Ministry of Power & Energy
Mega Watt
Non-conventional Renewable Energy
National Development Bank
National Engineering Research & Development Centre
Non-governmental organizations
National Renewable Energy Laboratory
Off-grid electrification infrastructure through village hydro
Per annum
Participating Credit Institutions
Promotion of Eco-efficient Productivity
Participating Financial Institutions
Project Management Unit
Public Utilities Commission Sri Lanka
Research & Development
Renewable Energy
Renewable Resource Based Electricity Generation
Renewable Energy for Rural Economic Development
RERED Additional Finance
Renewable Energy for Rural Economic Development Project
Renewable Energy Technology
South Asian Regional Initiative for Energy
Specific Energy Consumption
Sarvodaya Economic Enterprises Development Services
Sustainable Energy Fund
Sustainable Guarantee Facility
Solar Home Systems
Sri Lanka Business Development Centre
Sri Lanka Energy Managers Association
Sri Lanka National Energy Efficiency Award
Sri Lanka Sustainable Energy Authority
Sri Lanka Standard Institute
Small Power Producers
Small Power Purchase Agreements
Short Rotation Coppice
Treasury Bill
Treasury Bond
The Energy and Resources Institute
Ton of Oil Equivalent
Television
Up-flow Anaerobic Floating Filter
Urban Development Authority
United State Assistance for International Development
United State Dollars
Waste Cooking Oil
Watt peak power
________
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Rapid Assessment and Gap Analysis
Contents
LIST OF ABBREVIATIONS __________________________________________________________________ 2
CONTENTS ____________________________________________________________________________ 5
EXECUTIVE SUMMARY ___________________________________________________________________ 7
Section I: Introduction _________________________________________________________________ 21
Section 2: Current situation with regard to SE4ALL goals _______________________________________ 32
Section 3: Challenges and opportunities for achieving SE4ALL goals ______________________________ 70
Section 4: Ideas for the formulation of Projects, Programmes & Activities_________________________ 112
Reference ___________________________________________________________________________ 121
Bibliography _________________________________________________________________________ 123
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Rapid Assessment and Gap Analysis
Resource Panel
Eng. Upali Darangama
Ministry of Power & Energy (MoPE)
Dr Ananda Mallawatantri
United National Developemnt Program (UNDP)
Dr Thilak Siyambalapitiya
Resource Management Associates (RMA)
Dr Thusitha Sugathapala
Sri Lanka Sustainable Energy Authority (SLSEA)
Eng. Harsha Wickramasinghe
Sri Lanka Sustainable Energy Authority (SLSEA)
Eng. M.W.Leelaratne
Ex-National Engineering Research & Development Centre (NERDC)
Eng. Sena Peiris
National Cleaner Production Centre (NCPC)
Eng. Ananda Namal
National Engineering Research & Development Centre (NERDC)
Eng. Anura Vidanagamage
Industrial Solutions Lanka Limited (ISL)
Eng. Ronald Comester
Ceylon Electricity Board (CEB)
Eng. Nimal Perera
Sri Lanka Energy Managers Association (SLEMA)
Eng. Nameez Muzarfer
Practical Action
Ms Kushani De Silva
United National Developemnt Program (UNDP)
Compiled By
Eng. Gamini Senanayake,
M/s Gamini Senanayake Associates Private Limited (GSA)
Eng. Ranjith Pathamasiri
Sri Lanka Sustainable Energy Authority (SLSEA)
Eng. Wimal Nadeera
Sri Lanka Sustainable Energy Authority (SLSEA)
________
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Sri Lanka
Rapid Assessment and Gap Analysis
Sri Lanka
Rapid Assessment and Gap Analysis
OBJECTIVE
The purpose of Rapid Assessment and Gap Analysis is to provide:
 A quick brief look of the energy situation in the country (Section 1) within the context of its
economic and social development and poverty eradication
 A good review of where the country is in terms of the three SE4ALL goals (Section 2), and
 A good estimate of the main challenges and opportunities vis-à-vis the three goals of SE4ALL where
the major investments, policies and enabling environments will be required (Section 3)
 A sound basis and background for an Action Plan that may follow as part of the SE4ALL activities in
the country
Executive Summary
Country Overview
Vision - “Mahinda Chinthana Idiri Dekma” is the country’s vision for the future consists of fourteen key
aspects that are strategically significant of which, 3 aspects explicitly dealt with “access” to and “green”
energy.
Geography - Sri Lanka, an island in the Indian Ocean is located to the south of the Indian subcontinent.
The total land area is 65,610 sq. km. A length of 445 km. and breadth of 225 km. encompasses tropical
beaches, low land, mountains and vegetation. The average temperature of tropical low lands is 27°C and in
the central hills average temperature drops down to 14°C. The annual average rainfall is around 2,000 mm
and the number of rainy days per year is around 90.
Legislature - Sri Lanka is a free, independent and sovereign nation. Legislative power is exercised by a
Parliament, elected by universal franchise on proportional representation basis. A President, who is also
elected by the people, exercises executive power including defence. Sri Lanka enjoys a multi party system,
and the people vote to elect a new government every six years.
Demography
Mid-year population (provisional)
Average literacy rate
Labour force (Excluding Northern Province)
Households with electricity
Per capita electricity consumption
- 20,869,000
- 91.9 %
- 8,236,000
- 91 %
- 480.3 kWh.
Economy - Sri Lanka is a lower income economy in the South Asian region. The country's economy was
socialist oriented in the past, but in the present scenario the country has stepped forward for private
participation and competitive environment. Agriculture, industry and services have their respective
importance in contributing to the GDP. Sri Lanka is also a popular tourist attraction due to its landscape,
beaches and tropical forests. Key economic indicators are as follows;
GDP at current market prices (Rs. billion)
Per capita GDP at market prices (US$)
- 6,543 (Around USD 59 Billion)
- 2,836
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Rapid Assessment and Gap Analysis
Value of Oil Imports
- US$ 4.63 Billions.
Poverty Rate - The proportion of people living below the poverty line sharply declined from 26.1 per cent
in 1990/01 to 8.9 per cent in 2009/10 and on current trends, the national MDG target of halving poverty,
13.1 per cent is likely to be achieved much ahead of 2015.
Energy Situation
Composition of Primary Energy - Sri Lanka is a country of renewable energy having nearly 59% of
primary energy derived from various sources of energy, mainly from biomass (47%) followed by hydro
(12%). But the balance primary energy (41%) need is fulfilled by imported fossil fuel which makes the
country very vulnerable to price fluctuations and escalations. Biomass, hydro power, wind power and solar
power are the four indigenous sources with a high potential for productive use in Sri Lanka, whereas
petroleum and coal can be considered the two main sources readily available in the international market
for importation. Biomass is the main source of energy, satisfying heating energy requirements in the
country, particularly in the domestic sector. While hydro power has already been extensively developed for
electricity generation, studies have indicated that there is a large potential for wind power development in
the country. Studies are presently underway to establish the availability of offshore petroleum resources
within the territorial waters of Sri Lanka.
Secondary Energy Supply - The composition of secondary energy supply is as follows; biomass (57%),
petroleum (34%) and electricity (9%). The share of commercial energy in secondary supply was 43%. Losses
in conversion, transmission and distribution was high as 20%.
Electrical Energy Supply - The total amount of electricity generated during 2011 was 11,528 GWh out of
which 50% was from oil burning and 9% from coal power plants while the balance 41% was almost entirely
from hydro & wind power. The share of electricity generation from non-conventional sources remained
very small.
Energy Usage - In 2010, transport sector accounted for 27% of the national energy demand, and the
entire energy requirement of the transport sector was met through imported liquid petroleum. The
industrial sector energy consumption share was 25% compared with the commercial and household sector
share of 49%. Energy use in agriculture is insignificant.
Electrical Energy Usage - The composition of electrical energy usage is as follows; domestic (40%),
industrial (34%), commercial (24%), religious and street lighting (1%) each.
Energy Demand and Growth - With the increasing demand for energy to provide for the country’s
economic and social development, the total primary energy demand is expected to increase to about
15,000 kTOE by the year 2020 at an average annual growth rate of about 3%. Electricity and petroleum subsectors are likely to record higher annual growth rates of about 7-8%. Hydro electricity production and
biomass-based energy supplies, which are the only large-scale indigenous primary energy resources
available in Sri Lanka, are expected to increase only marginally in the near future.
Energy and Economic Development - Goals set for energy efficiency targets shows that the country is
looking forward to decouple energy with economic development in the Sri Lankan context.
Energy (Petroleum) Imports - Sri Lanka's consumption of petroleum products has doubled in the three
years since the end of island's 30-year ethnic war in 2009 as economic activity picked up requiring more
energy to run the economy. The demand for petroleum products is going up despite higher prices.
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Rapid Assessment and Gap Analysis
Trends of Oil Imports & Value - In 2009, total oil imported in barrels per day (bbl/day) was around
84,730 bbl/day including both crude oil and oil products.
Household Energy Use - An analysis of expenditure on energy per household per month shows a
countrywide average of Rs.1,279. Province-wise expenditure varies widely.
Energy Efficiency Strategy and Relevant - Under the strategy in implementing energy programmes in
the country, four aspects are being focused, namely; regulatory interventions, energy efficiency services,
knowledge management and financing assistance, and the methodologies have been thus prepared
accordingly.
Regulatory Interventions - Regulations introduced under the provisions of Sri Lanka Sustainable Energy
Authority Act are the driving force in implementing programmes to achieve the goals. Energy
manager/Energy Auditor regulations have been introduced in order to establish the national capacity for
implementing energy management programmes. A mandatory energy labelling programme has been
introduced to ensure the use of energy efficient appliances by the consumers. Further activities such as
making mandatory energy efficiency code for the design of energy efficient buildings are in the pipeline.
Provide Energy Efficiency Services - National level programmes in order to facilitate end use sectors to
comply with the regulations are also being established. Facilities for consultancy and project
implementation are created through registering consultants and energy services companies (ESCOs), and
developing the capacities of such categories on long term basis. A sophisticated instrument bank is focally
maintained at the Sustainable Energy Authority and the registered consultants and ESCOs can use the
instruments in project implementation activities. Energy consumption analysis software for major sectors in
the country have been prepared, and energy consumption baselines for the key sectors have been
established. Sri Lanka national energy efficiency award has been introduced to give national recognition to
the establishments excelling in energy management programmes.
Knowledge Management - Providing data and information and also updated knowledge on the subject
are immensely important for the different end use sectors to implement energy programmes in their
establishments. All the national data on energy supply and utilization, trends, technologies on alternative
energy & energy efficiency, etc. are provided by the Sustainable Energy Authority as the focal entity.
Awareness programmes, training workshops and sector-specific training programmes are conducted under
this.
Financing Support - Financing is the key element for successful project implementation and some soft
financing schemes were in operation some time back.
Current situation with regard to SE4ALL goals
Energy Access - The energy requirements of the country are met using electricity, petroleum oils, L.P. gas,
coal and biomass. All the industrial and commercial sectors have access to electricity and without any
limitation. So, those establishments have 100% access to electricity, which is a clean fuel and which can be
used for energy requirements in any nature. They also have the opportunity of using petroleum oils for
heating purposes and also in in-house power generation if they wish. Rural industries have the additional
opportunity of using biomass in heating requirements. In the case of domestic sector, 91% of the
population is fed by the national grid and 4% is fed by off-grid power plants, which are mainly based on
renewable energy resources. The un-electrified rural communities have access to biomass and kerosene,
which are the major sources of cooking and lighting respectively.
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Household Income & Expenditure on Energy - Mean household expenditure on Fuel & Lighting in 2009
was 6.4% of non food expenditure while it was 16.7% for transport & communication. These two figures
very roughly give an indication of expenditure on energy though the latter also includes the cost of
communication.
Access to Electricity - Level of electrification (coverage of the national grid) is 91%. There are issues
related to the quality of supply (Interruptions, low and high voltage, etc.).
Affordability of Electricity - The affordability of electricity by households is based on a study carried out
2011. In the above mentioned study, affordability is defined in two ways. First, the ability to pay their
current bill (and willingness to pay by non-electrified households). Whether they can pay their current bill
without any difficulty. Under the second method affordability is defined in terms of basic need electricity.
According to the above study, a little over 15 percent of responding households have reported that they
cannot afford the electricity bill. Nearly 14 percent of respondents do not pay the bill regularly on monthly
basis.
According to the rule of thumb (10 percent or above on electricity) only the poorest group of households
cannot afford electricity bill. Households with below Rs. 1,000 per capita income spend 15 percent of their
average income on electricity. For them the electricity bill is nearly 25 percent of their expenditure on
foods, three times the telephone bill and 2.3 times the expenditure on education.
Phasing out Kerosene Use for Lighting (Using LED-based Solar Lighting) - Presently, it is at a historical
low, only 10% of the households are dependent on kerosene and of the majority belong to Samurdhi
beneficiaries (Poorest of poor of the society). A project has been developed as a Government enabled,
private sector program to commercially introduce advanced solar powered White LED lighting products to
those segment of the population to power their basic lighting requirements and to eliminate the existing
practice of using kerosene for lighting purposes by the Sri Lankan population forthwith.
Energy Efficiency vis-à-vis Goal of SE4ALL
Energy Sector & Energy Efficiency in Sri Lanka - Present maximum demand for electricity is around
2,000 MW and the total annual electricity generation is around 12,000 GWh. About 57% of the electricity
generation is with thermal power plants running on diesel and other fossil fuel oils, about 17% with
“Norochchole” coal power plant and the balance 26% with hydro power. As a consequence of the high
share of oil based generation, the average electricity costs are higher when compared with other countries
in the region. The daily load curve is highly skewed, with a high evening peak lasting for about three hours.
This has been an additional burden to the utilities, whereas a flatter load curve would have made existing
plants operate more evenly reducing the necessity to add new capacity to serve the high peak. Lighting, TV
and other domestic appliances contribute to the peak period, and the efficiencies of the equipment used by
customers are not at satisfactory levels.
International Assistance for Energy Efficiency Improvement - Sri Lanka has obtained assistance from
international agencies (JICA, ADB, World Bank, USAID, etc.) in some of the earlier initiatives in energy
efficiency improvement.
Progress to Date - A significant progress has been made through following programmes; Energy labelling,
Building code, Energy Managers, Energy Auditors and Energy Consumption Reporting, EE Services through
ESCOs, National Energy Efficiency Award and Sustainable Guarantee Facility (SGF)
National Energy Management Plan - EnMAP (2012 - 2016) - SLSEA very recently developped the
National Energy Management Plan (EnMAP) for Sri Lanka covering a period of 5 years from 2012 to 2016. It
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Rapid Assessment and Gap Analysis
shall serve as a guide for SLSEA to embark on an integrated and cohesive programme of work with a long
term perspective to realize better energy efficiency in all energy consuming sectors of Sri Lanka. It will also
provide vital information to all interested parties, stakeholders, partners, collaborators and the prospective
donors on the direction of SLSEA in pursuing its mandate. Anticipated financial saving as a result of
electrical energy saving in all sectors and fosil fuel saving in the industrial sector is estimated to be around
LKR 13 billion in the first year and it will exceed LKR 34 billion at the fifth year. Financial benefit of
implementing the EnMAP over a period of 5 years is estimated to be around LKR 135 billion for a cost of
LKR 1.22 billion.
Energy Intensity of National Economy - Keeping the economic development goals of Sri Lanka in focus
and anticipation of a strong growth in the industrial sector, retaining the present levels of energy intensity
of economy will not be pursued. However, all possible measures to decouple the economic development
from energy demand growth will be made, targeting an energy intensity of economy of 500 toe/XDR million
by 2017. This will ensure a 20% saving of energy with respect to 2010 energy consumption.
Energy Saving Potential in Industrial & Commercial Sectors - It has been estimated that 19%
reduction in petroleum usage and 7.5% increase in biomass consumption is possible.
Energy Usage and Saving Potential in Domestic Sector - Refrigerators are responsible for over 50%
energy consumption.
CFL Penetration & its Effects on National Peak Demand - There is a significant potential for the
reduction of national peak demand if all incandescent lamps are replaced by CFL. The equivalent nation
peak demands saving is 235 MW.
Renewable Energy vis-à-vis Goal of SE4ALL
Renewable Energy - Due to the geo-climatic conditions, Sri Lanka is blessed with several forms of
renewable energy resources. Some of them are widely used and developed to supply the energy
requirements of the country. Others have the potential for development when the technologies become
mature and economically feasible for use. The following are the main renewable resources available in Sri
Lanka: Biomass, Hydro Power, Solar and Wind
Biomass is the most common source of energy supply in the country with the majority usage coming from
the domestic sector for cooking purposes despite the fact that they have access to grid electricity. Due to
abundant availability, only a limited portion of the total biomass usage is channeled through a commodity
market and hence the value of the energy sourced by biomass is not properly accounted for.
Although there is a potential for biomass based electricity generation, developments are still at their initial
stages. The first grid connected biomass based power plant (of l MW capacity) was commissioned in 2004
within the Small Power Purchase scheme of the CEB. In addition, a small scale (approximately 0.3MW)
biomass based power plant is operational at a factory in Madampe, producing electricity for factory use, as
a supplement to the grid supply. Another subsidiary of the same company is operating a co-generating
plant using producer gas of coconut shell and generates 5 MW of power.
Even though the majority of energy needs of the rural population are fulfilled by the use of firewood, there
are possibilities of further increasing the use of biomass for energy purposes in the country, especially for
electricity generation. Owing to the rapid growth of fuel wood cultivation, the concept of biomass based
electricity generation holds much promise for Sri Lanka.
The topography of the country provides an excellent opportunity to harness the energy stored in river
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Rapid Assessment and Gap Analysis
water which flows from the central hills of the country to the ocean surrounding the island. Though the
use of hydro resource for direct motive power was common in yesteryears, electricity production has
become the sole use of hydro resource in recent times. Therefore, hydro contribution as an energy supply
source is always through its secondary form which is electricity.
Hydro power is a key energy source used for electricity generation in Sri Lanka. The better part of the major
hydro potential has been already developed and they are delivering valuable low cost electricity to the
country. Currently, hydro power stations are operated to supply both peaking and base electricity
generation requirements. However, a few major sites are still classified as 'not economically feasible' for
development. Apart from the grid connected hydro power stations, many small-scale hydro power
applications are in operation serving off-grid loads. A substantial number of small scale hydro sites have
been identified for future developments.
Today, the development of small hydropower alone has reached great heights in Sri Lanka, paving way for
replication of the success in other parts of the world. The early development of the hydro industry created
a significant opportunity for knowledgeable technocrats, local investors and financial institutes to forge an
alliance to launch many more small hydro projects. The know-how was gainfully utilised by the nongovernmental organisations operating at grass root levels also enabled many community owned micro
hydro projects which were later identified as Village Hydro Schemes. By end 2010, there were more than
300 village hydro schemes in operation, benefiting approximately 7,000 rural families.
The state owned electricity utility, the Ceylon Electricity Board (CEB) extended further cooperation by
developing a robust technical and legal framework to connect non-despatchable embedded generators
through a Grid Code and a Standardised Power Purchase Agreement (SPPA) based on avoided cost
principles. The SPPA is also considered the key driver of the early success of the hydro power sector in Sri
Lanka. It is applicable for power plants having capacities less than 10 MW based on renewable sources,
waste or co-generation facilities.
The SPPA which offered a tariff based on avoided cost principles saw a dramatic surge in the number of
small hydro projects being developed, due to the steep rise in fossil fuel prices which entrained the avoided
cost to a higher level, making many a small hydro project financially a very attractive investment. The
resultant dynamism created an ever growing industry, teeming with project developers, service providers
and consultants which would eventually grown into a formidable force, commanding a total capacity of 217
MW by end 2011.
The country has developed a vast human resources base with the full set of skills required to develop small
hydropower anywhere in the world.
The country possesses its own high-quality hydro turbine manufacturing plant, with energy conversion
efficiencies reaching the levels hitherto achieved only by world class European manufacturers. Turbines
manufactured in Sri Lanka are not only used in local power plants, but also exported to other countries.
Already there are initiatives to manufacture wind turbines as well, and wind blade manufacturing is already
taking place at least in two enterprises.
Solar energy is used mostly in non-commercial forms. Therefore, similar to biomass, the total usage of solar
energy is not quantified properly. However, solar energy is the most extensively used form of energy in day
to day life and its supply is unrestricted and persistent throughout the year in most parts of the country.
The following are the most common uses of solar energy in Sri Lanka: drying, heating and electricity
production. Though not measured and officially reported, substantial use of solar energy is observed in
drying and water heating applications.
The CEB pioneered the introduction of solar photovoltaic technology in Sri Lanka during the early 1980s
and later solar photovoltaic applications saw a significant growth due the dedicated efforts of the private
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Rapid Assessment and Gap Analysis
sector.
Renewable energy industry soon benefited from generous grants to construct two utility scale solar PV
power plants in Hambantota in 2010. The projects were energised in 2011 and are yielding clean energy at
an annual plant factor of 17%. The ongoing market upheavals in solar PV couples with a special tariff
offered for exotic technologies have contributed to create a dynamic industry.
The usage of wind energy in Sri Lanka dates back to prehistoric times. Records have it, wind has been used
in the 3rd century, supporting the then burgeoning steel smelting industry in the South-western slopes of
the central hills of Sri Lanka. After this remarkable period, wind energy attracted the attention of Engineers
who were responsible for water management in the dry zone of Sri Lanka. Supported by Danish expertise,
many wind pumping stations were constructed in the flat terrain of the dry zone, along with the
accumulation of a wealth of indigenous knowledge of the wind regime of Sri Lanka.
The perseverance of a handful of committed practitioners planted the first seeds of wind energy
development in Sri Lanka through an ambitious programme of wind measurement in many locations of the
country. Armed with these valuable long term wind data, CEB managed to convince a development partner
to provide grant funds to construct the first wind energy plant in Hambantota in 1998. The success of this
project lead CEB’s Alternative Energy Unit to initiate a modern wind resource assessment programme,
yielding many years of quality wind data, required to launch commercial projects. The promising wind data
attracted the attention of a development partner leading to the development of a wind Atlas for Sri Lanka
in 2003. Introduction of the cost based tariff regime, availability of long term ground data, a sound
financing programme and experience gained in project development managed to launch the first
commercial wind project in 2009. This project was fast followed by several other projects, all of which are
yielding 32% annual plant factor, the highest level recorded anywhere in Asia. The commendable accuracy
of energy yield estimates provided the much needed comfort to the industry, leading to construction of
many more wind power plants, resulting in a capacity addition of 30.15 MW in 2011. A further 89.15 MW of
wind power plants are under construction and a 100 MW wind power plant is being mooted by the
Government to reap the promising winds of the Mannar island located in the north western sector of Sri
Lanka.
In Sri Lanka, application of wind pumping is an interesting option for farmers in the dry zone who are
practicing agriculture under lift irrigation, especially during the dry season. This is due to the existence of
negative correlation between the rainfall and strength of wind. Wind pumping activities in Sri Lanka are of
relatively recent origin. The first ever systematic studies on the subject commenced in 1978 with technical
assistance from the Government of the Netherlands. A 3m-diameter, six-bladed wind pump was developed,
which is now commercially produced in a small number and mostly used for irrigation purposes.
Work on biogas in Sri Lanka dates back nearly two decades. Many governmental and non-governmental
organizations have been active in this area at various periods of time. Many of these initiatives lacked
sustainability as they were implemented in isolation.
The Practical Action South Asia study “Integrating Energy and Environmental Mismanagement through
Biogas – A Country Review” revealed many factors, which have directly or indirectly resulted in the failure
of biogas technology. Although unconfirmed data suggests that there are nearly 5,000 biogas units
constructed through out the country the above sample survey results indicate that the functioning rate is as
low as 28.5%. The success rate, i.e. including plants which have been given up due to arrival of the grid
supply, remains at 33%.
The NRE industry was dominated by small hydro sector, as it was the only technology which was viable
under the prevalent avoided cost tariff regime. All other technologies were lagging behind with none of the
proposed projects getting implemented. In order to encourage the development of other NRE technologies,
the Government proposed a three tiered, technology specific, Cost-based Tariff for NRE developers,
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Rapid Assessment and Gap Analysis
thereby eliminating the drawbacks of the previous tariff based on avoided cost. The new tariff is offered to
6 genres of technology, viz., biomass, hydro, wind, municipal waste, agro waste and waste heat recovery.
The offering of a higher tariff for technologies other than hydro, opened opportunities for the expeditious
development of other genres such as solar and wind.
At present, measures are also taken to develop the first wind park in the Island of Mannar, which would
enable a 100 MW increase in clean energy capacity of Sri Lanka.
Several non-conventional primary sources have been used for electricity generation in Sri Lanka. Solar
photovoltaic systems have been increasingly used from the early 1980s. Small isolated hydroelectric
systems have been used in the tea processing industry for over 100 years. Small village-level hydroelectric
systems are increasingly used in remote locations for household use. Installation of household solar
photovoltaic systems and off-grid, community-based, hydro power systems continued to progress with the
financial assistance of the World Bank funded “Renewable Energy for Rural Economic Development”
(RERED) project. Given below is the electricity generation from non-conventional Sources.
In 2011, total non-conventional electricity generating capacity was 241 MW as against the conventional
electricity generating capacity (CEB and non-CEB) of 2,900MW. Therefore, the contribution of nonconventional primary source is about 7.6% of the total installed capacity of 3,141 MW.
The National Energy Policy of Sri Lanka is focused on the promotion of renewable sources of energy as a
means of addressing the supply inadequacies and sets out several initiatives and concessions to developers.
The government has set itself a minimum target of 10% of national grid electricity to comprise of
renewable energy sources by the year 2015.
However, the total renewable energy potential in Sri Lanka is found to be quite substantial, especially in
Wind and Dendro.
It is hard to estimate the potential of off-grid Mini-hydro as well as on-grid Solar. As the on-grid Mini-hydro
potential is expected to be fully harnessed by 2015, Sri Lanka has to rely on Dendro, Wind and Solar to
increase its share of non-conventional renewable energy in the energy supply portfolio. Though there is a
potential for Tidal and Wave energy, development of these sector will take a considerable period of time.
The total estimated small hydro potential at the 257 surveyed sites in 2002 was 97.4 MW, which was
distributed among the three site categories as: 24.4 % in old estate sites, 21.2 % in new estate sites and the
remaining 54.4 % in non-estate sites.
A study carried out by DFCC Bank in 2007 under the RERED project, has estimated that mini-hydro capacity
will be increased up to 300 MW by 2015.
It has been noted that the consumption of fuel wood for generation of electricity using currently available
technologies, and equipment, whilst meeting all environmental and other conditions is about 1.2 –1.5
kg/KWh (in 2005). Calculations on the national potential for Dendro power in Sri Lanka by BEASL have
estimated this to be in excess of 4,000 MW annually generating over 24,000 GWh. This is nearly 4 times the
total hydropower potential in this country. The conclusion may therefore be drawn that the Dendro
potential in the country is adequate to meet our electrical energy demand for many decades.
The most realistic assessment of the area of land available for commercial fire wood plantation would be
470,000 ha. This would be considered as the best starting point. Figures as high as 1.6 million have been
quoted for under used scrub, however, the question of ownership and approval for change of use might
not be automatically forthcoming. It would seem that a shortage of land for Short Rotation Coppice (SRC)
would not be a serious constraint for Sri Lanka.
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In 2002, the area under tea plantation was 180,000 ha. This area includes marginal tea lands with lower
stocking of productive bushes. Assuming 10% of the total tea area is marginal and not suitable for tea
cultivation, such areas could be profitably used for raising fuel wood. About 50% of the marginal lands
could be used for fuel wood for processing tea and the rest could be used for raising fuel wood for
domestic use.
Electricity production using solid biomass fuels is still a developing industry. In the longer term, grid
connected biomass generation (using the full range of possible technologies), may become competitive; the
greatest potential is for small scale embedded generation using gasification, pyrolysis or high-speed steam
engine-based plant.
A study carried out by DFCC Bank in 2007 under the RERED project, has estimated that biomass power
generation will be increased up to 90 MW by 2015.
Until the era ended in year 2000, scant information on wind resource prevented Sri Lanka from enjoying
wind power. With the advent of new technology backed by foreign financial aid, Sri Lanka commenced
wind energy studies followed by pilot scale wind power projects.
There are several comprehensive studies done extensively on the wind resource of Sri Lanka.
According to the “Wind Energy Resource Atlas of Sri Lanka and Maldives” compiled by the National
Renewable Energy Laboratory (NREL) under USAID technical assistance in 2003, there is nearly 5,000 km 2 of
windy area with good to excellent wind resource potential in Sri Lanka out of which 4,100 km 2 is in inland
and 700 km2 is in the costal belt. Therefore, the land extent with wind energy potential is around 6% of the
total land area (65,610 sq km2) of Sri Lanka. Based on a very conservative assumption of 5 MW per Km 2, it
could accommodate around 20,000 MW capacity wind power plants. The total potential is as high as 24,000
MW if windy lagoons are also considered.
A study carried out by DFCC Bank in 2007 under the RERED project, has estimated that wind capacity will be
increased up to 50 MW by 2015.
Already, SLSEA has issued Energy Permits to ten private developers for 90 MW in Kalpitiya & Puttalum
area. And four private developers for another 40 MW were issued.
Sri Lanka lies within the equatorial belt (between 6 and 10 degrees north of the Equator), a region where
substantial solar energy resources exist throughout much of the year in adequate quantities for many
applications, including solar water heating, solar electricity, and desalination. Many applications of solar
energy are currently in use for meeting remote electrical loads throughout much of the non-electrified
regions of Sri Lanka. The potential exists for significant expansion of the use of this renewable energy.
According to the “Solar Resource Assessment for Sri Lanka & Maldives” compiled by the National
Renewable Energy Laboratory (NREL) under USAID technical assistance in 2003, annual solar resource in Sri
Lanka ranges from 4.5 to 6.0 kWh/m2/day.
A study carried out by DFCC Bank in 2007 under the RERED project [2], has estimated that solar power
generation will be increased up to 11.2 MW by 2015.
In Sri Lanka, solar power has got a head start over others and is the fastest growing renewable resource,
particularly because of its rural roots. The industry grew from nothing in 1996 to 15-odd companies that
have helped install more than 100,000 units, mostly in homes of poor rice farmers. It is now growing at an
average of 20,000.
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A study on the potential of biogas from biomass sources (Human waste, Municipal solid waste, Landfills,
Livestock waste, Agricultural waste, plantation industries) in Sri Lanka carried out by Practical Action
estimates a total power generation potential of 288 MW of which includes 86 MW from livestock waste.
Solid waste is collected and disposed at a large number of unprotected sites. The problem is most acute in
the Colombo Metropolitan Area (CMA) and in other major cities such as Dehiwala-Mt. Lavinia, Moratuwa,
Kandy, Galle, etc. Even in remote areas, solid waste dumps have become a common sight. The Colombo
municipal area produces about 700 metric tones daily and the figure for the whole metropolitan area is
about 1,000 – 1,100 MT/day. The composition indicates that about 85% of the waste is organic and has
moisture content of about 60-75%. This data has been largely determined for the waste arising in the
Colombo area.
Production of liquid biofuels especially ethanol requires knowledge, experience, and a substantial amount
of capital investment, Therefore, setting up of small scale ethanol production units (in Sri Lanka) is neither
economically nor technically viable. Ethanol production in Sri Lanka is approximately 12 million litres per
year and is produced using sugar cane molasses at 2 sugar factories. This ethanol is of potable grade and
this amount is not even sufficient to meet demand for local ethanol. Therefore, another 5 million litres of
potable ethanol are imported in addition to the commercial grade ethanol.
However, small scale biodiesel production facilities can be installed even at village level and run by persons
with some scientific background. Feedstock required for these units can also be obtained locally. Yet the
cost of production may be high in these units due to the scale of operation and the inability to recover
unused reactants and by-products. The first ever rural level, community based, small scale biodiesel
production facility in Sri Lanka was set up by Practical Action with help from University of Ruhuna,
Peradeniya, Moratuwa and NERDC.
Biodiesel is also not yet produced on a commercial or pilot scale in Sri Lanka.
As waves are primarily driven by the wind, areas near the Equator tend to have lower wave potential. The
best wave climates, with annual average power levels between 20-70 kW/m of wave front or higher, are
found in the temperate zones (30-60 degrees latitude) where strong storms occur. However, attractive
wave climates are also found within ±30 degrees latitude where trade winds blow with the lower power
levels being compensated by the smaller wave power variability. Annual average wave power is
approximately 14 kW/m in the vicinity of Sri Lanka. It is reasonably close to estimate 15 kW/m as being
suitable for generation at competitive prices.
The only alternate energy source for which a tariff system has been formulated by the Ministry of Power
and Energy is wave energy. According to the government calculations, this is the cheapest form of
alternative energy.
With an absence of a major estuary and with a low tidal range (approx 0.7 m) there would be limited
opportunity for a barrage-type tidal station in Sri Lanka. However, with estimated currents of 3 m/s in the
Palk Strait there may be opportunities to develop a tidal stream.
SE4ALL Goals
Goal 1 (Energy Access & Security) - In reaching this goal, both national energy security and energy security
of the individual will be ensured by achieving the following: (I) All households to have access to basic
energy needs by 2017. (II) Energy security of the nation ensured by 2017.
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GOAL 2 (ENERGY EFFICIENCY) - Keeping the economic development goals of Sri Lanka in focus and anticipation
of a strong growth in the industrial sector, retaining the present levels of energy intensity of economy will
not be pursued. However, all possible measures to decouple the economic development from energy
demand growth will be made, targeting an energy intensity of economy of 500 toe/XDR million by 2017.
This will ensure a 20% saving of energy with respect to 2010 energy consumption. The desired objectives
are as follows; (I) A complete mechanism for delivery of energy efficiency services. (II) A comprehensive
capacity development programme. (III) Energy conscious nation.
GOAL 3 (RENEWABLE ENERGY) - In order to reach this goal, the plan is to target 10% increase in the use of
indigenous energy in the primary energy mix with respect to 2010 energy consumption. Following
objectives were to be fulfilled to reach/contribute towards the goal; (I) Generation of electricity from NCRE
to reach 10% by 2015. (II) Ten percent of industrial thermal energy to be switched to biomass. (III) Ten
percent of transport energy from non-petroleum fuels. (IV) Increase of biomass as a clean cooking fuel by
10%.
Institutional and Policy Framework
This section describes the institutional infrastructure available in the country for the promotion and
utilizing of renewable energy and also the promotion of energy efficiency.
The institutional arrangement in Sri Lanka in the sphere of renewable energy are as foolows. On one hand,
these organizations can be broadly categorized as “State” and “Non-state” based on their legal status. On
the other hand, these organizations can be further categorized as “Regulators” having project approving
powers, “Facilitators” having facilitation and/or commercial interests and “Financiers” including credit
Sri Lanka Sustainable Energy Authority (SLSEA) is positioned as the apex body with wider powers and has
dual functions of both regulation and facilitation and hence is not listed under any type.
All these organizations operate under a regulatory environment created by the Public Utilities Commission
of Sri Lanka (PUCSL). The PUCSL promotes competition, efficiency, safety, and quality of service in public
utilities, while protecting the interests of the consumers. PUCSL is also not listed under any type.
This multiplicity of organizations on one hand could be viewed as a blessing for the promotion and
utilization of renewable energy and on the other hand could be a hurdle especially at the time of project
approvals due to bureaucratic hindrances. Therefore, a better coordination of stakeholder organizations,
avoidance of duplicity and undue competition, etc. is the need of the hour and in this respect, SLSEA has an
uphill task of playing the role of the apex body by making use of the wider powers it is bestowed with
through the Act.
It is estimated that more than 50 organizations with over 2,000 stakeholders are commercially involved in
energy efficiency related matters and in the rapidly growing renewable energy industry, which includes
grid-connected, off-grid community and household based renewable energy systems. The stakeholders
include microfinance institutions, commercial and development banks, NGOs, project developers,
consultants, and equipment suppliers.
Development of renewable energy has received worldwide attention, mostly due to the bleak future of
fossil fuel supply sector and emerging evidence of links between climate change and fossil fuel use. Like in
many other developing countries, Sri Lankan case for renewable energy is more inclined to energy security
and economic issues than environmental concerns. The principles on which renewable energy development
is based on are four fold. They could be broadly identified as; (I) Government policy on accelerated
renewable energy development (II) Creation of value from indigenous natural resources (III) Energy security
concerns (IV) National economic development objectives.
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The funding landscape of Sri Lanka in renewable energy projects witnessed a dramatic change in 1997 with
the successful negotiation of GOSL with the International Development Association – IDA (Concessionary
credit arm of the World Bank) to secure a concessionary credit line (USD 19.7 m) supplemented with a
grant component (USD 3.8 m) from Global Environmental Facility (GEF). The Energy Service Delivery (ESD)
project was the result of this initiative which was operative from 1997 to 2002.
Following the tremendous success of ESD, the Renewable Energy for Rural Economic Development (RERED)
project was launched in 2003 by broad basing the development objectives with the enhanced credit line
(USD 75 m) from the same funding source. A GEF grant of USD 8 m was made available for the RERED
project.
At the end of RERED project in 2007, and again due to its resounding success, an additional credit line
amounting to USD 40 m was made available by the same funding organization for the extended phase of
RERED project operative from 2008 to 2011. The remaining grant components of ESD and RERED are
available for the extended RERED. A private sector oriented and independent administrative unit was
established under the DFCC Bank to steer and administer the project (initially ESD and thereafter RERED)
including the grant disbursement on behalf of GOSL. Six Participating Credit Institutions (PCIs) participated
in ESD and the number increased to 11 in RERED.
With the success of above projects and with the valuable experience gained, the Commercial Bank of
Ceylon - CBC (one of the PCIs) has managed to tie up with International Financial Corporation - IFC (Private
credit arm of World Bank) for 50% risk sharing of renewable projects undertaken by CBC.
In addition to the above dedicated credit facilities, some renewable energy projects (biomass based power
generation) have benefited from other credit lines such as Environmentally Friendly Solutions Fund (EFRIENDS) though it is not meant for the promotion of renewable energy projects. The principal objective of
this credit line made available by the Japan Bank of International Cooperation (JBIC) is to prevent industrial
pollution in Sri Lanka. The National Development Bank (NDB) and the Participating Credit Institutions (PCI)
provide long-term loans at low-interest to enable industries to reduce their pollution. Loans are either for
investment in anti-pollution equipment and facilities or for technical environmental protection training
costs.
Both the ESD Project and the RERED Project were concerned with addressing the issue of providing long
term financing support for renewable energy investments. Such measures have served the purpose
excellently, with capacity installed often surpassing targets. However, given the magnitude of the task still
ahead, the need to formulate a viable long term financing mechanism to augment electricity generation,
transmission and distribution throughout the country, remains a critical need.
The funding needs of the sector has been assessed given the estimate considered in the National Energy
Policy and Strategies for Sri Lanka, that of 10% of electricity generation to comprise from renewable
energy. While sources attributed to the Central Bank estimates that new power plants of 200 MW would be
required annually to meet the growth in demand, it is anticipated that nearly 350 MW of the above
requirement would comprise of new generating capacity to be installed through renewable resources by
the year 2015. The additional funding requirement to facilitate the above increase in renewable energy
capacity is estimated to be approximately US$ 242 million. The refinance component of 80% would amount
to US$ 193 million.
ADB is providing assistance to establish laboratory facilities for measuring of energy efficiency of
appliances. This will help to implement energy labelling scheme. ADB is also providing assistance to carry
out energy auditor training programme.
Plan is to extend the grid to reach 97% of total households and the balance 3% will be electrified through
off grid systems such as SHS and micro hydro.
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Rapid Assessment and Gap Analysis
“Grama Shakthi” program is being implemented to provide SHS for the balance 3% households (40,000
HHs) this year. Under this program Government is providing 1/3 of the total cost and 1/3 will provide by the
Donor agencies as a grant. The balance 1/3 of the cost will be charged from the recipient.
All forms of incentives (“Financial” and “Non-financial”) are available or had been available for the
promotion and utilization of renewable energy options in Sri Lanka in varying degrees, at different times, in
different regions for different target groups. In some cases, these incentives are available as a package
while in some cases it is just one of them depending on the need. Some incentives have been introduced
with a clear plan of phasing out with exit strategies.
In the early days, many NGOs such as Practical Action (formerly ITDG) operating in this field offered grants
for the developers as well as end users. Soft loans schemes such as ESD, RERED and even E-FRIEND,
consisted of grant components. Some Provincials Councils such as “Uva” and “Sabaragamuwa” offered
financial incentives to offset the upfront cost of low-income end users of Solar Home Systems and Village
Hydro projects. Free services of State, NGO and even private sector are available mostly in the form of
training and advisory services.
Private Investment & Enabling Business Environment
It is estimated that more than 50 organizations with over 2,000 stakeholders are commercially involved in a
rapidly growing renewable energy industry, which includes grid-connected, off-grid community and
household based renewable energy systems. The stakeholders include microfinance institutions,
commercial and development banks, NGOs, project developers, consultants, and equipment suppliers.
On the supply side, availability of the energy resource, manpower (know-how, skills, capabilities, etc.),
money (financing, grants, incentives, etc.), machines (technology, machinery, equipment, etc.), and
methods (policies, institutional arrangements, etc.) are considered. On the demand side, accessibility to the
energy resource, end user needs, awareness, affordability (financing, grants, incentives, etc.), reliability of
technology and equipment, and methods (policies, institutional arrangements, etc.) are considered.
Of five main renewable resources, Solar could be treated as the most developed, next is Small Hydro Power
(mini, micro and pico) and followed by Biogas. The Hydro market is found to be fully developed in terms of
technology, equipment, construction, financing, maintenance & operation. Biogas has around 78% success
rate especially when the Chinese continuous systems are adopted. The Wind market is being developed.
The Biomass market for power generation and thermal applications of industry and commercial sectors is
also not developed despite its high potential.
Grid connected small hydropower capacity has grown from just 120 kW in 1996 to 100 MW in 2006. The
development of the industry has been supported with appropriate policy changes, establishing of purchase
agreements and pricing mechanisms. This, indeed, is an outstanding achievement and depicts the
dynamism of the local entrepreneurship once the right institutional backing and investment climate are set
in place for the new industry.
Despite its enormous potential, the biomass market for thermal applications of industrial and commercial
sectors and also for electricity generation is not developed. The good sign is that many entrepreneurs have
begun to sense prospects. A few emerging companies are actively involved in this sector by offering unique
service packages.
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Gaps & Barriers
The major barriers in implementation of energy efficiency improvement projects have been; (I) Lack of
financing (II) Lack of end user awareness and commitments (III) Lack of technical capacity among end users
and (IV) The absence of a regulatory mechanism.
The electricity tariff doesn’t reflect the true energy cost, especially in the domestic category. The tariffs are
built, insulated from the ups and downs of the rising energy prices, therefore, it does not act as an incentive
to encourage investments in energy efficiency activities.
Energy efficiency is not yet a priority for many industries, since there are many other burning issues like
material supply and labour related issues, which has a direct bearing on the viability of business.
Sri Lankan ESCOs are not yet capable of handling the entire cycle of a given project, commencing from
energy auditing to project implementation.
In the area of funding, following barriers exist; (I) Lack of legal and financial infrastructure to support
performance contracts between end-users and ESCOs, (II) Limited ability of local ESCOs to obtain bank
financing or raise equity capital, particularly a problem for new, small ESCOs that are financially weak, (III)
Lack collateral and credit history, (IV) Lack of experience among the banks, both with Energy Efficiency
Improvement (EEI) projects, but also with the financial concept of performance contracts and lack of
confidence on the part of banks that ESCO performance estimates will turn out to be accurate.
Some barriers for the promotion of renewable energy and for the transferring of renewable energy
technologies are generic and common to all renewable energy options while some are specific.
Often the result of barriers is to put renewable energy at an economic, regulatory, or institutional
disadvantage relative to other forms of energy supply. Many of these barriers could be considered “market
distortions” that unfairly discriminate against renewable energy, while others have the effect of increasing
the costs of renewable energy relative to the alternatives.
All barriers could be broadly classified into 5 categories (Policy, Financial, Technical, Information and
Institutional) and often they are not mutually exclusive.
Technical Barriers - Resource Supply, Reliability, Technology Sophistication, R&D, Technical Deficiencies,
Grid Constraints, Harmonics and Intermittent Sources
Financial Barriers – Financing, High Initial Cost, Interest Rates, Long Delays, Transaction Cost and Risk &
Uncertainties
Policy Barriers - Low Priority for RE in National Planning, Taxes & Duties, Regulations, Environmental
Regulations, Monopoly of Electricity Distribution, Tariff, Fossil Fuel Subsidies, Restrictions on Locations and
Construction and Land Issues
Information Barriers – Data, Training & Education, Awareness & Education and Consumer Perception
Institutional Barriers - Donor Driven Projects, Institutional Inefficiencies, Linkage Issues, Capacity and
Competence Issues and Priority Issues.
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Ideas for the Formulation of Projects, Programmes & Activities
An exhaustive list of ideas have been generated through a focus group brainstorming exercise that can be
used to formulate and develop projects, programme and activities for the achievements of SE4ALL goals.
However, these ideas need to be further reviewed and prioritized using multiple criteria such as the Degree
of impact, Economic and technical feasibility, innovativeness and practicability. These ideas have been
arranged under three SE4ALL goals and also under following subheadings; Access to energy and security
(Policy, Sources / Resources, Generation, Transmission and Distribution, Energy industry, Energy efficiency,
Capacity building, Awareness & Promotion, R&D and Energy modesty. Energy efficiency (Policy, Standards
& Regulations, Funding, Industry, Technology, Capacity building, Awareness & Promotion, Monitoring &
Evaluation, R&D, Modesty and Rewards). Renewable energy (Policy, Standards & Regulations, Assessments,
Planning, Monitoring & Evaluation, Harnessing RE, Biomass, Technology, Capacity building, Awareness &
Promotion, R&D, Funding, Rewarding.
________
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Section I: Introduction
1.1 COUNTRY OVERVIEW [1, 2]
1.
Basic socio-economic data: population, GDP/capita, key economic sectors, poverty rate (current and
trend)
1.1.1 Vision - Mahinda Chinthana Idiri Dekma
“Mahinda Chinthana Idiri Dekma” is the country’s vision for the future.
The objective of our next massive leap forward is to transform
Sri Lanka into a strategically important economic centre of the world.
my determination therefore, is to transform sri Lanka to be the Pearl of
the Asian silk route once again, in modern terms. Using our strategic
geographical location effectively, i will develop our motherland as a
naval, Aviation, Commercial, energy and Knowledge hub, serving as a
key link between the east and the West.
The broad national objectives of the Mahinda Chinthana Idiri Dekma as given below encompass fourteen
key aspects that are strategically significant.
1. A leap forward to become a centre of shipping, aviation, commerce, energy and knowledge and
thus be the miracle of Asia.
2. To be a prosperous self sufficient country.
3. A country where everyone has a house, electricity, water and communication services.
4. A country with a developed road network and efficient transportation services.
5. A society that is disciplined, law abiding and that has good governance.
6. A hard won unitary nation that will not be divided again.
7. A sustainable peace that will be achieved through the consensus of all.
8. A green Lanka that will protect the flora and fauna of this country.
9. A country where the aspiration of the youth are recognized.
10. A teacher-student population that has conquered knowledge of the earth, sky and the cyber space.
11. A healthy population that equally benefits from both western and eastern medicine.
12. Local entrepreneurs who will utilize local resources and local knowledge and will be able to
compete internationally.
13. A period of renaissance in the Arts such as literature and drama.
14. A beautiful country where people will not leave but will arrive with happiness.
Of above fourteen aspects, 3 explicitly dealt with (1, 3 and 8 aspects) access to energy and green energy.
1.1.2 Geography
Sri Lanka, an island in the Indian Ocean is located to the south of the Indian subcontinent, 880 km north of
the equator. It lies between 5° 55' and 9° 55' north of the equator and between the eastern longitudes 79°
42' and 81° 52'. The total land area is 65,610 sq. km. including inland waters of 2,905 sq.km. A length of 445
km. and breadth of 225 km. encompasses tropical beaches, low land, mountains and vegetation. The island
consists of a mountainous mass somewhat south of the centre, with a height exceeding 2,500 metres,
surrounded by broad plains. The average temperature of tropical low lands is 27°C and in the central hills
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Rapid Assessment and Gap Analysis
average temperature drops down to 14°C. The south-west monsoon brings rain to the western, southern
and central regions from May to July, while the north-eastern monsoon occurs in the north and east in
December and January. The annual average rainfall is around 2,000 mm and the number of rainy days per
year is around 90.
1.1.3 Legislature
Sri Lanka is a free, independent and sovereign nation. Legislative power is exercised by a Parliament,
elected by universal franchise on proportional representation basis. A President, who is also elected by the
people, exercises executive power including defence. Sri Lanka enjoys a multi party system, and the people
vote to elect a new government every six years.
1.1.4 Demography
Mid-year population (provisional)
Growth of population
Population density
Expectation of life at birth
Average literacy rate
Labour force (Excluding Northern Province)
Unemployment rate (Excluding Northern Province)
Poverty Head Count Index
Households with electricity
Per capita electricity consumption
- 20,869,000
- 1.0%
- 333 persons per sq.km.
- 74.9
- 91.9 %
- Male: 93.2 %,Female: 90.8 %
- 8,236,000
- 4.2%
- 8.9
- 91 %
- 480.3 kWh.
1.1.5 Economy
Sri Lanka is a lower income economy in the South Asian region. The country's economy was socialist
oriented in the past, but in the present scenario the country has stepped forward for private participation
and competitive environment. Agriculture, industry and services have their respective importance in
contributing to the GDP. Sri Lanka is also a popular tourist attraction due to its landscape, beaches and
tropical forests.
Key economic indicators are as follows;
GDP at current market prices (Rs. billion)
GNP at current market prices (Rs. billion)
- 6,543 (Around USD 59 Billion)
- 6,471
Per capita GDP at market prices (Rs.)
Per capita GNP at market prices (Rs.)
- 313,511
- 310,059
Per capita GDP at market prices (US$)
Per capita GNP at market prices (US$)
- 2,836
- 2,804
Trade balance (US$ million)
- -9,710
Investment (% of GDP)
Gross National Savings (% of GDP)
- 29.9%.
- 22.1%.
Inflation (Annual average - Colombo Consumer Price Change %) - 6.7%
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Rapid Assessment and Gap Analysis
Value of Oil Imports
- US$ 4.63 Billions.
1.1.6 Poverty Rate [3]
Sri Lanka has made significant progress in poverty reduction. The proportion of people living below the
poverty line sharply declined from 26.1 per cent in 1990/01 to 8.9 per cent in 2009/10 and on current
trends, the national MDG target of halving poverty, 13.1 per cent is likely to be achieved much ahead of
2015.
However, in spite of this favorable progress at the national level, there are considerable regional
disparities. The incidence of poverty has declined in all districts except in Nuwara Eliya and Moneragala
where the poverty headcount index (HCI) is more than double the national average. Poverty in the estate
sector has risen by more than 55 percentage points in 1990/91-2006/07, contrary to the general trend of
steadily declining poverty. This varied pace of poverty reduction and disparities that exists, in Sri Lanka is
likely to be linked to various physical and non-physical inequalities that prevail among different regions.
Rising inequality is a cause for concern for Sri Lanka.
________
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1.2 ENERGY SITUATION [4]
2.
Energy supply (energy mix, export/import)
 Primary energy sources
 Power sector (installed capacity, annual generation, import/export)
3.
Energy demand (overview of main consuming sectors, industry, residential, agriculture, transport)
4.
Energy and economic development: share of energy sector in GDP; share and absolute amount of
public spending on energy, including for energy subsidies; energy security (share of energy imports in
balance of payment)
5.
Energy strategy and relevant targets (access, capacity, generation, energy security)
1.2.1 Composition of Primary Energy
Sri Lanka is a country blessed with year around sun, wind, rains and lush vegetation and surrounded by the
Indian Ocean. All these natural resources bear testimony to the ample opportunities the country has to
harness for energy needs.
0.05
12
Biomass (47%) 5,133 '000 toe
47
Petroleum (41%) 4,544 '000 toe
41
Hydro (12%) 1,352 '000 toe
Non-conventional (0.05%) 5
'000 toe
(Source: Sri Lanka Energy Balance 2010)
Figure 1.2.1 – Composition of Primary Energy
In deed, Sri Lanka is a country of renewable energy having nearly 59% of primary energy derived from
various sources of energy, mainly from biomass (47%) followed by hydro (12%). But the balance primary
energy (41%) need is fulfilled by imported fossil fuel which makes the country very vulnerable to price
fluctuations and escalations. This has been a major drain of scarce foreign reserves.
Table below provides the composition of primary energy and the trend for a period of 5 years from 2005;
Table 1.2.1 – Composition of Primary Energy Supply and the Trend
Primary Energy Supply (thousand toe)
Biomass
Petroleum
Hydro
Non Conventional
Total Primary Energy Supply
Share of Biomass in Primary Energy (%)
Share of Renewable Energy in Primary Energy (%)
2005
4,632
4,368
840
4
9,844
47
56
2006
4,760
4,002
1,112
4
9,879
48
59
2007
4,741
4,238
947
4
9,930
48
57
2008
4,677
3,929
991
5
9,601
49
59
2009
4,793
3,897
931
5
9,626
50
60
2010
5,133
4,544
1,352
5
11,034
47
59
(Source: Sri Lanka Energy Balance 2010)
Energy requirements in Sri Lanka are satisfied by both locally available sources and those sourced from
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Rapid Assessment and Gap Analysis
global energy markets. Biomass, hydro power, wind power and solar power are the four indigenous sources
with a high potential for productive use in Sri Lanka, whereas petroleum and coal can be considered the
two main sources readily available in the international market for importation. Biomass is the main source
of energy, satisfying heating energy requirements in the country, particularly in the domestic sector. While
hydro power has already been extensively developed for electricity generation, studies have indicated that
there is a large potential for wind power development in the country. Studies are presently underway to
establish the availability of offshore petroleum resources within the territorial waters of Sri Lanka.
Challenges faced by Sri Lanka’s Energy Sector are many. While ensuring a continuous supply of electricity
and petroleum products, the growing economy has to manage a strategic balance between indigenous
energy resources and imported fossil fuels. As per 2011 data, 9% of Sri Lanka’s population is yet to receive
electricity supply for household needs. Commercial energy utilities are required to be further strengthened
to improve their financial viability and service quality. The involvement of the country’s population in the
investment, operation, regulation, and delivery of energy services needs to be increased.
1.2.2 Secondary Energy Supply
The table below provides the composition of secondary energy supply; biomass (57%), petroleum (34%)
and electricity (9%). The share of commercial energy in secondary supply was 43%. Losses in conversion,
transmission and distribution was high as 20%.
Table 1.2.2 – Composition of Secondary Energy Supply and the Trend
Supply by Energy Source (thousand toe)
Biomass
Petroleum
Electricity
Total Secondary Energy Supply
Share of Commercial Energy in Secondary Supply (%)
Losses in Conversion, Transmission and Distribution (%)
2005
2006
2007
2008
2009
2010
4,584
2,743
624
7,951
42
19
4,713
2,705
672
8,090
42
18
4,689
2,802
707
8,198
43
17
4,653
2,449
719
7,821
41
19
4,771
2,425
721
7,918
40
18
5,054
2,947
792
8,793
43
20
(Source: Sri Lanka Energy Balance 2010)
1.2.3 Electrical Energy Supply
Table 1.2.3 – Composition of Electrical Energy Supply and the Trend
Generation Sri Lanka (GWh)
Hydro, CEB and SPP
Thermal, CEB, IPP and Hired
Non-Conventional, CEB
Self-Generation By Customers
Off-Grid, Conventional
Off-Grid, Non-Conventional
Gross Generation Sri Lanka
2005
2006
2007
3,450 4,634 3,947
5,339 4,805 5,895
2
2
2
78
78
78
14
15
16
8,884 9,535 9,938
(Source: Sri Lanka Energy Balance 2010)
2008
4,129
5,849
3
16
9,998
2009
3,881
6,062
4
17
9,964
2010
%
5,634 53
5,063 47
3 0
0
0
17 0
10,718 100
The total amount of electricity generated during 2011 was 11,528 GWh out of which 50% was from oil
burning and 9% from coal power plants while the balance 41% was almost entirely from hydro & wind
power. The share of electricity generation from non-conventional sources remained very small.
The grapgh below depicts the electricity generation during the past 40 years and the dependency on fossil
fuel.
26
Sri Lanka
Rapid Assessment and Gap Analysis
(Source: Sri Lanka Sustainable Energy Authority)
Figure 1.2.2 – Electricity Generation During the Past 40 Years
1.2.4 Energy Usage
The table below provides the composition of energy usage in 2010. The transport sector accounted for 27%
of the national energy demand, and the entire energy requirement of the transport sector was met
through imported liquid petroleum. The industrial sector energy consumption share was 25% compared
with the commercial and household sector share of 49%. Energy use in agriculture is insignificant.
Primary energy intensity in the economy was 31 toe per million Rupees of GDP in 2010 and a declining
trend can been seen. Commercial energy intensity in the economy was 11 toe per million Rupees of GDP in
2011 and as in the case of primary energy, a declining trend can be seen.
Table 1.2.4 – Composition of Energy Usage and the Trend
Energy Use (thousand toe, delivered to customers)
Industry
Transport
Household, commercial and others
Agricultural
Total Energy Use
Energy Intensity in the Economy
Primary Energy Intensity (toe per million Rupees of GDP1)
1 at 1982 factor cost prices
Commercial Energy Intensity (toe per million Rupees of GDP)
Energy use per person
Energy use (thousand toe/person)
Commercial Energy Use (thousand toe/person)
Electricity Sold (kWh/person)
Petroleum Sold (kg/person)
2005
1,946
2,072
3,918
14
7,951
2006
2,084
1,994
4,001
12
8,090
2007
2,063
2,134
3,990
11
8,198
2008
1,900
2,727
4,122
9
8,758
2009
1,944
1,858
4,173
8
7,983
2010
2,200
2,369
4,313
10
8,892
38
35
33
30
29
31
13
12
12
10
10
11
404
171
368
184
407
170
393
174
410
175
411
185
434
157
414
177
389
153
409
185
430
181
445
180
(Source: Sri Lanka Energy Balance 2010)
1.2.5 Electrical Energy Usage
The table below provides the composition of electrical energy usage; domestic (40%), industrial (34%),
commercial (24%), religious and street lighting (1%) each.
Table 1.2.5 – Composition of Electrical Energy Usage and the Trend
27
Sri Lanka
Rapid Assessment and Gap Analysis
Total Electricity Use (CEB+LECO+Self+Off-Grid)(GWh)
2005
2006
2007
Domestic
2,866 3,063 3,217
Religious
49
51
50
Industrial
2,732 2,947 2,957
Commercial
1,465 1,633 1,864
Street Lighting
141
125
136
Total
7,253 7,819 8,223
(Source: Sri Lanka Energy Balance 2010)
2008
3,239
49
2,957
1,986
135
8,366
2009
3,373
51
2,773
2,059
133
8,389
2010
%
3,651 40
55 1
3,148 34
2,224 24
130 1
9,208 100
The table below provides the installed capacity during a period of five years from 2005 and it was 3,088
MW in 2010. Sytem peak demand has shown an increasing trend and it has reached 1,955 MW in 2010.
2,000
1,950
1,900
1,850
1,800
1,750
1,700
1,650
1,600
2005
2006
2007
2008
2009
2010
Figure 1.2.3 – Peak Demand and the Trend
Table 1.2.6 – Installed Capacity, Peak Demand and the Trend
2005
2006
Total Installed Capacity in the Grid (MW)
2,411 2,434
System Peak Demand (MW)
1,748 1,893
(Source: Sri Lanka Energy Balance 2010)
2007
2,441
1,842
2008
2,811
1,922
2009
2,868
1,868
2010
3,088
1,955
1.2.6 Energy Demand and Growth
With the increasing demand for energy to provide for the country’s economic and social development, the
total primary energy demand is expected to increase to about 15,000 kTOE by the year 2020 at an average
annual growth rate of about 3%. Electricity and petroleum sub-sectors are likely to record higher annual
growth rates of about 7-8%. Hydro electricity production and biomass-based energy supplies, which are the
only large-scale indigenous primary energy resources available in Sri Lanka, are expected to increase only
marginally in the near future. This is mainly due to limitations in further hydropower development owing to
lower economic viability of exploiting the remaining large hydropower sites and limited use of biomass with
gradually increasing standard of living of the population. This means that the country’s incremental primary
energy requirements need to be supplied mainly by imported fossil fuels in the medium term. In the longer
term, possible development of indigenous petroleum resources and accelerated development of nonconventional renewable energy are likely to make a significant change in Sri Lanka’s mix of primary energy
resources.
A combination of factors has contributed to the emphasis in recent times for generating electricity through
less conventional renewable sources. Electrification of rural areas, for instance poses many challenges,
foremost amongst which are the high capital investment, operational costs and the difficulties associated
with extending grid connected electricity lines to remote areas. In this context renewable sources of energy
including solar power, small scale hydro power, wind power, biomass and Dendro power, have emerged as
an economical and sustainable alternative source to promote medium term electricity generation to the
rural populace, albeit in small measure.
28
Sri Lanka
Rapid Assessment and Gap Analysis
1.2.7 Energy and Economic Development
1.2.7.1 Energy & Economic Development
Goals set (as stated below) for energy efficiency targets shows that the country is looking forward to
decouple energy with economic development in the Sri Lankan context.
“Keeping the economic development goals of Sri Lanka in focus and anticipation
of a strong growth in the industrial sector, retaining the present levels of energy
intensity of economy will not be pursued. However, all possible measures to
decouple the economic development from energy demand growth will be made,
targeting an energy intensity of economy of 500 toe/XDR million by 2017. This
will ensure a 20% saving of energy with respect to 2010 energy consumption. By
development of systems, capacity and consciousness, the nation can be guided
towards the goal of arresting energy intensity of economy”
1.2.7.2 Energy (Petroleum) Imports [5]
Sri Lanka's consumption of petroleum products has doubled in the three years since the end of island's 30year ethnic war in 2009 as economic activity picked up requiring more energy to run the economy. The
demand for petroleum products is going up despite higher prices.
Until 2000, the island's sole 50,000 barrels-a-day refinery operated by the state-run Ceylon Petroleum
Corporation was able to meet about half of total requirements but now two-thirds of all products are
imported except for kerosene. Therefore, the increased demand must be met by imports. If this trend
continues at this pace, petroleum bill will likely to be doubled in every three years.
Almost a quarter of the import bill is spent on petroleum alone which is a huge burden on country’s
economy. The island's petroleum bill is equal to about 45 percent of total export proceeds. Economists say,
heavy oil import bills has been a major contributory factor in Sri Lanka’s negative trade balance. Current
petroleum imports bill is around USD 4.979 Billion.
The bulk of Sri Lanka's petroleum consumption goes for transport and power generation, accounting for up
to 90 percent of total petroleum consumption. Petrol and diesel consumption has been increasing at a very
rapid rate, and also fuel oil used to generate electricity, because of rising power consumption and a
growing fleet of vehicles. Demand for kerosene, used mainly for lighting, had fallen as grid electricity
spread to cover over 90 percent of the people.
Trends of Oil Imports & Value [6]
In 2009, total oil imported in barrels per day (bbl/day) was around 84,730 bbl/day including both crude oil
and oil products. The following table provides the value of oil imports from 1980 to 2010.
Table 1.2.7 – Value of Oil Imports
Year
Value of oil imports
Percent Change
Billion USD
1980
0.322
1981
0.373
15.84 %
1982
0.484
29.76 %
29
Sri Lanka
Rapid Assessment and Gap Analysis
1983
0.383
-20.87 %
1984
0.389
1.57 %
1985
0.386
-0.77 %
1986
0.137
-64.51 %
1987
0.229
67.15 %
1988
0.164
-28.38 %
1989
0.182
10.98 %
1990
0.311
70.88 %
1991
0.228
-26.69 %
1992
0.226
-0.88 %
1993
0.309
36.73 %
1994
0.296
-4.21 %
1995
0.387
30.74 %
1996
0.479
23.77 %
1997
0.539
12.53 %
1998
0.345
-35.99 %
1999
0.5
44.93 %
2000
0.901
80.20 %
2001
0.731
-18.87 %
2002
0.789
7.93 %
2003
0.838
6.21 %
2004
1.209
44.27 %
2005
1.655
36.89 %
2006
2.07
25.08 %
2007
2.498
20.68 %
2008
3.368
34.83 %
2009
2.167
-35.66 %
2010
3.019
39.32 %
(Source: http://www.indexmundi.com/sri_lanka/oil_imports.html)
1.2.7.3 Household Energy Use
An analysis of expenditure on energy per household per month shows a countrywide average of Rs.1279.
Province-wise expenditure varies widely. An analysis of expenditure on energy in relation to consumption
of different types of fuel shows that the provinces with lesser usage of fuel wood tend to spend more on
energy indicating that they use more expensive fuels like electricity, LPG & kerosene for domestic purposes.
It is clearly evident that higher the income, more they spend on domestic energy. The average monthly
expenditure on energy steadily increases as the income category increases. However it is interesting to see
how preferences for energy type change/ behave with income category. Average electricity bill too
progressively increases with increase in income. So does the LPG bill. But the pattern changes when it
comes to kerosene and fuel wood. When household incomes increase, usage of kerosene and fuel wood
30
Sri Lanka
Rapid Assessment and Gap Analysis
progressively decrease. These facts show that there is a preference for cleaner fuels by the community, but
affordability is the major factor restraining their wider use.
1.2.8 Energy Efficiency Strategy and Relevant Targets (Access, Capacity, Generation and Energy
Security)
Under the strategy in implementing energy programmes in the country, four aspects are being focused,
namely; regulatory interventions, energy efficiency services, knowledge management and financing
assistance, and the methodologies have been thus prepared accordingly.
1.2.8.1 Regulatory Interventions
The Government of Sri Lanka clearly identifies the importance of ensuring energy security of the country
through development of indigenous renewable energy sources and enhancing energy conservation.
Regulations introduced under the provisions of Sri Lanka Sustainable Energy Authority Act are the driving
force in implementing programmes to achieve the goals. Energy manager/Energy Auditor regulations have
been introduced in order to establish the national capacity for implementing energy management
programmes. A mandatory energy labelling programme has been introduced to ensure the use of energy
efficient appliances by the consumers. Further activities such as making mandatory energy efficiency code
for the design of energy efficient buildings are in the pipeline.
1.2.8.2 Provide Energy Efficiency Services
National level programmes in order to facilitate end use sectors to comply with the regulations are also
being established. Facilities for consultancy and project implementation are created through registering
consultants and energy services companies (ESCOs), and developing the capacities of such categories on
long term basis. A sophisticated instrument bank is focally maintained at the Sustainable Energy Authority
and the registered consultants and ESCOs can use the instruments in project implementation activities.
Energy consumption analysis software for major sectors in the country have been prepared, and energy
consumption baselines for the key sectors have been established. So, end users can analyze their energy
consumption data and get an understanding of the energy utilization in comparison to the peer
establishments. Sri Lanka national energy efficiency award has been introduced to give national recognition
to the establishments excelling in energy management programmes.
1.2.8.3 Knowledge Management
Providing data and information and also updated knowledge on the subject are immensely important for
the different end use sectors to implement energy programmes in their establishments. All the national
data on energy supply and utilization, trends, technologies on alternative energy & energy efficiency, etc.
are provided by the Sustainable Energy Authority as the focal entity. Awareness programmes, training
workshops and sector-specific training programmes are conducted under this. The necessary material have
been compiled and used in these programmes.
1.2.8.4 Financing Support
Financing is the key element for successful project implementation and some soft financing schemes were
in operation some time back. Those were Renewable Energy for Rural Economic Development (RERED), EFriends, etc. and international donor agencies provided assistance for implementing those programmes. A
facility called sustainable guarantee facility has been established and through that the necessary technical
guarantee on project feasibility and also the guarantee on refinancing are provided in implementing energy
efficiency improvement projects.
________
31
Sri Lanka
Rapid Assessment and Gap Analysis
Section 2: Current situation with regard to SE4ALL goals
2.1 ENERGY ACCESS vis-à-vis GOAL OF SE4ALL
6.
Overview and assessment
7.
Modern energy for thermal applications (cooking, heating)

Physical access: share of households without access to modern cooking/heating,
industrial/agricultural use
Availability/quality of supply: status of domestic supply chain
Affordability: fuel prices, cost/affordability of efficient cooking stoves and fuel supplies (e.g. % of
household monthly income)
Sustainability: share of sustainable biomass and other RES, % household with access to efficient
stoves



8.




9.
Access to electricity:
Physical access: grid connection, urban/rural areas, target group: areas/category of population with
minimum level of physical access [official statistics exist]
Availability and reliability of supply: frequency/duration of black-outs, load shedding (if officially
practiced)
Affordability: tariffs, share of utility bills in household incomes, subsidies [data available for most
countries via national household survey]
Sustainability: share of renewable energy sources (RES) in power mix [official statistics exist]
Modern energy for productive uses:
 Energy needs and access: energy demand in productive sectors; share of enterprises,
industrial/agricultural, with access to modern energy sources
 Availability: quality of local supply chain and availability of required technologies for productive
applications
 Affordability and access to capital: fuel prices, cost/affordability of technological

10. Overview and assessment
2.1.1 Modern Energy for Thermal Applications (Cooking, Heating)
2.1.1.1
Energy Access
The energy requirements of the country are met using electricity, petroleum oils, L.P. gas, coal and
biomass. All the industrial and commercial sectors have access to electricity and without any limitation. So,
those establishments have 100% access to electricity, which is a clean fuel and which can be used for
energy requirements in any nature. They also have the opportunity of using petroleum oils for heating
purposes and also in in-house power generation if they wish. Rural industries have the additional
opportunity of using biomass in heating requirements. In the case of domestic sector, 91% of the
population is fed by the national grid and 4% is fed by off-grid power plants, which are mainly based on
renewable energy resources. The un-electrified rural communities have access to biomass and kerosene,
which are the major sources of cooking and lighting respectively.
32
Sri Lanka
Rapid Assessment and Gap Analysis
It is clearly evident that higher the income, more they spend on domestic energy. The average monthly
expenditure on energy steadily increases as the income category increases. However it is interesting to see
how preferences for energy type change/ behave with income category. Average electricity bill too
progressively increases with increase in income. So does the LPG bill. But the pattern changes when it
comes to kerosene and fuel wood. When household incomes increase, usage of kerosene and fuel wood
progressively decrease. These facts show that there is a preference for cleaner fuels by the community, but
affordability is the major factor restraining their wider use.

Kerosene: Kerosene is used by 71.2% of households island-wide. A marginally higher proportion of
rural households (73.8%) used kerosene compared to their estate counterparts (72.7%) and a
significantly lower percentage of urban (55.8%) households.

LPG: Household saturation of liquified petroleum gas island-wide is 22.7%. LPG was a major source
of energy used for cooking by urban households (45.1%) and 17.1% of rural households whereas in
the estate sector (tea, rubber and coconut plantation) it was marginal at 1.4%.

Fuel wood: Fuel wood was the other major energy source used for cooking and water heating.
National average household saturation is 90%. Usage by estate sector households is 98.7%, rural
sector is 94.5%, and urban sector is 61%.

The first known major energy efficiency drive came into being with the introduction of an energy
efficient cook stove in 1986. Involvement of a Government institution to promote fuel wood cook
stove could be quite a coincidence, but the reasons for the affiliation could be absence of any other
player with such deep penetration of the domestic energy user and also the interest of the state
owned utility (Ceylon Electricity Board – CEB) to take out part of load from cooking applications.
This extensive island wide programme, a part of the bigger National Fuel Conservation Programme
targeted low and middle income groups for an improved cook stove which had one hearth
providing heat to two mouths, named “Anagi”. Tests carried out on the stove and numerous fieldcooking tests have revealed a near 50% fuel wood saving over the traditional stoves.
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.1.1 – “Anagi” Cook Stove

Although the results of the programme was not fully evaluated in a post programme monitoring
effort, the emergence of the Anagi stove as the preferred stove speaks volumes of the success of
the programme. It is estimated that 37.0% of households which use fuel wood for cooking now use
the Anagi stove and a further 16.6% uses some kind of an efficient stove. Translated to fuel wood
savings, this indicate a 38.3% saving of fuel wood used in Sri Lanka, accounting for all improved
cook stoves in use. Given below are the details of stove penetration by provinces and by sector
vice;
33
Sri Lanka
Rapid Assessment and Gap Analysis
Table 2.1.1 – “Anagi” Cook Stove Saturation in Provinces
Province Name
Central
Central Average
Eastern
Eastern Average
North Central
North Central Average
North Western
Partly
Saturation Average of
Fuel
3 Stone Covered
Other
of Stove
Tot No of
Efficient
Stoves %
Clay
Stoves %
%
Stoves/house
Stoves %
Stoves %
63.4
1.3
4.8
36.1
25.0
1.2
91.4
1.5
17.1
40.5
39.2
1.0
96.6
1.4
14.7
51.0
15.7
18.2
90.5
1.5
15.6
42.6
32.6
5.1
61.7
1.4
51.5
10.3
4.0
0.0
91.7
1.4
75.0
16.6
10.6
0.0
85.2
1.4
69.9
15.3
9.1
0.0
94.5
2.0
70.3
24.2
0.0
0.0
100.0
1.9
77.0
24.4
2.6
0.0
99.8
1.9
76.8
24.3
2.5
0.0
97.1
1.2
71.8
13.8
15.9
0.0
97.3
1.6
68.4
22.9
18.2
0.0
97.3
1.6
68.5
22.6
18.1
0.0
97.6
1.7
17.1
90.1
9.8
0.0
98.8
1.8
24.8
64.5
22.7
0.0
100.0
1.7
28.2
67.6
12.1
0.0
98.9
1.8
24.8
65.7
21.3
0.0
88.7
1.3
63.4
21.3
11.9
1.6
98.8
1.6
58.6
43.3
11.9
4.2
97.4
1.4
50.7
26.6
24.5
0.0
97.9
1.6
58.9
41.1
12.1
3.9
100.0
1.9
55.6
11.1
33.3
22.2
98.6
1.7
50.4
49.7
5.8
0.0
96.8
1.2
87.0
3.2
12.5
0.0
98.4
1.6
56.0
41.2
7.9
0.9
52.1
1.5
30.0
22.5
2.7
0.6
87.1
1.6
38.3
41.2
21.0
1.3
100.0
1.5
83.4
35.1
0.6
0.0
76.6
1.6
36.4
35.4
15.1
1.1
89.8
1.6
45.3
37.0
16.6
1.6
Sector
Urban
Rural
Estate
Urban
Rural
Urban
Rural
Urban
Rural
North Western Average
Sabaragamuwa
Urban
Rural
Estate
Sabaragamuwa Average
Southern
Urban
Rural
Estate
Southern Average
Uva
Urban
Rural
Estate
Uva Average
Western
Urban
Rural
Estate
Western Average
National
(Source: Sri Lanka Sustainable Energy Authority)
Monthly Fuel Wood Consumption by Sector & National
Average Fuel Wood
Consumption/ Month (Kg.)
160
140
120
100
80
60
40
20
0
Urban
Rural
Estate
National
Sector
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.1.2 – “Anagi” Cook Stove Usage by Sectors
34
Sri Lanka
Rapid Assessment and Gap Analysis
The below table provides the biomass supply by source. Majority comes from home gardens (26%)
followed by crop lands (19%).
Table 2.1.2 – Biomass Supply by Source
Source
%
Natural Forest
7.0
Coconut Plantations
19.0
Forest Plantations
4.0
Processing Residues
3.0
Rubber Wood
7.0
Home Gardens
26.0
Crop Lands
19.0
Fuel wood Plantations
2.0
Others
13.0
(Source: Sri Lanka Sustainable Energy Authority)
The below table provides the yearly biomass saving potential in million tons.
Table 2.1.3 – Biomass Saving Potential (Million Tons/year)
Biomass Saving Potential (Million Tons/year)
Sector
Type of Biomass
Fuel wood
Agri-residues
Domestic cooking
2.24
0.41
Industrial boilers
0.04
Furnaces
0.37
0.01
Total
2.61
0.46
(Source: Sri Lanka Sustainable Energy Authority)
2.1.1.2
Household Income & Expenditure on Energy
The following table provides the household income of Sri Lanka in 2009 and expenditure on energy.
Average exchange rate in 2009 was LKR 115 per USD.
Table 2.1.4 – Household Income & Expenditure on Energy
Mean
Household
Income
per month
(A)
LKR
National
Urban
Rural
Estate sector
National
Urban
Rural
Estate sector
35,495
46,191
34,329
25,649
0.47
0.45
0.46
0.44
Mean Household
Expenditure per
month
Mean Household
Expenditure on
Food & Drink per
month
(B)
LKR
32,446
44,845
30,845
25,662
Mean Household
Expenditure on
Non-food per
month
(D)
As a %
LKR
As a %
of (B)
of (B)
Food
Ratio
91
12,918
39.8
19,529
61
97
15,427
34.4
90
12,523
40.6
100
12,702
49.5
Gini Co-efficient of Household Income & Expenditure
Mean Household
Expenditure on
Fuel & Lighting
per month
(C)
As a %
of (A)
LKR
(E)
LKR
1,250
As a %
of (D)
6.4
0.39
0.39
0.38
0.31
(Source: Household Income & Expenditure Survey 2009/2010 Preliminary Report,
Department of Senses & Statistics of Sri Lanka)
35
Mean Household
Expenditure on
Transport &
Communication
per month
(F)
LKR
As a %
of (D)
3,260
16.7
Sri Lanka
Rapid Assessment and Gap Analysis
Mean household expenditure on Fuel & Lighting in 2009 was 6.4% of non food expenditure while it was
16.7% for transport & communication. These two figures very roughly give an indication of expenditure on
energy though the latter also includes the cost of communication.
2.1.1.3
Access to Electricity
Level of electrification (coverage of the national grid) is 91%.
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.1.3 – Status of Electrification
There are issues related to the quality of supply as described below:
Quality of Power
A large number of power interruptions are recorded from some provinces of the country. The other areas
of concern are low voltage and high voltage situations.
Power Interruptions
Average number of power interruptions is highest in the Central province with 7 interruptions per month.
Uva records the next highest value 6, followed by 4 in Sabaragamuwa, 3 each in Eastern and Southern
provinces, 2 each in North Central and North Western and 1 in the Western province. Accordingly the
national average number of electricity breakdowns per month works out to 3. Since the duration of
breakdowns has not been recorded, assessing the effect of these interruptions on the quality of supply and
on the day to day life of the community becomes a problem. However these breakdowns need to be
avoided by introducing suitable measures by the CEB. Sector-wise analysis shows that power interruptions
per month are more in the estate sector (4), followed by rural (3).and urban (2) sector.
Low Voltage
The national average of incidences of low voltage is 3 per month. The highest numbers of incidences (9) are
recorded from the Uva province. Next is Sabaragamuwa with 7. Central & Southern provinces have 3
incidences each, North Western and Eastern have 2 each and North Central and Western provinces follow
with 1 incidence each. Most low voltage situations are brought about by connecting too many households
to transformers, thus overloading them. Sector-wise analysis shows that low voltage situations are mostly
prevalent in the rural sector (3). Estate (1) and urban (1) sectors too are affected to a lesser extent.
36
Sri Lanka
Rapid Assessment and Gap Analysis
High Voltage
Incidences of high voltage are not common, however again Uva records the highest number of times per
month – 4 incidences when they experienced high voltage. Sabaragamuwa records 3 incidences. All other
provinces have not recorded any incidences of high voltage. Reasons for this situation have to be
investigated and remedial measures implemented. Only the rural sector has reported high voltage
problems at 1 per month.
2.1.1.4
Affordability of Electricity [8]
This section describes the affordability of electricity by households based on a study carried out by the
Department of Economics, Social Policy Analysis & Research Centre (SPARC), University of Colombo
conducted for Public Utilities Commission of Sri Lanka (PUCSL) in April 2011.
In the above mentioned study, affordability is defined in two ways. First, the ability to pay their current bill
(and willingness to pay by non-electrified households). Whether they can pay their current bill without any
difficulty. Under the second method affordability is defined in terms of basic need electricity.
Table 2.1.5: Affordability to Electricity
Difficult to Pay the Electricity Bill
Overall
15.39
%
Poorest
42.22
Richest
9.04
Do not Pay Electricity Bill Monthly
14.06
25.00
9.60
% of Monthly income on Electricity Bill
3.17
8.78
1.61
(Source: Study on Requirements of Prospective Electricity Consumers and Fuel (electricity) Poverty & Affordability
Conducted for Public Utilities Commission of Sri Lanka, April 2011)
Table above summarizes survey / study findings on affordability to electricity. Little over 15 percent of
responding households have reported that they cannot afford the electricity bill. Nearly 14 percent of
respondents do not pay the bill regularly on monthly basis. These two variables are closely correlated with
income of the family. While 15 percent of respondents feel that they find it difficult to pay the electricity
bill, the same percentage for poorest group in the sample is over 40.
For 72 percent of respondents who do not pay the bill on monthly basis, main reason is economic
difficulties. They delay payment of the bill because they cannot do it with all other commitments.
The affordability is also measured in terms of percentage of income (expenditure) spends on electricity. If
respondents’ spending on electricity exceeds certain percentage of their income, it is defined as
unaffordability. For example, European Bank (2003) defines that the share of income goes into electricity
exceeds 10 percent the consumer is identified as unaffordable household. This method has no any scientific
validation except rule of thumb. Therefore, in this study, study team has compared the share of income
goes into various other essentials with the share go for electricity bill.
According to the rule of thumb (10 percent or above on electricity) only the poorest group of households
cannot afford electricity bill. Households with below Rs. 1,000 per capita income spend 15 percent of their
average income on electricity. For them the electricity bill is nearly 25 percent of their expenditure on
foods, three times the telephone bill and 2.3 times the expenditure on education1.
37
Sri Lanka
Rapid Assessment and Gap Analysis
Table 2.1.6: Share of Income Spent on Major Consumables
Income Class
less than Rs. 1,000
Rs. 1,001 to Rs. 2,000
Rs. 2,001 to Rs. 3,000
Rs. 3,001 to Ts. 4,000
Rs. 4,001 to Rs. 5,000
Rs. 5,001 to Rs. 6,000
Rs. 6,001 to Rs. 7,000
Rs. 7,001 to Rs. 8,000
Rs. 8,001 to Rs. 9,000
Rs. 9,001 to Rs. 10,000
Rs. 10,001 to Rs. 11,000
Rs. 11,001 to Rs. 12,000
Rs. 12,001 to Rs. 13,000
Over Rs. 13,000
Total
Electricity
15.09
4.16
3.44
2.99
3.19
3.93
2.94
3.69
4.20
3.18
2.21
3.43
2.25
2.30
3.51
Food
63.66
74.86
65.39
59.08
54.79
47.53
46.48
48.50
42.49
42.62
40.91
33.56
36.08
28.61
53.50
Education Transport Telephone Recreation
6.67
5.35
5.11
3.61
9.66
4.33
3.70
1.90
9.89
5.36
2.99
2.54
7.66
5.04
2.99
2.41
8.21
5.49
3.18
2.74
6.17
5.03
3.75
2.39
8.04
5.06
3.37
2.66
6.43
4.81
3.01
2.17
6.79
5.04
2.90
2.75
7.10
4.18
2.90
2.53
9.67
3.78
2.84
1.07
6.11
3.90
3.03
2.92
3.69
2.85
3.20
3.30
5.87
3.71
2.82
2.96
7.82
4.88
3.18
2.54
Water
1.05
1.38
1.02
0.69
0.78
0.61
0.63
0.73
0.48
0.54
0.23
0.36
0.20
0.42
0.76
On average, a household in the sample spends 3.51 percent of household income on electricity. This is
smaller than the percentage of income spent on foods, education and transport and closely comparable
with the share on telephone.
These percentages vary between different income classes. For example, poorest group spends on average
15.09 percent of their income on electricity. For them this is next only to the share of income goes to foods.
Table 2.1.5 shows a very clear negative relationship between level of income and percentage of income
spends on electricity. This is a clear evident that the poorest segments of the society cannot afford
electricity bill.
Table 2.1.6 shows that nearly one percent of respondents will have to spend over nine percent to buy basic
need electricity. If the 10 percent threshold is considered, it can be concluded that basic need electricity is
not affordable for 0.98 percent of the electricity consumers in the sample.
In responding to questions on electricity affordability from non-electrified households nearly five percent of
households have expressed that they might not be able to pay the electricity bill regularly and on average
all non-electrified households are willing to pay Rs. 320 per month on electricity. Roughly they plan to
consume 60 kWhs per month.
2.1.1.5
Phasing out Kerosene Use for Lighting (Using LED-based Solar Lighting)
Kerosene had been in use as a source of lighting from the beginning of the last century in Sri Lanka.
However, wide scale use of kerosene for lighting resulted only in the 1940’s, due to the rapid expansion of
the refinery capacity world over. Thereafter, throughout the decades from 1950 – 2000, the consumption
decreased due to the expansion of the national grid to all corners of the country. Presently, it is at a
historical low, only 10% of the households are dependent on kerosene and of the majority belong to
“Samurdhi” beneficiaries (Poorest of poor of the society).
Even with the target of reaching 100% of electrification by 2012, the Ceylon Electricity Board (CEB)
estimates that about 40,000 households would still be deprived of the national grid, due to the sheer
remoteness of such villages. There are an estimated 110,000 consumers who would rapidly served and
38
Sri Lanka
Rapid Assessment and Gap Analysis
would benefit from using LED-based solar lighting in the near term while awaiting a grid connection and
others who may continue to require off-grid solutions. The latter include consumers who use kerosene
lighting such as pavement hawkers and homes unfit for obtaining an electricity connection. The off-grid
solutions include solar photovoltaic (PV) stand-alone system ranging in size from 10 Wp to 40 Wp, pico and
micro hydro units providing electricity to individual households living close to suitable streams, village
hydro mini-grids and solar/wind hybrids. These systems would provide high quality LED and CFL lighting to
fulfil basic lighting needs or provide enhanced energy services that will including lighting as well as power
for TV/radio and mobile phone charging.
Therefore, a project has been developed as a Government enabled, private sector program to commercially
introduce advanced solar powered White LED lighting products to those segment of the population to
power their basic lighting requirements and to eliminate the existing practice of using kerosene for lighting
purposes by the Sri Lankan population forthwith. Also the project envisages introduction of enhanced
energy services to isolated rural communities through renewable energy options.
_________
39
Sri Lanka
Rapid Assessment and Gap Analysis
2.2 ENERGY EFFICIENCY vis-à-vis GOAL OF SE4ALL
11. Overview and Assessment
12. Energy intensity of national economy: TPES/GDP$, current situation and trend, is there a decoupling
between energy use and GDP, sectoral breakdown into:
 Industrial energy use and potential for energy saving
 Household energy use and potential for energy saving
2.2.1 Background
Before the first ‘oil shock’ in 1973, energy efficiency initiatives were least heard around the world. People
all over the world had ready and easy access to energy sources at relatively lower prices. Sri Lanka was no
exception and the demand for energy was also not high. However, with the advent of open economic
policies in 1977, demand for energy surged with the free inflow of vehicles and other electricity consuming
domestic appliances. Gradual expansion of the national grid also contributed significantly to the rapidly
growing energy demand. Second oil shock in 1979 further aggravated the situation.
With the Sri Lankan Government realizing the need to intervene in energy conservation and management,
among other initiates, a dedicated organization under the name “Energy Conservation Fund” (ECF) was
established in 1983. ECF engaged in various energy conservation and management activities. However,
with limited resources as well as statutory powers, delivery of ECF was severely constrained. Having
identified its own constraints, it took initiatives to formulate a national energy policy for Sri Lanka and
transforming itself into an empowered organization with wider powers for statutory interventions in
energy conservation and management. Result was the birth of Sri Lanka Sustainable Energy Authority
(SLSEA) in 2007 as the successor of ECF and much awaited formal document on energy policy - “National
Energy Policy & Strategies of Sri Lanka” which came into effect in 2008.
2.2.2 Energy Sector & Energy Efficiency in Sri Lanka
The main primary energy sources used in Sri Lanka are hydro resources, petroleum and biomass. Hydro
resources are used for electricity generation for the national grid, fuel oil is used for transportation and
power generation, and industrial requirements of thermal energy. Biomass is used for domestic cooking
and industrial heating.
Present maximum demand for electricity is around 2,000 MW and the total annual electricity generation is
around 12,000 GWh. About 57% of the electricity generation is with thermal power plants running on diesel
and other fossil fuel oils, about 17% with “Norochchole” coal power plant and the balance 26% with hydro
power.
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.2.1 – Daily Load Profile of Electricity Demand
As a consequence of the high share of oil based generation, the average
electricity costs are higher when compared with other countries in the
region. The daily load curve is highly skewed, with a high evening peak
lasting for about three hours. This has been an additional burden to the
utilities, whereas a flatter load curve would have made existing plants
operate more evenly reducing the necessity to add new capacity to
serve the high peak. Lighting, TV and other domestic appliances
contribute to the peak period, and the efficiencies of the equipment
40
Sri Lanka
Rapid Assessment and Gap Analysis
used by customers are not at satisfactory levels. In this background, it is of paramount importance to devise
effective modalities to ensure the optimum use of available resources, and to popularize better means of
using energy efficient equipment and technologies.
2.2.3 International Assistance for Energy Efficiency Improvement
Sri Lanka has obtained assistance from international agencies in some of the earlier initiatives in energy
efficiency improvement. Such programmes are briefly described below;
2.2.3.1 Japan
Assistance was obtained from JICA for a 3-year project from 2008 to 2011 to establish a
framework for energy efficiency improvement activities. Several initiatives and outcomes of the
technical assistance work have enabled the proposed energy efficiency improvement fund
project to be effectively planned. JICA assistance was also available for energy efficiency initiatives in
industry through the E-Friends II project. In the latter part of the E-Friends II project, which primarily
financed environmental management projects in industry, concessionary loans were also provided for
energy efficiency projects. Fuel switching projects, too, have been funded.
2.2.3.2 Asian Development Bank
University of Moratuwa conducts a Masters programme in Energy and assistance from ADB has
been obtained in 1999 for initiating.
2.2.3.3 The World Bank
Testing facilities were established in 2000 for lamp testing for the energy labelling programme,
at the National Engineering Research & Development (NERD) Centre, under World Bank
assistance.
2.2.3.4 US Agency for International Development
In obtaining finances from commercial banks for energy efficiency improvement
projects, end users faced the difficulty for want of collateral, and SLSEA addressed that
by establishing the Sustainable Guarantee Facility (SGF). Development of SGF was
assisted by the USAID under the SARI/Energy programme. Furthermore, identifying the need for greater
technical focus on energy efficiency improvement in lighting, SLSEA established Regional Centre for Energy
Efficient Lighting in 2009, with the assistance of USAID.
2.2.4 Progress to Date
2.2.4.1 Energy Labelling
Through the provisions of the SLSEA Act, the mandatory energy labelling programme is being implemented
step by step, with the objective of covering all commonly used appliances by year 2016. Energy labelling for
compact fluorescent lamps (CFLs) has already been introduced with a gazette notification issued in 2009
making the energy label for CFLs mandatory. Formulation of energy labelling programmes for ceiling fans,
linear fluorescent lamps (LFL) and ballasts are at final stages and it is planned to announce mandatory
energy labels for those products by mid-2012. The next step would be to introduce similar legislation for
refrigerators and air conditioners.
41
Sri Lanka
Rapid Assessment and Gap Analysis
2.2.4.2 Building Code
Incorporating energy efficiency by way of retrofits to existing buildings causes many a practical limitations,
and therefore, incorporation of energy efficiency in design stage of buildings has been determined to be
the most appropriate course of action. Therefore, Code of Practice on Energy Efficient Buildings (Building
Code) was compiled by SLSEA to ensure energy efficiency features are included in the design and
construction of large-scale buildings. Compliance with building code is expected to be announced as a
mandatory requirement by the Urban Development Authority, by mid-2012.
2.2.4.3 Energy Managers, Energy Auditors and Energy Consumption Reporting
Energy Consumption Benchmarks were developed in accordance with Clause 36 of the SLSEA Act. A webbased mandatory monitoring system has been established to monitor the energy consumption levels of
industries in comparison with the benchmarks as per Clause 37 of the SLSEA Act. This mandatory
monitoring system is implemented through Energy Managers. The appointment of accredited energy
managers to plan and implement energy management work, and to report energy efficiency, would shortly
be made mandatory.
2.2.4.4 EE Services through ESCOs
SLSEA is facilitating the formulation and implementation of projects by Energy Service Companies (ESCOs)
by providing support through capacity building and providing instruments. Capacity building includes
technology dissemination, skill development in use of instruments, report writing, etc. Fuel switching from
liquid fuel to biomass, building management systems for increasing efficiency, introduction of efficient
lighting systems and introduction of efficient motors are the major energy conservation measures
implemented by ESCOs.
2.2.4.5 National Energy Efficiency Award
SLSEA has already prepared Sri Lanka National Energy Efficiency Award scheme targeting both public sector
and private sector covering major production and services sectors in the country, namely manufacturing,
hotels, commercial buildings, state sector office buildings and the healthcare sector. It was introduced in
2010.
2.2.4.6 Sustainable Guarantee Facility (SGF)
A guarantee scheme is available for energy efficiency improvement projects carried out through ESCOs.
SLSEA is validating projects through technical and financial guarantees for projects, facilitating the industrial
and commercial sector end users to obtain soft loans for energy efficiency improvement projects. Loan
disbursements are made by the financial institutions participating in the scheme.
2.2.5 National Energy Management Plan - EnMAP (2012 - 2016)
SLSEA very recently developped the National Energy Management Plan (EnMAP) for Sri Lanka covering a
period of 5 years from 2012 to 2016. It shall serve as a guide for SLSEA to embark on an integrated and
cohesive programme of work with a long term perspective to realize better energy efficiency in all energy
consuming sectors of Sri Lanka. It will also provide vital information to all interested parties, stakeholders,
partners, collaborators and the prospective donors on the direction of SLSEA in pursuing its mandate.
2.2.5.1 Main and Sub-activities
The EnMAP consists of 10 main activities as follows;
42
Sri Lanka
Rapid Assessment and Gap Analysis
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Conducting awareness & training programmes and promoting services
Secure funds
Establishment of Energy Management Cells
Providing Advisory & Counselling services
Promoting ISO 50001
Introducing Standards & Regulations
Carrying out Research & Development
Establishment of Pilot Projects (For future replication)
Introducing Market Based Instruments (MBIs)
Rewarding of achievements
2.2.6 Cost and the Benefit of Implementing the EnMAP
2.2.6.1 Cost
Estimated cost in Sri Lanka Rupees to implement the activities of EnMAP and expected source of funding
are given in the below table. Some projects need to be implemented with SLSEA funds received from
consolidated fund and from Energy Fund. Some projects need donor assistance and CSR (Corporate Social
Responsibility) funds. Some projects could be fully self funded while some needs sponsorship from private
entities.
Table 2.2.1 – Cost of Implementing EnMAP)
Year 5
Total
Self Funded
Consolidated Fund
Donor Funds
CSR Funds
Energy Fund
65.9
2.4
7
19.3
1.8
22.8
30
141
0.4
23.1
65.9
52.4
5
15.3
1.6
42.8
30
16
0.4
23.1
65.9
42.4
5
17.3
1.6
42.8
30
16
0.4
23.1
65.9
42.4
4
20.3
1.6
3.8
30
16
0.4
23.1
65.9
42.4
4
16.3
1.6
3.8
30
16
0.4
23.1
329.5
182
25
88.5
8.2
116
150
205
2
115.5
106
0
0
7
6
0
25
125
0
5
85.5
2
25
31.5
2.2
96
50
55
2
45.5
48
170
0
42
0
20
75
20
0
0
10
10
0
0
0
0
0
0
0
0
30 50
0 0
0 0
8 0
0 0
0 0
0 0
5 0
0 0
5 60
314
253
245
208
204
1,222 274 395 375 20 48 110
Sponsorships
Year 4
Total
Year 3
Awareness, training & promotion
Funding
EM cell
Advisory & counseling
ISO 50001
Standards & regulations
R&D
Pilot projects (For future replication)
Market Based Instruments (MBIs)
Rewarding of achievements
Year 2
1
2
3
4
5
6
7
8
9
10
Funding Sources
Year 1
Main Activities
Annual Budget in million LKR
(Source: Sri Lanka Sustainable Energy Authority)
Estimated budgetary requirement for 5 years is around LKR 1.2 billion and average annual requirement is
around LKR 250 million.
LKR 395 million is expected from the consolidated fund, LKR 375 million from donor funds, LKR 48 million
from Energy Fund and LKR 20 from CSR funds. Self funding is expected in the range of LKR 274 million and
around LKR 110 is expected from sponsorships.
2.2.6.2 Benefit
Benefit of implementing the EnMAP will be realized from saving of electricity as well as fossil fuel.
Savings from Electricity
43
Sri Lanka
Rapid Assessment and Gap Analysis
Anticipated electrical savings in GWh from all sectors are given in the table below.
Table 2.2.2 – Benefit of Implementing EnMAP)
Total
Year 4
Year 5
114.4
84.4
77.8
187.8
148.8
138.3
272
228
211.25
367
322
298.6
315.2
287.2
277.25
49.496
91.87
145.235 210.9338 194.1313
8.944529 13.41679 8.944529 4.472264
0
Total
Year 3
Awareness, training & promotion
Funding
EM cell
Advisory & counseling
ISO 50001
Standards & regulations
R&D
Pilot projects (For future replication)
Market Based Instruments (MBIs)
Rewarding of achievements
Year 2
1
2
3
4
5
6
7
8
9
10
Year 1
Main Activities
Annual Electrical Energy Saving GWh
1,256
1,070
1,003
692
36
165.7704 248.6556 331.5408 414.426
10.8
21.6
36
54
396.426
50.4
1,557
173
512
850
1,233
1,671
(Source: Sri Lanka Sustainable Energy Authority)
1,521
5,787
Anticipated electrical energy saving is estimated to be around 500 GWh in the first year (equivalent to
about 5% of the national energy consumption) and it will reach 1,500 GWh at the fifth year. Coresponding
monetory values in million LKR based on present average cost of electricity of LKR 21 per kWh are given in
the table below.
Table 2.2.3 – Anticipated Electrical Energy Saving by Implementing EnMAP)
Year 3
Year 4
Year 5
2,402
1,772
1,634
3,944
3,125
2,904
5,712
4,788
4,436
7,707
6,762
6,271
6,619
6,031
5,822
26,384
22,478
21,067
1,039
188
1,929
282
3,050
188
4,430
94
4,077
-
14,525
751
3,481
227
5,222
454
6,962
756
8,703
1,134
8,325
1,058
32,693
3,629
10,744 17,859 25,892 35,100
(Source: Sri Lanka Sustainable Energy Authority)
31,933
121,528
Awareness, training & promotion
Funding
EM cell
Advisory & counseling
ISO 50001
Standards & regulations
R&D
Pilot projects (For future replication)
Market Based Instruments (MBIs)
Rewarding of achievements
Total
Total
Year 2
1
2
3
4
5
6
7
8
9
10
Year 1
Main Activities
Annual Electrical Energy Saving LKR million
Anticipated financial saving as a result of electrical energy saving is estimated to be around LKR 10 billion in
the first year and it will reach nearly LKR 32 billion at the fifth year.
44
Sri Lanka
Rapid Assessment and Gap Analysis
Savings from Fossil Fuel
Table 2.2.4 – Anticipated Fossil Fuel Saving by Implementing EnMAP)
Sector
Million Litres Percentage
Transport
2,063
56
Power Generation
1,070
29
Industry
216
6
Domestic
331
9
Commercial
35
1
Total
3,715
100
(Source: Sri Lanka Sustainable Energy Authority)
The above table presents the fossil fuel consumption of various sectors in 2010 in million litres. Industrial
sector consumes around 200 million litres which is around 6% of the total consumption. Transport sector is
the biggest consumer and is high as ten times of the industrial sector consumption.
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.2.2 – Sectoral Consumption of Petroleum)
However, as EnMAP does not cover the energy efficiency and saving possibilities in the transport sector, for
the estimate of benefits, only the industrial sector is considered. Assuming a conservative figure of 15%
saving, EnMAP would derive a financial saving of around LKR 2.7 billion per year at the current furnace oil
price of LKR 90 per litre.
Total Savings
Anticipated financial saving as a result of electrical energy saving in all sectors and fosil fuel saving in the
industrial sector is estimated to be around LKR 13 billion in the first year and it will exceed LKR 34 billion at
the fifth year.
Cost vs Benefit
Financial benefit of implementing the EnMAP over a period of 5 years is estimated to be around LKR 135
billion for a cost of LKR 1.22 billion.
2.2.7 Energy Intensity of National Economy
Keeping the economic development goals of Sri Lanka in focus and anticipation of a strong growth in the
industrial sector, retaining the present levels of energy intensity of economy will not be pursued. However,
all possible measures to decouple the economic development from energy demand growth will be made,
targeting an energy intensity of economy of 500 toe/XDR million by 2017. This will ensure a 20% saving of
energy with respect to 2010 energy consumption.
45
Sri Lanka
Rapid Assessment and Gap Analysis
2.2.8 Energy Saving Potential in Industrial & Commercial Sectors
Table 2.2.5 – Energy Saving Potential in Industrial & Commercial Sectors)
Electrical energy
Thermal energy
Present Consumption - TOE
Saving Potential - TOE
271
1,863
54
465
Percentage
savings
20
25
(Source: Sri Lanka Sustainable Energy Authority)
Some technologies that can be adopted to enhance the energy utilization efficiency;
 Co generation in selected industries (eg. tea, rubber, tyre, hotels, etc.)
 Waste heat recovery – Mainly in thermal power plants
 Thermal storage – Ice making during off peak hours and use in peak hours
 Use of variable speed drives in electrical motors
 Efficient lighting systems like T5 and LEDs
 Implement Energy labelling scheme (Especially for magnetic ballasts and ceiling fans)
Table below presents the industrial energy consumption;
Table 2.2.6 – Composition of Industrial Energy Consumption)
Biomass (Thousand TOE)
2005
2006
2007
2008
2009
2010
1416.28
1519.48
1506.08
1358.44
1393.49
1619.39
Petroleum (Thousand TOE)
295.04
310.75
303.00
270.35
246.66
243.74
Electricity (Thousand TOE)
Total
234.93
1946.25
253.42
2083.65
254.27
2063.35
254.30
1883.08
238.44
1878.59
270.73
2133.87
(Source: Sri Lanka Sustainable Energy Authority)
Table below presents the petroleum consumption by different sectors;
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.2.3 – Sectoral Petroleum Consumption)
It has been estimated that 19% reduction in petroleum usage and 7.5% increase in biomass
consumption is possible.
Below tables provide the annual energy saving potential based on energy audits carried out along
with estimated savings from different energy efficient technologies;
46
Sri Lanka
Rapid Assessment and Gap Analysis
Table 2.2.7 – Energy Saving Potential Based on Energy Audits)
Description
Annual Saving Potential
Electricity
Fuel Oil (Million
litres)
MWh
MVA
Public sector institutions (26)
9288
20
Nil *
Private sector establishments (110)
9585
28
1.5
*These institutions are office establishments, and no direct fuel oil use.
Investment (LKR
million)
165
227
(Source: Sri Lanka Sustainable Energy Authority)
Table 2.2.8 – Saving Potentials for Some Technology Options)
Technological option
Variable speed drives
Efficient industrial fans (Tea sector only)
Efficient ceiling fans
Efficient motors
Efficient chillers & AC systems
Efficient lighting systems
Efficient pumps
Building management systems
Compact fluorescent lamps
Efficient refrigerators
Improving housekeeping in Industrial and
Commercial sectors (Implementation of
ISO 50001)
Annual Saving
Potential (GWh)
26.9
9.5
155
8.7
171.2
20.4
18.9
8.6
300
54
250
(Source: Sri Lanka Sustainable Energy Authority)
The table and the figure below present the industrial sector wise electricity consumption;
Table 2.2.9 – Industrial Sector vice Electricity Consumption
47
Sri Lanka
Rapid Assessment and Gap Analysis
Industry Category
Garment industry
Other,mainly commercial buildings
Food industry (including farms and restaurants)
Rubber and leather including rubber estates
Water pumping
Metal industry (iron,aluminium etc)
Cement,roofing material and porcelain
Tea industry
Hotel industry
Chemical and mining industries
Property development and large scale buliding management
Non classified industries
Airport and sea ports
Hospitals
Telecommunication
Banks and other similar fianncial organizations
Plastics,polythene,pvc etc
Nonclassified government organization
Defence
Mass media
Packaging industry
Wood products
Education
Supermarket chains (cargills and keels)
Electricity generation and distribution
Rice milling
Recreation and sports
Dessicated cocunut industry
Inland transport (CTB,CGR etc)
Coconut estates and fiber products
Metal crushing
Total
%
14.49
7.91
7.48
6.39
5.84
5.75
5.54
5.23
4.72
3.85
3.76
3.36
3.30
3.16
2.33
2.25
2.10
1.99
1.98
1.95
1.82
0.99
0.82
0.71
0.67
0.57
0.29
0.27
0.23
0.15
0.09
100.00
CEB
38,240,527
20,894,858
19,991,171
16,512,284
15,656,484
15,995,822
15,121,652
14,552,568
10,059,455
10,077,400
10,324,331
8,549,364
9,098,654
8,566,332
6,152,674
6,249,414
4,228,802
5,524,165
5,397,092
5,411,928
3,985,146
2,753,680
2,198,787
1,909,796
1,855,242
1,588,062
793,427
760,631
566,766
403,279
253,848
263,673,641
LECO
2,047,544
1,104,534
816,233
1,247,282
593,195
279,056
3,057,006
629,180
131,882
792,155
79,946
220,292
334,060
1,615,519
101,859
1,081,618
82,062
75,921
75,076
14,364,420
(Source: Sri Lanka Sustainable Energy Authority)
Garment industry
Other,mainly commercial buildings
Food industry (including farms and restaurants)
Rubber and leather including rubber estates
Water pumping
2%
2%
2%
2%
2%
2%
0%
0%
0%
%
11%1%0%
1%
2%1%
Metal industry (iron,aluminium etc)
14%
Cement,roofing material and porcelain
Tea industry
8%
Hotel industry
Chemical and mining industries
3%
3%
7%
3%
Property development and large scale buliding
management
Non classified industries
Airport and sea ports
4%
6%
Hospitals
4%
Telecommunication
5%
6%
5%
6%
Banks and other similar fianncial organizations
6%
Plastics,polythene,pvc etc
Nonclassified government organization
Defence
Mass media
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.2.3 – Industrial Sector vice Electricity Consumption
48
Total
40,288,071
21,999,392
20,807,404
17,759,566
16,249,679
15,995,822
15,400,708
14,552,568
13,116,461
10,706,580
10,456,213
9,341,519
9,178,600
8,786,624
6,486,734
6,249,414
5,844,321
5,524,165
5,498,951
5,411,928
5,066,764
2,753,680
2,280,849
1,985,717
1,855,242
1,588,062
793,427
760,631
641,842
403,279
253,848
278,038,061
Sri Lanka
Rapid Assessment and Gap Analysis
2.2.9 Energy Usage and Saving Potential in Domestic Sector
Table below presents the consumption of energy by the domestic sector;
Table 2.2.10 – Energy Consumption of the Domestic Sector
Biomass (Thousand TOE)
2005
2006
2007
2008
2009
2010
3167.84
3193.09
3182.94
3294.72
3377.65
3435.01
Petroleum (Thousand TOE)
361.55
389.00
354.45
318.84
312.83
356.72
Electricity (Thousand TOE)
388.83
419.05
452.91
465.15
482.99
Total
3918.22
4001.14
3990.30
4078.72
4173.48
(Source: Sri Lanka Sustainable Energy Authority)
Figure below presents the energy balance of a typical household;
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.2.4 – Energy Balance of a typical Household
Refrigerators are responsible for over 50% energy consumption.
Figure below presents the Daily Load Pattern of a Sample of Households;
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.2.5 – Daily Load Pattern of a Sample of Households (2911HH)
49
521.19
4312.93
Sri Lanka
Rapid Assessment and Gap Analysis
Lighting load is responsible for over 50% energy consumption.
2.2.10 CFL Penetration & its Effects on National Peak Demand
Table below presents the usage of different types of Lamps and their contribution to the total lighting Load;
Table 2.2.11 – Usage of Different Types of Lamps and their Contribution to the Total Lighting Load
% of Lamps from
Total Lamp
Population
47
(%) from
Morning
Lighting load
30
(%) from
Evening Lighting
Load
31
(%) from Total
Average Lighting
load
27
Incandescent
49
66
64
68
LFL
3.3
3
4
4
Other
0.7
1
0.3
1
Lamp Type
CFL
(Source: Sri Lanka Sustainable Energy Authority)
Figure below presents the import of CFL and incandescent lamps since 2001.
CFL Imports
35000
Lamp Imports (Thousands)
30000
25000
20000
15000
10000
5000
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Year
Series1
Series2
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.2.6 – CFL Imports
The below figure present the potential for national peak demand if all incandescent lamps are replaced by
CFL. The equivalent nation peak demands saving is 235 MW.
Existing
situation
If all
incandescent
lamps replaced
with CFLs
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.2.7 – Reduction of Lighting Load by Replacement of Incandescent Lamps with CFLs
50
Sri Lanka
Rapid Assessment and Gap Analysis
2.3 RENEWABLE ENERGY vis-à-vis GOAL OF SE4ALL
13.
14.
15.
16.
Overview and Assessment
On-grid and off-grid renewable energy
Use of renewable energy sources (RES) for thermal applications (cooking/heating)
Use of RES for productive activities
17. Consolidated Summary: problem statements with regard to energy access, energy efficiency
and renewable energy
2.3.1 Renewable Energy Resources [4]
Due to the geo-climatic conditions, Sri Lanka is blessed with several forms of renewable energy resources.
Some of them are widely used and developed to supply the energy requirements of the country. Others
have the potential for development when the technologies become mature and economically feasible for
use. The following are the main renewable resources available in Sri Lanka: Biomass, Hydro Power, Solar
and Wind.
2.3.1.1
Biomass
Biomass is the most common source of energy supply in the country with the majority usage coming from
the domestic sector for cooking purposes despite the fact that they have access to grid electricity. Due to
abundant availability, only a limited portion of the total biomass usage is channelled through a commodity
market and hence the value of the energy sourced by biomass is not properly accounted for [4].
Biomass comes in different forms. The following are the most common forms of biomass available in Sri
Lanka: Fuel Wood, Municipal Waste, Industrial Waste and Agricultural Waste.
Home gardens and forests supply the major portion of the biomass requirement of the country. A very
small amount of biomass is converted to charcoal and electricity. Biomass is mostly used 'as-it-is'. Although
there is a potential for biomass based electricity generation, developments are still at their initial stages.
The first grid connected biomass based power plant (of l MW capacity) was commissioned in Walapone in
October 2004 within the Small Power Purchase scheme of the CEB. In addition, a small scale (approximately
0.3MW) biomass based power plant is operational at the Factory of Haycarb Ltd. in Madampe, producing
electricity for factory use, as a supplement to the grid supply [4]. Another subsidiary of Haycarb Ltd
(Recogen) is operating a co-generating plant using producer gas of coconut shell and generates 5 MW of
power. Another 0.5 MW power plant is now in operation at Thirappane using producer gas generated by
Gliricidia.
Even though the majority of energy needs of the rural population are fulfilled by the use of firewood, there
are possibilities of further increasing the use of biomass for energy purposes in the country, especially for
electricity generation. Owing to the rapid growth of fuel wood cultivation, the concept of biomass based
electricity generation (commonly referred to as Dendro Power) holds much promise for Sri Lanka [4].
The biomass distribution network is quite simple, and in most cases, non-existent. The majority use of
biomass is at the domestic level, where the source and the point of use happen to be within the same
home garden. Even in industrial usage, the distribution is a one-to-one arrangement, which links the source
to the user through a direct biomass transport. The biomass sector operates with very little interaction with
51
Sri Lanka
Rapid Assessment and Gap Analysis
the governing structure of the energy sector [4].
2.3.1.2
Hydro
Figure 2.3.1 – Village Hydro (Source: Energy Forum)
The topography of the country provides an excellent opportunity to harness
the energy stored in river water which flows from the central hills of the
country to the ocean surrounding the island. Though the use of hydro
resource for direct motive power was common in yesteryears, electricity
production has become the sole use of hydro resource in recent times.
Therefore, hydro contribution as an energy supply source is always through its
secondary form which is electricity [4].
The small power producers (SPP) who operate small scale hydro power plants (mini hydro
contribute to the primary energy supply through hydro power. In contrast to SPP hydro power
which are of 'run-of river' type, Ceylon Electricity Board (CEB) owned large hydro power plants
storage capacities in the form of reservoirs, enabling these large power plants to be dispatched
when they are mostly needed in the system [4].
plants)
plants,
posses
as and
Hydro power is a key energy source used for electricity generation in Sri Lanka. The better part of the major
hydro potential has been already developed and they are delivering valuable low cost electricity to the
country. Currently, hydro power stations are operated to supply both peaking and base electricity
generation requirements. However, a few major sites are still classified as 'not economically feasible' for
development. Apart from the grid connected hydro power stations, many small-scale hydro power
applications are in operation serving off-grid loads. A substantial number of small scale hydro sites have
been identified for future developments [4].
Today, the development of small hydropower alone has reached great heights in Sri Lanka, paving way for
replication of the success in other parts of the world. The early development of the hydro industry created
a significant opportunity for knowledgeable technocrats, local investors and financial institutes to forge an
alliance to launch many more small hydro projects. The know-how was gainfully utilised by the nongovernmental organisations operating at grass root levels also enabled many community owned micro
hydro projects which were later identified as Village Hydro Schemes. By end 2010, there were more than
300 village hydro schemes in operation, benefiting approximately 7,000 rural families.
The state owned electricity utility, the Ceylon Electricity Board (CEB) extended further cooperation by
developing a robust technical and legal framework to connect non-despatchable embedded generators
through a Grid Code and a Standardised Power Purchase Agreement (SPPA) based on avoided cost
principles. The SPPA is also considered the key driver of the early success of the hydro power sector in Sri
Lanka. It is applicable for power plants having capacities less than 10 MW based on renewable sources,
waste or co-generation facilities. The salient features of the SPPA include:
(i) A complete avoidance of market risk: the Ceylon Electricity Board assures the purchase of all what
is produced by an SHP project.
(ii) A floor price of 90% of the tariff: ensuring a steady and predictable cash-flow.
(iii) A long term commitment: the SPPA which was for a period of 15 years is now offered for 20 years
and is based on sound legal provisions in resource allocation assured through an Energy Permit.
52
Sri Lanka
Rapid Assessment and Gap Analysis
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.3.2 – Small Hydro Sector
The SPPA which offered a tariff based on avoided cost principles saw a dramatic surge in the number of
small hydro projects being developed, due to the steep rise in fossil fuel prices which entrained the avoided
cost to a higher level, making many a small hydro project financially a very attractive investment. The
resultant dynamism created an ever growing industry, teeming with project developers, service providers
and consultants which would eventually grown into a formidable force, commanding a total capacity of 217
MW by end 2011.
The country has developed a vast human resources base with the full set of skills required to develop small
hydropower anywhere in the world.
The country possesses its own high-quality hydro turbine manufacturing plant, with energy conversion
efficiencies reaching the levels hitherto achieved only by world class European manufacturers. Turbines
manufactured in Sri Lanka are not only used in local power plants, but also exported to other countries.
Already there are initiatives to manufacture wind turbines as well, and wind blade manufacturing is already
taking place at least in two enterprises.
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.3.3 – Locally Manufactured Hydro Turbine
2.3.1.3
Solar
Figure 2.3.4 – Solar PV (Source: Energy Forum)
Solar energy is used mostly in non-commercial forms. Therefore, similar to
biomass, the total usage of solar energy is not quantified properly. However,
solar energy is the most extensively used form of energy in day to day life and its
supply is unrestricted and persistent throughout the year in most parts of the
country. The following are the most common uses of solar energy in Sri Lanka:
drying, heating and electricity production. Though not measured and officially
reported, substantial use of solar energy is observed in drying and water heating applications [4].
The CEB pioneered the introduction of solar photovoltaic technology in Sri Lanka during the early 1980s
and later solar photovoltaic applications saw a significant growth due the dedicated efforts of the private
sector.
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.3.5 – Sri Lanka’s First Ever Solar Park with an Installed Capacity of 1.237 MW at Hambantota
53
Sri Lanka
Rapid Assessment and Gap Analysis
Renewable energy industry soon benefited from generous grants to construct two utility scale solar PV
power plants in Hambantota in 2010. The projects were energised in 2011 and are yielding clean energy at
an annual plant factor of 17%. The ongoing market upheavals in solar PV couples with a special tariff
offered for exotic technologies have contributed to create a dynamic industry.
2.3.1.4
Wind
The usage of wind energy in Sri Lanka dates back to prehistoric times. Records have it, wind has been used
in the 3rd century, supporting the then burgeoning steel smelting industry in the South-western slopes of
the central hills of Sri Lanka. After this remarkable period, wind energy attracted the attention of Engineers
who were responsible for water management in the dry zone of Sri Lanka. Supported by Danish expertise,
many wind pumping stations were constructed in the flat terrain of the dry zone, along with the
accumulation of a wealth of indigenous knowledge of the wind regime of Sri Lanka.
(Source: Sri Lanka Sustainable Energy Authority)
Figure 2.3.6 – Wind Energy Plants in the North Western Province of Sri Lanka
The perseverance of a handful of committed practitioners planted the first seeds of wind energy
development in Sri Lanka through an ambitious programme of wind measurement in many locations of the
country. Armed with these valuable long term wind data, CEB managed to convince a development partner
to provide grant funds to construct the first wind energy plant in Hambantota in 1998. The success of this
project lead CEB’s Alternative Energy Unit to initiate a modern wind resource assessment programme,
yielding many years of quality wind data, required to launch commercial projects. The promising wind data
attracted the attention of a development partner leading to the development of a wind Atlas for Sri Lanka
in 2003. Introduction of the cost based tariff regime, availability of long term ground data, a sound
financing programme and experience gained in project development managed to launch the first
commercial wind project in 2009. This project was fast followed by several other projects, all of which are
yielding 32% annual plant factor, the highest level recorded anywhere in Asia. The commendable accuracy
of energy yield estimates provided the much needed comfort to the industry, leading to construction of
many more wind power plants, resulting in a capacity addition of 30.15 MW in 2011. A further 89.15 MW of
wind power plants are under construction and a 100 MW wind power plant is being mooted by the
Government to reap the promising winds of the Mannar island located in the north western sector of Sri
Lanka.
In Sri Lanka, application of wind pumping is an interesting option for farmers in the dry zone who are
practicing agriculture under lift irrigation, especially during the dry season. This is due to the existence of
negative correlation between the rainfall and strength of wind. Wind pumping activities in Sri Lanka are of
relatively recent origin. The first ever systematic studies on the subject commenced in 1978 with technical
assistance from the Government of the Netherlands. A 3m-diameter, six-bladed wind pump was developed,
which is now commercially produced in a small number and mostly used for irrigation purposes [16].
54
Sri Lanka
Rapid Assessment and Gap Analysis
2.3.1.5
Bio Gas
Figure 2.3.7 - Biogas (Source: Energy Forum)
Work on biogas in Sri Lanka dates back nearly two decades. Many governmental
and non-governmental organizations have been active in this area at various
periods of time. Many of these initiatives lacked sustainability as they were
implemented in isolation [10].
The Practical Action South Asia study “Integrating Energy and Environmental Mismanagement through
Biogas – A Country Review” revealed many factors, which have directly or indirectly resulted in the failure
of biogas technology. Although unconfirmed data suggests that there are nearly 5,000 biogas units
constructed through out the country the above sample survey results indicate that the functioning rate is as
low as 28.5%. The success rate, i.e. including plants which have been given up due to arrival of the grid
supply, remains at 33% [10].
2.3.2 Contribution by Non-Conventional Electricity (NRE) Generation
(Source: Sri Lanka Energy Balance 2010 & CEB Generation Data)
Figure 2.3.8 – Non-conventional Electricity Generation
The NRE industry was dominated by small hydro sector, as it was the only technology which was viable
under the previously adopted avoided cost tariff regime. All other technologies were lagging behind with
none of the proposed projects getting implemented. In order to encourage the development of other NRE
technologies, the Government proposed a three tiered, technology specific, Cost-based Tariff for NRE
developers, thereby eliminating the drawbacks of the previous tariff based on avoided cost. The new tariff
is offered to 6 genres of technology, viz., biomass, hydro, wind, municipal waste, agro waste and waste
heat recovery. The offering of a higher tariff for technologies other than hydro, opened opportunities for
the expeditious development of other genres such as solar and wind. The first solar energy park was
commissioned in 2011, with an installed capacity of 1.2 MW. At present, measures are also taken to
develop the first wind park in the Island of Mannar, which would enable a 100 MW increase in clean energy
capacity of Sri Lanka.
Several non-conventional primary sources have been used for electricity generation in Sri Lanka. Solar
photovoltaic systems have been increasingly used from the early 1980s. Small isolated hydroelectric
systems have been used in the tea processing industry for over 100 years. Small village-level hydroelectric
systems are increasingly used in remote locations for household use. Installation of household solar
photovoltaic systems and off-grid, community-based, hydro power systems continued to progress with the
financial assistance of the World Bank funded “Renewable Energy for Rural Economic Development”
(RERED) project. Given below is the electricity generation from non-conventional Sources [4].
.
55
Sri Lanka
Rapid Assessment and Gap Analysis
Table 2.3.1 – Non-conventional Electricity Generation
Non-Conventional
Primary Source
Wind Electricity
Small Hydro Electricity
Solar PV
Biomass
Total
Non-Conventional
Primary Source
Off-grid Hydroelectric Estate
Off-grid Hydroelectric Village
Off-grid Solar PV Home Systems
Wind Battery Charging Systems
Total
Gird-Connected (2011)
Number of
Average Peak
Energy (GWh)
Installations Capacity (kW)
5
33,800
88.95
92
194,000
601.64
4
1,235
0.87
3
12,000
30.57
104
234,235
722.03
Number of
Installations
32
239
157,342
25
157,638
Off-Grid (2010)
Average Peak Estimated Useful
Capacity (kW)
Energy (GWh)
3,226.2
7,065,472
1,928.0
3,208,880
6,659.7
7,192,461
8.2
5,747
11822.1
17,472,560
(Source: Sri Lanka Energy Balance 2010 & CEB Generation Data)
The above table shows that in 2011, total non-conventional electricity generating capacity was 241 MW as
against the conventional electricity generating capacity (CEB and non-CEB) of 2,900MW. Therefore, the
contribution of non-conventional primary source is about 7.6% of the total installed capacity of 3,141 MW.
2.3.4 Scope for Utilizing Renewable Energy
This section describes the scope for the utilizing of renewable energy in Sri Lanka.
In order to improve the quality of life among the lesser-privileged segments of people who have no access
to electricity to meet their energy requirements, it has become necessary to explore sustainable energy
alternatives. Based on Sri Lanka’s geographical positioning in terms of its tropical climate and natural
terrain, Sri Lanka has a very high potential to draw on forms of renewable energy sources to meet this
need. Endowed with a tropical climate, the potential for solar energy is very high. The terrain is highly
conducive to tap hydropower, which has accounted for around 54 percent (in 2007) of total installed
capacity of state utility. The opportunities for producing localized hydropower through micro (village) and
mini hydropower technologies are also considerably high. In addition, the long coastal lines surrounding the
island of Sri Lanka with several windy locations also provide tremendous scope for tapping wind power. In
this context, the applications of Renewable Energy Technologies (RETs) have a distinct advantage of being
able to be used in localized settings and provide effective delivery without a centralized supply mechanism
[11]
.
The National Energy Policy of Sri Lanka is focused on the promotion of renewable sources of energy as a
means of addressing the supply inadequacies and sets out several initiatives and concessions to developers
as explained. The government has set itself a minimum target of 10% of national grid electricity to comprise
of renewable energy sources by the year 2015 [12].
A study carried out by DFCC Bank in 2007 under the RERED project, has estimated the potential from
renewable energy technologies in Sri Lanka by the year 2015 as follows [12];
56
Sri Lanka
Rapid Assessment and Gap Analysis
Table 2.3.2 – Estimated Renewable Energy Potential
Energy Source
Solar Energy
Wind Energy
Mini Hydro Energy
Biomass Energy
Total
Estimated Potential
by year 2015
11 MW
50 MW
300 MW
90 MW
451 MW
Estimated Potential
by year 2020
160 MW
400 MW
400 MW
134 MW
1,094 MW
(Source: DFCC Bank, Sustainable Energy Authority – Renewable Energy Road Map)
However, the total renewable energy potential in Sri Lanka is found to be quite substantial, especially in
Wind and Dendro as shown in the below table [13].
Table 2.3.3 – Estimated Renewable Energy Potential
2006
(MW)
106
1.4
2
3
0.035
Mini-hydro (on-grid)
Mini-hydro (off-grid)
Dendro (on-grid)
Wind (on-grid)
Solar (on-grid)
Potential
(MW)
300
4,000
24,000
-
(Source: Proceeding of the Conference, Achieving Sustainability and Equity in Energy: Policy Choices for the Future,
Sri Lanka Sustainable Energy Authority and Practical Action, 2008)
It is hard to estimate the potential of off-grid Mini-hydro as well as on-grid Solar. As the on-grid Mini-hydro
potential is expected to be fully harnessed by 2015, Sri Lanka has to rely on Dendro, Wind and Solar to
increase its share of non-conventional renewable energy in the energy supply portfolio. Though there is a
potential for Tidal and Wave energy, development of these sector will take a considerable period of time.
2.3.4.1
Hydro Power
Small streams in the upper catchments as well as major rivers of Sri Lanka offer considerable potential to
generate hydroelectric power. The potential for large scale hydro plants have already been harnessed by
CEB.
A study to assess the small hydro potential in Sri Lanka (focusing largely on the plantation sector) was
concluded in 2002 by Sunith Fernando for Intermediate Technology Development Group – ITDG (now
Practical Action) with the funding of The Royal Norwegian Embassy in Sri Lanka, the results of which are
presented below.
The total estimated small hydro potential at the 257 surveyed sites in 2002 was 97.4 MW (see Table
below), which was distributed among the three site categories as: 24.4 % in old estate sites, 21.2 % in new
estate sites and the remaining 54.4 % in non-estate sites. The highest potential encountered in the study
was 5,192 kW on “Kuru Ganga” while the lowest capacity of 5 kW was found in one of the old estate sites,
Maria division of “Waltrim Estate”. Capacity utilized in old estate sites was estimated as 6.1 MW.
Distribution of all sites by the estimated exploitable small hydro potential is as follows; in 81 % (209 sites)
of the surveyed sites, the potential lies in the range 0-500 kW. Within this range, 22 % of sites have a
capacity of less than 50 kW and 25 % lie between 50 kW and 100 kW. In the range of 500 kW to 4000 kW
(48 sites) nearly 70 % of sites have capacities between 500 kW and 1500 kW [21].
57
Sri Lanka
Rapid Assessment and Gap Analysis
Table 2.3.4 – Estimated Exploitable Small Hydro Potential
Site
Classification
Number
of
Sites
Utilized
Potential
(MW)
Old estate sites
New estate sites
Non-estate sites
Total
137
71
49
257
6.1
6.1
Exploitable Potential
MW
% of Total
23.668
20.723
53.016
97.407
24.4
21.2
54.4
100
Highest
Site
Capacity
(kW)
1,665
1,127
5,192
-
Lowest
Site
Capacity
(kW)
5
8
44
-
(Source: An Assessment of the Small Hydro Potential in Sri Lanka – Practical Action)
Site classification is as follows;
Old estate sites - These are sites where there are or had been hydro plants in the past.
New estate sites - A new location found within the boundaries of the particular tea estate.
Non-estate sites - A site located outside an estate, mostly on state land.
MW
According to the distribution of non-estate sites by district, the highest potential of 26,800 kW was found in
Ratnapura district, followed by Kegalle district with 9,972 kW. Almost all non-estate sites were found on
state land, often interspersed with village settlements, some bordering forest reserves. Therefore,
development of these sites is likely to face social and environmental issues to
Growth in Mini-Hydro Capacity
some extent [14].
350
300
250
200
150
100
50
0
2006
2008
2010
2012
2014
A study carried out by DFCC Bank in 2007 under the RERED project, has
estimated that mini-hydro capacity will be increased up to 300 MW by 2015
[12]
.
Figure 2.3.9 – Estimated Growth in Mini-Hydro Electricity Generating Capacity
(Source: DFCC Bank)
2.3.4.2
Biomass Energy [13]
Given below is the biomass availability in MT per year estimated by Bio Energy Association of Sri Lanka
(BEASL) in 2005:
Table 2.3.5– Estimated Availability of Biomass
Type
Rice Husk available from commercial mills
Biomass from Coconut Plantations available for industrial use
Sugar bagasse
Bio degradable garbage
Saw dust
Off cuts from timber mills
Biomass from home gardens Such as Gliricidia
Total
MT / Year
179,149
1,062,385
283,604
786,840
52,298
47,938
505,880
2,873,880
%
6.2
37
8.3
27.4
1.8
1.7
17.6
100
(Source: Proceeding of the Conference, Achieving Sustainability and Equity in Energy: Policy Choices for the Future,
Sri Lanka Sustainable Energy Authority and Practical Action, 2008)
Power generating potential - It has been noted that the consumption of fuel wood for generation of
electricity using currently available technologies, and equipment, whilst meeting all environmental and
58
Sri Lanka
Rapid Assessment and Gap Analysis
other conditions is about 1.2 –1.5 kg/KWh (in 2005). Calculations on the national potential for Dendro
power in Sri Lanka by BEASL have estimated this to be in excess of 4,000 MW annually generating over
24,000 GWh. This is nearly 4 times the total hydropower potential in this country. The conclusion may
therefore be drawn that the Dendro potential in the country is adequate to meet our electrical energy
demand for many decades [13 – pp22].
Land availability - The most realistic assessment of the area of land available for commercial fire wood
plantation would be 470,000 ha. This would be considered as the best starting point. Figures as high as 1.6
million have been quoted for under used scrub, however, the question of ownership and approval for
change of use might not be automatically forthcoming. It would seem that a shortage of land for Short
Rotation Coppice (SRC) would not be a serious constraint for Sri Lanka [13 - pp33].
Tea plantation - In 2002, the area under tea plantation was 180,000 ha. This area includes marginal tea
lands with lower stocking of productive bushes. Assuming 10% of the total tea area is marginal and not
suitable for tea cultivation, such areas could be profitably used for raising fuel wood. About 50% of the
marginal lands could be used for fuel wood for processing tea and the rest could be used for raising fuel
wood for domestic use [13 -pp39].
Growth in Biomass Capacity
100
MW
80
60
40
20
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
0
Electricity production using solid biomass fuels is still a developing
industry. In the longer term, grid connected biomass generation
(using the full range of possible technologies), may become
competitive; the greatest potential is for small scale embedded
generation using gasification, pyrolysis or high-speed steam enginebased plant [15].
Figure 2.3.10 – Estimated Growth in Biomass Electricity Generating Capacity
(Source: DFCC Bank)
A study carried out by DFCC Bank in 2007 under the RERED project, has estimated that biomass power
generation will be increased up to 90 MW by 2015 [12].
2.3.4.3
Wind Power [15, 16, 17]
Figure 2.3.11 – Wind Resource Map of Sri Lanka
(Source: Wind Energy Resource Atlas of Sri Lanka and the Maldives, National Renewable Energy Laboratory)
Until the era ended in year 2000, scant information on wind resource prevented Sri
Lanka from enjoying wind power. With the advent of new technology backed by
foreign financial aid, Sri Lanka commenced wind energy studies followed by pilot
scale wind power projects. There are several comprehensive studies done
extensively on the wind resource of Sri Lanka. The first one to emerge was the
“Wind Energy Resource Assessment in Puttalam and Central Regions of Sri Lanka”
as a result of a collaborative attempt of the Ministry of Power and Energy Sri Lanka,
CEB, and UNDP/GEF Renewable Energy Project. The report elaborates the
availability of wind resource, wind energy potential, and the reliability in terms of
wind speed and consistency, etc. The study identified potential wind sites in the
country along with the financial and economic viability of establishing wind driven
power generation plants.
According to the “Wind Energy Resource Atlas of Sri Lanka and Maldives” compiled by the National
Renewable Energy Laboratory (NREL) under USAID technical assistance in 2003, there is nearly 5,000 km 2 of
59
Sri Lanka
Rapid Assessment and Gap Analysis
windy area with good to excellent wind resource potential in Sri Lanka out of which 4,100 km2 is in inland
and 700 km2 is in the costal belt. Therefore, the land extent with wind energy potential is around 6% of the
total land area (65,610 sq km2) of Sri Lanka. Based on a very conservative assumption of 5 MW per Km2, it
could accommodate around 20,000 MW capacity wind power plants. The total potential is as high as 24,000
MW if windy lagoons are also considered [17].
The above values may be further enhanced with the future advancement in wind technology as it would be
possible to utilize wind resource which is now at a moderate level. It would be equivalent to 16.7 % of the
total area of the country (11,000 Km2 out of 65,610 Km2) having wind power generating potential.
According to these approximations, Sri Lanka has an overall wind potential of more than 55,000 MW [17].
The above wind potentials are calculated based on the available land area in the country excluding the
national parks and reserves, bird sanctuaries, archaeological or cultural sites and cities or capitals which are
the pre excluded areas for such a project.
However, NREL stressed that additional studies were needed to accurately assess the practical resource by
accounting for the transmission grid and accessibility.
As a result of those studies, wind maps graphically depicting the wind resource distribution in the country
and the estimated wind energy prospects in such areas are now available in the public domain.
The above wind resource map of Sri Lanka shows the wind resource values with provincial boundaries. It
clearly shows that the wind power availability in the good and excellent range is extended from the
Northern tip of the Kalpitya Peninsula (in the North West) to the Karativu islands near Portugal Bay through
Mannar and Delft Islands (in the North) and in the central highlands (Indicated in blue – excellent and
purple - good). The central highland regions include the extreme Northern part of the Central Province, the
Southern part of the North Central Province, and the Northern parts of Uva and Sabaragamuwa provinces.
Finally, coastal areas in the South-Eastern part of the Southern Province and the Southern tip at Dondra are
estimated to have moderate resources. Another prominent coastal region with good resource is the strip
from Hambanthota to near the Eastern border of the Southern Province.
According to the wind measurements by the CEB, good wind potentials exist in Southeast and Northwest of
Sri Lanka. Hambantota and Kalpitiya areas have been identified as suitable places for a grid connected Wind
Parks. A conservative estimate, excluding the wildlife reserves and agricultural lands, leads to an estimated
wind potential of at least 200 MW in the southern coastal areas. However, the cost of electricity generated
by wind is still not competitive with renewable sources such as mini-hydro [16].
A study carried out by DFCC Bank in 2007 under the RERED project, has estimated that wind capacity will be
increased up to 50 MW by 2015 [12].
Figure 2.3.1 2– Estimated Growth in Wind Electricity Generating Capacity
(Source: DFCC Bank)
According to the current development in this field and the possibility
of harnessing the wind potential in the North with the civil war coming
to an end, DFCC estimates would be easily surpassed.
Growth in Wind Capacity
60
50
MW
40
30
20
10
0
2006
2008
2010
2012
2014
Already, SLSEA has issued Energy Permits to ten private developers for
90 MW in Kalpitiya & Puttalum area. And four private developers for
another 40 MW were issued.
The inconsistencies of estimates of different parties shows that,
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Sri Lanka
Rapid Assessment and Gap Analysis
further studies are needed, especially wind data measurements in various locations to accurately assess the
practically realizable potential by taking various constraints and restrictions such as accessibility of sites,
grid availability, etc. in to consideration.
SLSEA has already commenced the collection of wind data in 4 locations out of the 10 locations planned [18].
2.3.4.4
Solar Power
Sri Lanka lies within the equatorial belt (between 6 and 10 degrees north of the Equator), a region where
substantial solar energy resources exist throughout much of the year in adequate quantities for many
applications, including solar water heating, solar electricity, and desalination. Many applications of solar
energy are currently in use for meeting remote electrical loads throughout much of the non-electrified
regions of Sri Lanka. The potential exists for significant expansion of the use of this renewable energy.
According to the “Solar Resource Assessment for Sri Lanka & Maldives” compiled by the National
Renewable Energy Laboratory (NREL) under USAID technical assistance in 2003, annual solar resource in Sri
Lanka ranges from 4.5 to 6.0 kWh/m2/day [19].
Figure 2.3.1 3– Solar Resource Map of Sri Lanka
(Source: Solar Resource Assessment of Sri Lanka and the Maldives, National Renewable Energy Laboratory)
The above study shows that ample resources exist throughout the
year for virtually all locations in Sri Lanka for PV applications, such as
solar home systems and remote power applications.
The variability in global horizontal solar resources is relatively small
across most of the country, despite the impact of terrain
characteristics on cloud formation. The resource generally varies
spatially at most 20% to 30% during any given season. The highest
resources are in the northern and southern regions, and the lowest
resources are in the interior hill country [19].
The seasonal variations in solar resources in Sri Lanka can be
somewhat greater at specific locations, for example ranging from 4.5
to 6.5 kWh/m2/day in the hill country and the effects of the changing
directions in wind flow and storm patterns between the southwest
and the northeast monsoons are quite sharp. During the southwest
monsoon, with airflow generally from the southwest to the
northeast, the lee side of the mountains (the northeast portion of the country) shows quite high solar
resources. During the northeast monsoon, the southern and western portions of the country show higher
resources. However, the highest resources occur during the hot dry period from March and April when the
transition between the northeast and the southwest monsoon occurs [19].
A study carried out by DFCC Bank in 2007 under the RERED project, has estimated that solar power
generation will be increased up to 11.2 MW by 2015 [12].
Figure 2.3.1 4– Estimated Growth in Solar Electricity Generating Capacity
(Source: DFCC Bank)
In Sri Lanka, solar power has got a head start over others and is the fastest
growing renewable resource, particularly because of its rural roots. The
industry grew from nothing in 1996 to 15-odd companies that have helped
install more than 100,000 units, mostly in homes of poor rice farmers. It is
now growing at an average of 20,000 units a year [20].
MW
Growth in Solar Capacity
12
10
8
6
4
2
0
2006
2008
2010
2012
2014
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Rapid Assessment and Gap Analysis
Pradip Jayewardene, a founder member of the Solar Industries Association and a pioneer in the private-led
solar industry in Sri Lanka, said "Because the industry is growing and demand is outstripping supply
globally, the technology is getting costly. We have sun all year on but the panels and other equipment to
tap this source are getting more expensive, because the demand is 75 times the supply. The huge demand
for suppliers of equipment is driving up costs." [20]
2.3.4.5
Bio Gas Energy
A study on the potential of biogas from biomass sources (Human waste, Municipal solid waste, Landfills,
Livestock waste, Agricultural waste, plantation industries) in Sri Lanka carried out by Practical Action
estimates a total power generation potential of 288 MW of which includes 86 MW from livestock waste [22].
Many biogas (anaerobic digestion) technologies are commercially available and have been demonstrated
for use with agricultural wastes and for treating municipal and industrial wastewater. Where unprocessed
wastes cause odor and water pollution such as large dairies, anaerobic digestion reduces the odor and
liquid waste disposal problems and produces a biogas fuel that can be used for process heating and/or
electricity generation.
Solid waste is collected and disposed at a large number of unprotected sites. The problem is most acute in
the Colombo Metropolitan Area (CMA) and in other major cities such as Dehiwala-Mt. Lavinia, Moratuwa,
Kandy, Galle, etc. Even in remote areas, solid waste dumps have become a common sight. The Colombo
municipal area produces about 700 metric tones daily and the figure for the whole metropolitan area is
about 1,000 – 1,100 MT/day. The composition indicates that about 85% of the waste is organic and has
moisture content of about 60-75%. This data has been largely determined for the waste arising in the
Colombo area [2].
2.3.4.6
Bio-diesel
Production of liquid bio-fuels especially ethanol requires knowledge, experience, and a substantial amount
of capital investment, Therefore, setting up of small scale ethanol production units (in Sri Lanka) is neither
economically nor technically viable.
Ethanol production in Sri Lanka is approximately 12 million litres per year and is produced using sugar cane
molasses at 2 sugar factories. This ethanol is of potable grade and this amount is not even sufficient to
meet demand for local ethanol. Therefore, another 5 million litres of potable ethanol are imported in
addition to the commercial grade ethanol [23].
However, small scale bio-diesel production facilities can be installed even at village level and run by persons
with some scientific background. Feedstock required for these units can also be obtained locally. Yet the
cost of production may be high in these units due to the scale of operation and the inability to recover
unused reactants and by-products. The first ever rural level, community based, small scale biodiesel
production facility in Sri Lanka was set up by Practical Action with help from University of Ruhuna,
Peradeniya, Moratuwa and NERDC. There are plans to run a tractor and a generator using the biodiesel
produced by this unit for community based activities without any charge. This facility could also be used to
educate, encourage and motivate people towards the use of biofuels and help in breaking the myth and
various concerns regarding the use of biodiesel [23].
Biodiesel is also not yet produced on a commercial or pilot scale in Sri Lanka [23].
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Rapid Assessment and Gap Analysis
2.3.4.7
Wave Energy
As waves are primarily driven by the wind, areas near the Equator tend to have lower wave potential. The
best wave climates, with annual average power levels between 20-70 kW/m of wave front or higher, are
found in the temperate zones (30-60 degrees latitude) where strong storms occur. However, attractive
wave climates are also found within ±30 degrees latitude where trade winds blow with the lower power
levels being compensated by the smaller wave power variability. Annual average wave power is
approximately 14 kW/m in the vicinity of Sri Lanka. It is reasonably close to estimate 15 kW/m as being
suitable for generation at competitive prices [6].
Figure 2.3.1 5– Wave Energy Map of Sri Lanka
(Source: Reference 50 – Energy Forum)
The only alternate energy source for which a tariff system has been
formulated by the Ministry of Power and Energy is wave energy.
According to the government calculations, this is the cheapest form
of alternative energy.
Waves are stable in the South of Sri Lanka since there is no land
mass all the way to Antarctica. Strong storms are rare. The wave
energy potential of 1 meter off the southern coast of Sri Lanka is
about 13 KW in January. It rises to 100 KW by May. The Ministry of
Power and Energy estimates that stable electricity can be obtained
at a plant factor of 67% [24].
2.3.4.8
Tidal Power [25]
With an absence of a major estuary and with a low tidal range (approx 0.7 m) there would be limited
opportunity for a barrage-type tidal station in Sri Lanka. However, with estimated currents of 3 m/s in the
Palk Strait there may be opportunities to develop a tidal stream.
2.3.4 Summary of Renewable Energy Resources Available
Given below is the summary of renewable resources available in Sri Lanka. The estimated potential was
drawn from various sources and the estimated exploitable potential by 2015 is from a study carried out by
the Development Finance Corporation of Ceylon (DFCC Bank) in 2007 under the RERED project.
Table 2.3.6 – Availability of Renewable Energy Resources
Renewable Energy Source
Small Hydro
Solar (PV)
Wind (on-grid) – Inland only
Biomass (Dendro on-grid)
Biogas
Wave Energy
Estimated Potential
600 MW
4.5 to 6.0 kWh/m2/day
24,000 MW
4,000 MW
288 MW
13 to 100 kW/m
________
63
Estimated Exploitable
Potential by 2015 - MW
300
11
50
90
-
Sri Lanka
Rapid Assessment and Gap Analysis
2.4 SE4All Goals
18. Goals



Energy access
Energy efficiency
Renewable energy
Goals would ideally be formulate and if so, should be based on problem statement and can relate to
improved physical access, as well as its reliability, affordability and sustainability for the whole country
and/or targeted consumers’ groups, i.e. households or productive users. It would be good to use
quantitative indicators/targets when formulating national goals to enable their aggregation at the global
level (i.e. XXX mln people with approved access to electricity and YYY mln people with access to modern
energy for cooking, etc). Milestones to 2015, 2020 and 2030 would be ideal.
2.4.1 Ensuring Energy Access & Security
In reaching this goal, both national energy security and energy security of the individual will be ensured by
achieving the following:
Objectives:
(i)
(ii)
All households to have access to basic energy needs by 2017.
Energy security of the nation ensured by 2017.
2.4.2 ENERGY EFFICIENCY
Energy management activities are carried out with a national focus and with a target of achieving an energy
consumption reduction of 8.7% by 2020 and 13.5% by 2030. Following graph depicts the projected
electricity savings at different milestones.
(Source: Sustainable Energy Authority)
Figure 2.4.1 – Projected Electricity Saving
Table 2.4.1 – Target Savings from Generation
64
Sri Lanka
Rapid Assessment and Gap Analysis
Year
2012
2016
2020
2025
2030
Maximum
Yearly Savings as a % of
Demand
Net Generation
MW
11,895
2,425
4.3%
16,232
3,162
6.4%
21,794
4,061
8.7%
28,569
5,569
11.6%
39,449
7,617
13.5%
(Source: Sustainable Energy Authority)
Net Generation
GWh/year
The overall electricity savings as a result of the activities carried out by SLSEA in year 2011 are given below;





448.3 GWh savings due to implementation of energy efficiency activities in domestic, industrial and
commercial sectors. This is equivalent to 4.1% of the total consumption in 2011.
300 MW peak demand reduction
715 million litres of fuel oil mainly due to fuel switching initiatives
328,700 kg of LPG
476,300 kg of firewood
The above is only from the sectors with reported data and hence the actual savings is higher.
2.4.3 INCREASING INDIGENOUS ENERGY
The previously compiled renewable energy portfolio (Table 1.1) of the SEA aimed at achieving 10%
electrical energy from NCRE plants by 2015 and maintaining a share of 10% from NCRE plants till 2020.
However, this target has been now revised in the Mahinda Chinthana: Vision for the Future as requiring Sri
Lanka to meet 20% of electricity generation coming from NCRE sources by 2020.
Following objectives were to be fulfilled to reach/contribute towards this goal.
(i)
(ii)
(iii)
(iv)
Generation of electricity from NCRE to reach 10% by 2015, 20% by 2020 and beyond.
Ten (10%) percent of industrial thermal energy to be switched over to biomass.
Ten (10%) percent of transport energy from non-petroleum fuels.
Increase of biomass as a clean cooking fuel by 10%.
Renewable Energy Mix
The Table below shows the planned renewable energy mix to achieve the target of 20% from NCRE
resources by 2020. The short term targets (1-3 year period) envisioned for each renewable energy resource
is based on the assessment made on number of permits issued and details of projects which are at different
stages of project approval process.
65
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Rapid Assessment and Gap Analysis
YEAR
Table 2.4.2 – Capacity Mix of NCRE Resources
PROPOSED CAPACITY ADDITIONS (MW)
HYDRO
WIND
SOLAR
BIOMASS
TOTAL
2012
40
50
10
10
110
2013
60
50
30
10
150
2014
60
20
30
20
130
2015
60
100
10
20
190
2016
50
10
10
25
95
2017
40
10
10
25
85
2018
10
10
10
30
60
2019
10
10
10
30
60
2020
10
10
10
30
60
TOTAL
340
270
130
200
940
(Source: Sustainable Energy Authority)
The Figure below demonstrates the timing of proposed capacity additions. The noticeable feature is the
continuous reduction of capacity additions from hydro resource. This is largely due to the exploitation of
full economic potential of the hydro resource. The contribution from wind resource has been restricted due
to the widely known grid stability issues. However with the ever increasing national demand for electricity
and advent of new technology, it is very likely that the present restrictions on grid absorption of wind
power would be reviewed.
(Source: Sustainable Energy Authority)
Figure 2.4.2 – Capacity Addition from NCRE Resources
Expected Electricity Generation from NCRE Technologies
The primary target of the above renewable energy mix is to realize a 20% electrical energy demand from
NCRE resources. The industry standard capacity factors have been assumed for assessing the energy yield
form each renewable energy technology. The table below shows the set capacity factors for each
technology.
66
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Rapid Assessment and Gap Analysis
Table 2.4.3 – Capacity Factors for NCRE Technologies
RENEWABLE ENERGY
SOLAR
CAPACITY FACTOR
(%)
17%
WIND
32%
HYDRO
42%
RESOURCE
BIOMASS
80%
(Source: Sustainable Energy Authority)
The Table below shows the expected energy generation from each renewable energy technology and their
temporal variations. It also exhibits the variation of combined capacity factor of all NCRE technologies. It is
possible to realize a combined capacity factor of, approximately, 40% NCRE based power generation if the
proposed NCRE portfolio is implemented. Perhaps this is an ambitious target, given the type of
technologies in the NCRE mix and maturity of certain technologies. It should be noted that the contribution
from biomass recourse based power plants would be very vital in achieving the desired target.
Table 2.4.4 – Details of Energy from NCRE Technologies & Capacity Factors
YEAR
INSTALLED CAPACITY (MW)
GENERATION (GWH)
NCRE
CAPACITY
HYDRO
WIND
SOLAR
BIOMASS
TOTAL
HYDRO
WIND
SOLAR
BIOMASS
TOTAL NCRE
2012
229
81
11
23
344
843
227
17
158
1244
41%
2013
274
131
41
33
479
1008
367
62
228
1664
40%
2014
309
151
71
43
574
1137
423
106
298
1964
39%
2015
329
251
86
68
734
1210
703
129
473
2515
39%
2016
349
281
101
93
824
1284
787
151
648
2871
40%
2017
369
311
116
118
914
1358
871
173
823
3226
40%
2018
379
341
131
143
994
1394
955
196
999
3544
41%
2019
389
371
146
148
1054
1431
1040
218
1034
3722
40%
2020
400
401
161
153
1114
1468
1124
240
1069
3901
40%
(Source: Sustainable Energy Authority)
(Source: Sustainable Energy Authority)
Figure 2.4.3 – Variation of Combined Capacity Factors
67
FACTOR
Sri Lanka
Rapid Assessment and Gap Analysis
(Source: Sustainable Energy Authority)
Figure 2.4.3 – Expected Energy Generation from NCRE Sources
The figure below shows the expected achievement (% contribution) from NCRE technologies towards
reaching the 20% NCRE contribution to national electrical energy demand.
(Source: Sustainable Energy Authority)
Figure 2.4.4 – NCRE Contribution to National Electricity Demand
Impediment Towards Achieving NCRE Targets
The renewable energy capacity additions are well within the available potential of NCRE resources.
However, given the industry outlook, this seems to be an ambitious target. There are many technical and
non technical factors which may impede the progress of realizing NCRE target. The commonly foreseen
issues are;
a. Grid connections issues
b. Project approval issues
c. Social and non technical issues
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Rapid Assessment and Gap Analysis
In order to achieve the set NCRE targets, interventionist type approach is desired. Since each of the NCRE
based power generation schemes are at different stages of its project cycle (industry maturity), the
interventions need to be carefully formulated and resource specific. The hydro sector may need
interventions in the form of accelerating project approval process and clearing grid connection issues at
regional grid substations whereas biomass sector may need few pilot projects to motivate and set the
industry in motion.
The Table below highlights the commonly cited issues when integrating large amount of renewable energy
resources. The important indexes to be reviewed are the penetrations of NCRE technologies at different
time of the daily demand curve. The contribution from NCRE technologies to off-peak demand, if the
proposed NCRE portfolio is implemented, would be very significant. However fleets of power plants which
are based on NCRE resource need to be connected to the power system at all time in order to achieve the
desired contribution from NCRE technologies.
Table 2.4.5 – NCRE Penetration - Peak and Off-peak Demand
FORECAST PEAK
TOTAL NCRE
TOTAL NCRE
TOTAL NCRE
INSTALLED
INSTALLED CAPACITY
INSTALLED CAPACITY
CAPACITY % OF
% OF OFF-PEAK
LESS BIOMASS % OF
PEAK DEMAND
DEMAND
OFF-PEAK DEMAND
GRID(MW)
OFF PEAK DEMAND (MW)
(ASSUMING 0.45 OF PEAK
DEMAND)
2012
2503
1126
14%
30%
28%
2013
2688
1210
18%
36%
33%
2014
2853
1284
20%
39%
36%
2015
3035
1366
24%
47%
42%
2016
3211
1445
26%
50%
44%
2017
3397
1529
27%
52%
44%
2018
3604
1622
28%
53%
44%
2019
3820
1719
28%
53%
44%
2020
4051
1823
27%
(Source: Sustainable Energy Authority)
52%
44%
YEAR
DEMAND
2.4.4 ARRESTING GROWTH OF ENERGY INTENSITY OF ECONOMY
Keeping the economic development goals of Sri Lanka in focus and anticipation of a strong growth in the
industrial sector, retaining the present levels of energy intensity of economy will not be pursued. However,
all possible measures to decouple the economic development from energy demand growth will be made,
targeting an energy intensity of economy of 500 toe/XDR million by 2017. This will ensure a 20% saving of
energy with respect to 2010 energy consumption.
By development of systems, capacity and consciousness, the nation can be guided towards the goal of
arresting energy intensity of economy. The desired objectives are as follows.
Objectives:
(i)
(ii)
(iii)
A complete mechanism for delivery of energy efficiency services.
A comprehensive capacity development programme.
Energy conscious nation.
________
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Rapid Assessment and Gap Analysis
Section 3: Challenges and Opportunities for Achieving SE4ALL
Goals
3.1 Institutional and policy framework
This section should focus only on those institutional and policy frameworks which have direct relevance to
identified goals and the degree to which there is, or not, coordination among the various relevant ministries
and/or whether there is an institution which coordinates the energy sector activities within the context of
economic and social development in the country.
19.


Energy and development:
Energy in national development and poverty reduction strategies and plans
Energy governance: institution(s) in charge of energy sector within the context of economic and
social development in the country
20.
Thermal energy for households:
 Relevant targets, policies, strategies, plans
 National institutions/capacities (mandate/capacities of relevant governmental institutions and
market regulators, fuel tariffs, specifically for households)
21.
Power sector:
 Relevant targets, policies, strategies, plans
 National Institutions/capacities (Ministry of Energy/Power, existence/capacity/mandate of market
regulator for power sector, market structure in power sector, power tariffs)
22.


23.
Modern energy for productive sectors:
Relevant targets, policies, strategies, plans
Institutions/capacities
National monitoring framework for SE4ALL:
 Proposed indicators to measure and monitor achievement of national SE4ALL goals
 Data requirements, gaps and associated capacity development needs
3.1.1 Institutional and Policy Framework
This section describes the institutional infrastructure available in the country for the promotion and
utilizing of renewable energy and also the promotion of energy efficiency.
SLSEA
D
C
PUCSL
70
State Sector
F
Non-state
Sector
E
Financiers
B
Facilitators
Approving
Authorities
A
Sri Lanka
Rapid Assessment and Gap Analysis
Figure 3.1.1 – Institutional Arrangement
The above is an attempt to portray the institutional arrangements in Sri Lanka in the sphere of renewable
energy. On one hand, these organizations can be broadly categorized as “State” and “Non-state” based on
their legal status. On the other hand, these organizations can be further categorized as “Regulators” having
project approving powers, “Facilitators” having facilitation and/or commercial interests and “Financiers”
including credit providers and donors. Under this dual categorization, six types of organizations could be
identified as follows:
1.
2.
3.
4.
Type A – State Sector Organizations (with regulatory and project approving powers)
Type B – State Sector Organizations (with facilitation role)
Type C– Non State Sector Organizations, NGOs (with facilitation role)
Type D – Non State Sector Organizations, Private (with commercial interests as well with
facilitation role)
5. Type E – Non State Sector Organizations, Private Banks (with commercial interests) as credit
providers and the Donor Community (with no commercial interests)
6. Type F – State Sector Organizations, State Banks (with commercial interests) as credit providers
Sri Lanka Sustainable Energy Authority (SLSEA) is positioned as the apex body with wider powers and has
dual functions of both regulation and facilitation and hence is not listed under any type.
All these organizations operate under a regulatory environment created by the Public Utilities Commission
of Sri Lanka (PUCSL). The PUCSL promotes competition, efficiency, safety, and quality of service in public
utilities, while protecting the interests of the consumers. PUCSL is also not listed under any type.
This multiplicity of organizations on one hand could be viewed as a blessing for the promotion and
utilization of renewable energy and on the other hand could be a hurdle especially at the time of project
approvals due to bureaucratic hindrances. Therefore, a better coordination of stakeholder organizations,
avoidance of duplicity and undue competition, etc. is the need of the hour and in this respect, SLSEA has an
uphill task of playing the role of the apex body by making use of the wider powers it is bestowed with
through the Act.
Some key players known to the writers at the time of compiling this report are listed below under each
category.
It is estimated that more than 50 organizations with over 2,000 stakeholders are commercially involved in
energy efficiency related matters and in the rapidly growing renewable energy industry, which includes
grid-connected, off-grid community and household based renewable energy systems. The stakeholders
include microfinance institutions, commercial and development banks, NGOs, project developers,
consultants, and equipment suppliers.
Type A – State Sector (Regulatory)
Table 3.1.1 – Classification of Organizations Involved in Renewable Energy
1
2
3
Organization
Central Environmental Authority (CEA)www.cea.lk
Public Utilities Commission (PUC) www.pucsl.gov.lk
Board of Investment (BOI) 71
Role
Environmental clearance
Regulation
Project approvals
Sri Lanka
Rapid Assessment and Gap Analysis
www.investsrilanka.com
4 Mahaweli Authority - www.mahaweli.gov.lk
5 Airport & Aviation - www.airport.lk
6 Coastal Conservation Department www.coastal.gov.lk
7 National Water Supply & Drainage Board –
www.waterboard.lk
8 Irrigation Department - www.irrigation.gov.lk
9 Forest Department - www.forestdept.gov.lk
10 Divisional Secretaries & Pradesiya Sabhas
11 Ceylon Electricity Board (CEB) - www.ceb.lk
Clearance for Hydro projects
Clearance for Wind towers
Clearance for Hydro projects
Clearance for Hydro projects
Clearance for Hydro projects
Clearance for Hydro projects
General clearance
For grid availability and capacity
Type B – State Sector (Facilitation)
1
2
2
3
4
5
Organization
National Engineering Research &
Development Centre (NERDC) - www.nerdc.lk
Sri Lanka Standard Institute (SLSI) www.slsi.lk
University of Moratuwa - www.mrt.ac.lk
University of Peradeniya - www.pdn.ac.lk
University of Ruhuna - www.ruh.ac.lk
Industrial Development Board www.idb.gov.lk
Role
R & D (Biomass, Biogas, Wind, Solar,
Hydro, Biodiesel)
Standards & Code of Practices
R & D (Biodiesel), Biogas
R & D (Biodiesel)
R & D (Biodiesel)
Development (Biogas, Biomass)
Type C– Non State Sector, NGOs (Facilitation)
1
2
3
4
5
6
7
8
9
10
11
12
13
Organization
Practical Action –
www.practicalaction.org/sri-lanka
Sri Lanka Energy Managers Association
(SLEMA) - www.slema.org.lk
Energy Forum - www.efsl.lk
Integrated Development Association (IDEA) www.ideasrilanka.org
Lanka Biogas Association www.lankabiogas.org
Federation of Electricity Consumer Societies www.efsl.lk/fecs.aspx
Village Hydro Energy Suppliers &
Manufacturers Association
Village Hydro Developers Association
Micro-hydro Association
Bio Energy Association of Sri Lanka (BEASL) www.bioenergysrilanka.org
National Energy NGO Network
National Network on Gender & Energy
(NANEGE), University of Peradeniya www.energia-asia.org/.../sri-lanka
Department of Animal Production & Health 72
Role
Policy advocacy & technology
transfer
Capacity building (Training,
Workshops, Seminars)
Policy advocacy & technology
transfer
Promotion of RE, especially cook
stoves
Biogas
Village hydro
Village hydro
Village hydro
Micro hydro
Biomass
Promotion of Renewable Energy
Biomass
Biogas
Sri Lanka
Rapid Assessment and Gap Analysis
www.daph.gov.lk
Type D – Non State Sector, Private (Commercial & Facilitation)
Equipment suppliers & private developers
1
2
3
4
5
6
7
9
10
11
12
13
14
15
Organization
EnerFab (Mr Indika Gallage) www.enerfabsrilanka.com
Spectra Industries - www.spectra.lk
Role
Dendro equipment supplier
Cimplus Lanka (Pvt) Ltd (Mr G.K.Upawansa)
Eco Engineers (Mr Athula Jayamanne) www.athulajayamanne.com
Industrial Services Bureau (Mr Neelakanth
Wanninayake) – www.isb.lk
Industrial Services Lanka Limited (Mr Anura
Vidanagamage) – www.isl.lk
Access Solar - www.accesssolar.lk
Alpha Solar - www.solartherm.lk
EB Creasy – www.listofcompanies.co.in/e-bcreasy-company-plc
Selco Solar
Shell Solar - www.solar-facts-andadvice.com/shell-solar.html
Softlogic - www.softlogic.lk
Solar Dynamics
Suriyavahini
Cook Stoves & Dendro equipment
supplier
Biogas
Biogas
Supplying of small scale wind
turbines
Supplying of small scale wind
turbines
Supplying of Solar PV
Supplying of Solar PV
Supplying of Solar PV
Supplying of Solar PV
Supplying of Solar PV
Supplying of Solar PV
Supplying of Solar PV
Supplying of Solar PV
Type E – Non State Sector, Private Banks (with commercial interests)
& Donor Community (without commercial interests)
Organization
DFCC Bank - www.dfcc.lk
National Development Bank (NDB) www.ndbbank.com
3 Samptah Bank - www.sampath.lk
4 Hatton National Bank (HNB) - www.hnb.net
5 Seylan Bank - www.eseylan.com
6 SEEDs - www.seeds.lk
7 Commercial Bank of Ceylon www.combank.net
8 Ceylinco Leasing Corporation
9 Lanka Orix Leasing Company www.lankaorix.com
10 Alliance Finance Company www.alliancefinance.lk
11 Sanasa Development Bank - www.sdb.lk
1
2
1
2
GEF - www.thegef.org/gef/CM-SriLanka
UNDP - www.undp.lk
Role
Credit
Credit
Credit
Credit
Credit
Credit
Credit
Credit
Credit
Credit
Credit
Grants
Grants
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3
4
5
6
7
8
ESCAP www.unescap.org/huset/lgstudy/country/srilanka
Government of Netherlands
Government of Norway
Government of Japan (JICA & JBIC)
Government of Ireland
USAID – www.usaid.gov
Grants
Grants
Grants
Grants
Grants
Grants
Type F –State Sector, State Banks (with commercial interests)
1
Organization
Regional Development Banks
Role
Credit
Note: Apart from what is listed above, there could be many organizations and individuals active in this
discipline not known to the writers especially from the NGO and private sector and hence the above should
not be treated as comprehensive.
The roles of some key organizations are described below;
3.1.2 State Sector
The Basic Structure of the Energy Sector Institutional Framework is given below;
(Source: Sri Lanka Sustainable Energy Authority)
Figure 3.1.2 – Basic Structure of the Energy Sector Institutional Framework
Development of renewable energy has received worldwide attention, mostly due to the bleak future of
fossil fuel supply sector and emerging evidence of links between climate change and fossil fuel use. Like in
many other developing countries, Sri Lankan case for renewable energy is more inclined to energy security
and economic issues than environmental concerns. The principles on which renewable energy development
is based on are four fold. They could be broadly identified as;
(i)
Government policy on accelerated renewable energy development
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(ii)
(iii)
(iv)
Creation of value from indigenous natural resources
Energy security concerns
National economic development objectives
Guiding principles in renewable energy development are given in the following table
Guiding Principles In Renewable Energy Development
(Source: Sri Lanka Sustainable Energy Authority)
Figure 3.1.3 – Guiding Principles In Renewable Energy Development
3.1.2.1 Public Utilities Commission [26]
The Public Utilities Commission Act (PUC Act 2002), which was enacted in December 2002, established the
multi-sector regulatory body, the PUC. The PUC functions as a regulatory umbrella for the public utilities
industries. It will initially regulate the electricity sector, with plans to add water and petroleum industries.
The powers and functions regulating each sector within the PUC will be provided in industry-specific
legislation. The PUC promotes competition, efficiency, safety, and quality of service in public utilities, while
protecting the interests of the consumers. The PUC has been vested with the powers of advising the
government on all matters such as licensing, regulation, and inspection functions, as well as tariffs and
other charges. It also investigates anti-competitive practices and abuses of a dominant position and
oversees the activities of monopolies. Initial funding to establish the PUC has been provided by the
Government, but the PUC will generate its own funds over time from licensing fees and other charges on
the industry operators.
The Electricity Reform Act, which was also enacted in December 2002, provides for the regulation of
companies generating, transmitting, and distributing electricity in Sri Lanka. The administration of the
Electricity Reform Act will be vested in the PUC, and the PUC will serve as the economic, technical, and
safety regulator for the electricity industry.
3.1.2.2 Sri Lanka Sustainable Energy Authority [27]
SLSEA established under the Act No.35 of 2007 of Democratic Socialist Republic of Sri Lanka functions
under the purview of the Ministry of Power & Energy (MoPE). SLSEA has the Vision to make an energy
secure Sri Lanka and functions with the Mission to guide the nation in all its efforts to develop indigenous
energy resources and conserve energy resources through exploration, facilitation, research & development
and knowledge management in the journey of national development by protecting natural, human and
economic wealth by embracing best sustainability practices.
In the journey towards an energy secure Sri Lanka, SLSEA has set three primary goals, viz;
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1. All citizens to have access to modern energy services by 2017
2. Ten percent (10%) of all energy forms generated from non-conventional renewable energy
resources by 2017 across all areas including electricity (The industry if continuously facilitated
through education, capacity building and relationship building exercises which target the state
agencies responsible for granting planning approvals. The resource allocation process is fully web
enabled in 2009 and project facilitation and monitoring is expected to be migrated to a web based
scheme in 2012), transport and domestic sectors, and
3. To manage the energy intensity of economy at 500toe/XDRM even in 2017 while keeping the
economic development of Sri Lanka in focus in anticipation of a strong industrial growth.
Act provides wider powers to SLSEA with special emphasis on energy efficiency and conservation
programmes. SLSEA has an important and uphill task of playing the role of the apex body in energy
conservation & management and by promoting renewable energy use by making use of wider powers it is
bestowed with through the Act.
3.1.2.3 Ceylon Electricity Board (CEB) [28]
The mandate of the Ceylon Electricity Board (CEB) is to generate, transmit and supply electricity. CEB also
constructs, maintains and operates the necessary works for the generation of electricity by all means and
for the inter-connection of Generating Stations. It also distributes and sells electricity in bulk or otherwise.
CEB is a corporate body establish in terms of Parliament No.17 of 1969 as the Successor to the Department
of Government Electrical Undertakings. It is a national institution charged with the responsibility of
generating, transmitting and distributing electrical energy to reach all categories of consumers nationwide.
As a national body serving a very vital function, revenue is collected according to a government approved
tariff structure.
To carry out its role, the CEB has acquired a large base of physical assets, including generating stations,
substation complexes, transmission lines and distribution networks located in all parts of the country. It
also has a significant human resource base to operate, maintain and plan the system.
It is the duty of the CEB to provide reliable electricity to the entire nation at internationally competitive
prices effectively and efficiently through a meaningful partnership with skilled and motivated employees
using appropriate state of the art technology for the socioeconomic development of the country in an
economically sustainable manner while meeting acceptable environmental standards and a satisfactory
rate of return on investments.
The availability, reliability and quality dimensions highlight the degree to which the CEB should orient its
functions to the satisfaction of the customer and to serve the Nation. These are also the major concerns of
the commercial and industrial sectors which have to be internationally competitive in order to provide
employment opportunities and contribute to the economic and social development.
The affordability criteria highlight two aspects, firstly that the supply of electrical energy should be within
the reach of the people at an affordable price irrespective of where they live, so that the people could
make use of it to facilitate socio economic development. Secondly, planning process, implementation
strategies, distribution methodologies and revenue collection activities should be geared to provide
electricity at an affordable price to the customer while ensuring that all these processes guarantee the
availability, reliability and quality of the product while adhering to acceptable environmental norms.
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3.1.2.4 Road Map to Achieve Energy Security [28]
A Cabinet Sub Committee coordinated by Minister of Petroleum Industries has been appointed in June
2012 to examine and assess the counbtry’s energy supply situation and develop a clear “Road Map” in
achieving immediate, medium and long term energy security in terms of relaibility, adequacy and
affordability of energy supply. This “Road Map to Achieve Energy Security” is also expected to suggest
possible incentives for promoting alternative and renewable sources for ensuring energy security in the
country. The Road Map is to be submitted to Cabinet of Ministers within 4 months.
3.1.3 NGO Sector
There are many non-governmental organizations (NGOs) active in the energy sector in the country. They
have implemented many rural energy programmes and also played a key role in awareness raising and
capacity building of the rural community. Further, the NGO sector in the country collaborates efficiently
with private sector activities and is also instrumental in establishing many community organizations. Some
of the key NGOs related to the energy sector are described below [24].
In the absence of any government authority to look after the energy requirements for the off-grid
population in Sri Lanka, the civil society organizations have become the backbone of the off-grid energy
sector. The NGOs and CBOs, during the last 22 years, have contributed to the off-grid energy sector by
mobilizing the community and organizing the end users, by conducting research and development,
providing micro-financing and by monitoring the after sale services. As a result the off-grid energy
technologies have now provided energy services to over 100,000 off-grid households in Sri Lanka. These
energy technologies include Solar PV systems, village hydro systems, bio-gas units, small wind generators
and village dendro-power systems [29].
3.1.3.1 Practical Action
Practical Action (Former ITDG) is an international development agency that promotes appropriate
technology options around the world and its Head Office is based in the United Kingdom. Practical Action
has been in operation in Sri Lanka since 1989.. Currently it has around 8060 employees.
Practical Action has been engaged in the areas of renewable energy (improved cook stoves, wind, microhydro, biomass, biogas, biodiesel, solar, etc.), rural transport, agro-processing, manufacturing, building
materials, disaster mitigation, research and policy, and communications. Presently, their main involvements
include policy advocacy, standards setting, capacity building, and information dissemination through
publications, research, technology development, and technology transfer.
Practical Action plays a crucial role in formulation of new policies and reviewing of existing policies by
acting as a convener of stakeholder groups and also by preparation of various publications. It has carried
out an Energy Poverty Indiex, particularly considering the primary energy needs of people. It also is
engaged in the policy advocacy in the same area. The working model of Practical Action is depicted below.
Figure 3.1.4 – Working Model of Practical Action
(Source: Practical Action)
Exit
Scaling-up
Capacity Building
Pilot Programme
Technology Testing
Working Model of Practical Action
The working process of Practical Action commences with the technology
testing to assess the suitability to local conditions. Technology could be
either an existing one or entirely a new one. Thereafter, a pilot
programme is implemented followed by a capacity building programme
for all stakeholders to promote the technology. With the success of pilot
and capacity building programmes, scaling up of the equipment,
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appliances, etc. to the real life conditions is carried out and the same could be considered as the
commercialization stage. When the market is developed to a self-sustaining level, a pre-determined exist
strategy is executed. The first step of the process – technical testing is usually funded by the parent
organization and external financial assistance is sought for pilot programmes. Financial assistance in the
form of subsidies is available at the time of commercialization of technologies. The host is expected to
contribute maximum of 30% either in cash or in kind.
Hydro - One of the main energy programmes initiated by Practical Action was small-hydro development in
the country. Practical Action invested heavily to revive the small hydro power technology that once
flourished in the estate sector but went into disuse with the expansion of the national grid system and
initiated a number of interventions during the last two decades to accelerate the development of this
sector, which includes: (i) Technical Assistance for rehabilitation of abandoned plants, (ii) Development of
local engineering capabilities in design, operation and maintenance of small hydro plants, (iii) Operation &
maintenance training for operators and mechanics, (iv) Technical assistances for manufacture of Pelton
turbines, Electronic Load Controllers and Induction Generator Controllers, and (v) Demonstration and
promotion of decentralized, community managed micro-hydro schemes. This was one of the most
successful renewable energy programmes in the country and Practical Action won “Energy Globe 2001
International Award” for its contribution for the development of villagehydro.
Practical Action also undertook pioneering work in adapting the small hydro power technology for rural
electricity supply which is now being used on a commercial scale in the country. This work was begun 28
years ago. Having realized the long-term potential for small hydropower development, Practical Action
invested substantial time and money in capacity building to enable local technical personnel to lead the
small hydropower industry in Sri Lanka. These training programmes targeted a range of technical personnel
– from maintenance technicians in estates to engineers in the government organizations and private
companies. Many persons benefited from Practical Action's training programmes and some of them are
now holding senior positions in hydropower companies, banks, consulting companies, equipment
manufacturing companies and universities.
Grid connected small hydropower capacity has grown from 120 kW in 1996 to 100 MW in 2006. Practical
Action is now actively engaged in Pico-hydro development.
Wind - Another successful rural energy programme initiated by Practical Action was the wind energy
project, which is the development of a small wind turbine for battery charging applications in the rural
sector. This was, titled "Small Wind Energy System for Battery Charging". The main objective of the project
was to develop a small wind machine that could cater to the electrical energy needs of the rural people,
who do not have access to the national grid. The expected outcome of the project was the development of
a reliable and cost effective wind energy system with dissemination of the know-how of its manufacture
among the interested local manufacturers. The first phase of the project was started in June 1998 and
completed in 2001. During the first three years, three demonstration units (of capacity 200 W, rotor
diameter 2m and tower height 11 m) were designed, fabricated and field tested. The design is now in the
commercial market, and Practical Action is in the process of improving the design further. Further, in
December 2003, Practical Action conducted an extensive design course on small wind turbine for engineers
[26]
. Over 40 units of small wind turbines with the capacity ranging from 150 to 250 W have been promoted
to date.
As the solar PV market is fairly well developed in Sri Lanka, Practical Action does not involve in direct Solar
PV promotion but in hybrids. all other renewable energy options. However, Solar Wind Hybrid is promoted
as the need arises. So far 12 hybrid units have been promoted (300 W solar PV with 40 W wind turbines).
Under Solar Thermal Systems, solar dryers for food and fish processing are being promoted.
Under Bio-fuel, there is a pilot project in Nikeweratiya to promote bio-diesel using oil bearing seeds such as
Castor, Neem, Jathropa, etc. As a principle, Practical Action does not promote any Ethanol as bio-diesel to
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avoid any conflicts with food production. This project is an integrated approach where Plantation, Oil
expelling, Diesel processing Application of bio-diesel (for water pumping, hand tractors, electricity
generation on a 90:10 basis),, etc) are being tried out with the collaboration of many partners such as NERD
Centre, Universities of Moratuwa, Peradeniya and Ruhuna, and the private sector. In addition to the biofuel, other renewable energy technologies such as wind, biogas and solar heating (for dehydration of agro
produce) are also used in the integrated demonstration project.
Biogas - Practical Action started a project on developing and popularizing biogas technology in 1996 by
carrying out a sample survey to find out the status of biogas technology in Sri Lanka and to learn lessons
from the past experiences. This phase was followed by a series of new activities aimed at widespread
popularization of the technology [2].
Out of the estimated 5,000 domestic type biogas units of in Sri Lanka, Practical Action was responsible for
the promotion of around 1,000 units all over the country adopting three main technologies; Chinese
continuous type, Sri Lankan dry batch type (NERD system) and Indian Plug Flow Type. The Chinese system is
found to be the most effective. Few other new technologies are also being tested currently.
At the national level in Sri Lanka, biogas technology has a number of benefits such as:



Waste getting cleared (the environmental management tool)
Useful fuel gas being generated (the energy generation tool)
Production of the digestate as a by-product, which is considered to be an excellent soil conditioner
(the fertilizer option)
At a commercial scale, two private sector companies; Ambewela Milk Processing Factory and Maxis Poultry
are in the process of setting up biogas units with German technology to treat their solid and liquid waste.
Biogas compression is not yet used in Sri Lanka and the University of Moratuwa is engaged in some trails
under their research activities.
Practical Action was instrumental in establishing the Lanka Biogas Association (www.lankabiogas.org) in
2008 of which current president is Prof Ajith De Alwis with a membership of around 100. The Launch of the
Lanka Biogas Association has officially herald a new era of development and promotion of biogas in Sri
Lanka, as a technology that offers triple benefits: as an effective system in which to manage bio-degradable
waste, to produce clean energy and to provide valued inputs to organic agriculture. This is considered as a
landmark event in the Renewable Energy Sector of Sri Lanka.
Biogas technology can play a vital role in solving some of the major problems faced by the Sri Lankan
societies of the present and future. Biogas utilization should happen in a more systematic way, as it is fast
becoming one of multiple end-uses in Sri Lanka [2].
Most of the technologies promoted by the Practical Action are for rural applications. However, its attempt
to popularize bicycles (Human Powered Machine) is mostly for urban applications.
Associations - Practical Action was instrumental in establishing / strengthening many organizations and
associations for the promotion of renewable energy; Energy Forum (www.efsl.lk ), Lanka Biogas Association
(www.lankabiogas.org), Village Hydro Energy Suppliers & Manufacturers Association, Federation of
Electricity Consumers Society (www.efsl.lk/fecs.aspx ), Village Hydro Developers Association, Integrated
Development Association (IDEA), and South Asia Electronic Forum on Energy (www.sa-energy.net) . For
example, Energy Forum was commenced as a Project and later transformed into an independent entity to
mainly deal with policy advocacies while Practical Action retaining the focus on technology transfers.
Similarly, IDEA was commenced as a Project to promote Cook Stoves.
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Resource Assessment - In 2001, Practical Action carried out an assessment of Micro-hydro (by Mr Sumith
Fernando) in 10 districts of Sri Lanka identifying over 1,000 sites and also the potential for biogas (by Prof
Ajith De Alwis).
Publications - There are many publications to the credit of Practical Action (Research papers, Books,
Electronic News letters – South Asia Energy Magazine ‘e net’Videos – on Wind, Micro & Pico Hydro, etc.) in
all three languages (English, Sinhala & Tamil). Practical Action took the lead in the preparation of; National
Standards on Domestic Biogas Systems (SLS 1292 : 2006), Operations and Maintenance Manual on
Community Based Micro Hydro Village Electrification Schemes, Biogas Design & Construction, Maintenance
of Domestic Biogas Systems and Biofuels. Practical Action also led the first day cover design and release of
the postage stamp on the UN theme for the year 2012 ’Sustainable Energy for All’ and establishment of the
demonstration pico hydro power plant at Doluwa Bus Stand.
South-South Technology Transfer - Practical Action has created a good platform for South-South technology
transfer. Micro-hydro technology of Sri Lanka was promoted in India with special emphasis on social
organization and technical aspects while the Bio-fuel technology is transferred from India.
3.1.3.2 Energy Forum
The Energy Forum was established in 1991 with the participation of renewable and decentralized energy
technology NGOs, private-sector firms, government agencies, and prominent energy community members
in Sri Lanka to address their common issues. The Energy Forum which was originally a project of ITDG (now
Practical Action) became a non profit organization in 1999.
The Energy Forum is working to promote renewable and distributed energy options to alleviate poverty, to
address energy capacity deficiencies, and to protect the environment. As a network of individuals and
organizations from government institutions, Provincial Councils, the private sector, NGOs, utilities,
universities and research institutions, the Energy Forum serves as a network hub for non-partisan energy
information and research. The Energy Forum specializes in grassroots community awareness-raising and
has created close working partnerships with community leaders, business leaders, provincial councils and
individual officials, policy makers, journalists, school children and teachers and other NGOs and
community-based organizations.
Energy Forum acts as a partner for local and global renewable energy initiatives and promotion of fair and
sustainable energy policy.
Particularly, in the year 2001 a survey on off-grid biomass based electricity generation potential was
conducted by Energy Forum under funding by the World Bank. The survey identifies that almost all the dryzone off-grid villages in Sri Lanka have enough sparsely used croplands that can be effectively used to
establish energy plantations for supplying fuelwood to generate electricity for the consumption of off-grid
households [26].
The great success of Energy Forum has been its bottom-up focus. Starting from the grassroots, the Energy
Forum convinced local Community Based Organizations of their role in addressing the energy needs of the
communities they serve.
One of the key achievements of the Energy Forum has been the establishment of the Federation of
Electrical Consumer Societies (FECS) to give end users and consumers a voice in the decision-making
process regarding off-grid energy. The FECS now has around 150 ECS members, representing over 6000 offgrid powered households.
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3.1.3.3 The Federation of Electricity Consumer Societies
This is a community organization that functions through the joint action of Electricity Consumer Societies
attached to isolated rural hydro electricity plants distributed throughout Sri Lanka. The FECS has an active
membership of 104 Electricity Consumer Societies and its Executive Committee consists of 12 members
representing 6 districts in Sabaragamuwa, Southern and Uva Provinces, 4 Provincial Energy Officials and 2
National level experts. 10,250 families currently obtain electricity from these plants, covering a total
population of around 51,000. FECS receives considerable backstopping support from the Energy Forum.
3.1.3.4 Integrated Development Association (IDEA)
IDEA is the major organization, which co-coordinated, monitored and responded to the needs of the stove
development community which comprises of several government and non government organizations
operating at provincial, district and community levels. CEB stove programme set up the Integrated
Development Association (IDEA) to continue stove dissemination efforts with the guidance of a few
development experts. Practical Action, which assisted CEB in the stove dissemination effort, recognized
IDEA as the Partner Organization.
Figure 3.1.5 – “Anagi” Cook Stove
Practical Action provided technical inputs and secured funding for IDEA to continue
with dissemination of stoves in rural areas thus filling the vacuum created by the
withdrawal of CEB. IDEA being a NGO with a future vision was able to shell the rigidity
enforced by the CEB thinking which enable to accommodate a wide spectrum of
development issues, which could not be addressed within the CEB objectives. Creation of IDEA was an
important initiative for sustainability of stove activities in Sri Lanka since the main objective was to
implement and support projects related to stove. Therefore, IDEA had the freedom, mandate and
commitment to focus on stoves only without diluting their efforts on other projects.
At present there is no significant foreign funding for stove activities except the support provided by Asian
Regional Cookstove Programme (ARECOP) for networking activities for which IDEA act as the focal point. A
network of district level NGOs has been formed with the support and guidance of ARECOP [26].
IDEA serves as the national focal point of the ARECOP and a member of the INFORSE. Its activities include
networking and capacity building of NGOs in the promotion of wood stoves and kitchen improvement,
including the Anagi Stove, promotion of improved combustion systems in brick kilns and bakeries and
promoting large wood stoves for income generating activities, off grid micro hydro village electrification,
capacity building of NGOs and CBOs in proposal writing and sustainable development activities and
advocacy to promote rural energy planning and policy concepts [22].
3.1.3.5 Bio-Energy Association of Sri Lanka (BEASL)
Figure 3.1.6 – Gliricedia
All the interested parties in biomass energy have got-together to form BioEnergy Association of Sri-Lanka (BEASL) with the mission of “to be the leading
voice in the country for the bio energy industry”. The main objectives of BEASL
are to build support for the industry throughout the country’s legislature,
administration and funding agencies, through tax incentives, increased
biomass research and regulations and other policy initiatives. BEASL also
interacts directly with the general public, farmer organizations and other
relevant institutions to ensure that bio-energy provides a sustainable
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development means to alleviate poverty. In order to offer well considered opinions and advice for the
formulation of necessary policies and plans BEASL has been incorporated as an association under the
Companies Act.
Pioneering members of BEASL have long strived to promote the use of indigenous resources for power
generation and thus reduce the increasing dependence on imported fossil fuels for both generation of
electricity and thermal energy requirements.
In the backdrop of poser shortages in the past years and the looming threat of further shortages and the
escalation of costs of energy, the value of Biomass energy is at last being realized and has received the
attention of the government authorities due to the effort of organizations like BEASL.
BEASL was instrumental in convincing GOSL to declare Gliricedia as the 4th commercial crop in Sri Lanka and
to have a reasonably attractive tariff for grid-connected biomass electricity generation.
3.1.3.6 Human and Environment Links Progressive Organization (HELP-O) [30]
HELP-O is a NGO based in Galle specializing in producing biogas using domestic waste with the support of
UNDP. With the experience gained over the years, HELP-O has ventured into the setting up of biogass
plants in many governemnt hospitals. HELP-O commenced its operation in 1992 and is focusing on the lowincome community for the development and balancing of human and environmental progress.
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3.2 Programs and Financing
This section should provide an overview of on-going/planned programs, further details such as project titles,
financing and partners should be provided in Annex 1(see matrix below).
24. Thermal energy: programs and financing to improve access, efficiency and use of RES for cooking and
other household needs
 Supply: programs and investment to develop domestic manufacturing capacities, including access
to capital and know-how for supply chain stakeholders
 Demand: financial support schemes to improve affordability of modern energy for end-users, as
well as build their knowledge and capacity
 Sustainability: programs aimed at improving environmental sustainability of energy supply for
cooking, such as forest plantation and sustainable charcoal production
25. Power sector: programs and financing to improve access, efficiency and use of RES for power supply
 Physical access (electrification)
 Availability (new capacity)
 Reliability (grid maintenance/upgrade)
 Sustainability (investment in renewable energy, on-grid and off grid, and energy efficiency)
26. Modern energy for productive use: programs and financing to improve access, efficiency and use of
renewable resources in productive sectors
 Supply: programs and investment to develop domestic manufacturing capacities, including access
to capital and know-how for productive applications
 Demand: financial support schemes to improve affordability of modern energy technologies for
industrial and agricultural enterprises, as well as build their knowledge and capacity
 Sustainability: programs aimed at improving environmental sustainability of energy supply, such as
demand-side energy efficiency and use of renewable energy
3.2.1 Financial Institutions Supporting Renewable Energy Projects & their Current
Status
This section provides information on financial institutions supporting renewable energy projects along with
the present status of projects funded. Depicted below is an overview of dedicated funding mechanisms in
the past and in the present.
Period
Project
Funding
Admin
Focus
PCIs
1997 - 2002
ESD
Credit - WB / IDA
USD 19.7 m
Grant – GEF
USD 3.8 m
DFCC
Administrative
Unit
70% Mini Hydro
28% Solar
6
2003 - 2007
RERED
Credit - WB / IDA
USD 75 m
Grant – GEF
USD 8 m
DFCC
Administrative
Unit
67% Mini Hydro
32% Solar
11
2008 - 2011
RERED-AF
2009 - ?
Commercial
Bank
Credit - WB / IDA
USD 40 m
Grant – GEF
Balance from
ESD & RERED
DFCC
Administrative
Unit
Credit – WB/IFC
USD 15 m
Grant – GEF,
Ireland & Japan
Commercial
Bank
?
11 ?
Upgrading
Renewable
Energy Projects
Figure 3.2.1 – Dedicated Funding for Renewable Energy
83
?
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Rapid Assessment and Gap Analysis
The funding landscape of Sri Lanka in renewable energy projects witnessed a dramatic change in 1997 with
the successful negotiation of GOSL with the International Development Association – IDA (Concessionary
credit arm of the World Bank) to secure a concessionary credit line (USD 19.7 m) supplemented with a
grant component (USD 3.8 m) from Global Environmental Facility (GEF). The Energy Service Delivery (ESD)
project was the result of this initiative which was operative from 1997 to 2002.
Following the tremendous success of ESD, the Renewable Energy for Rural Economic Development (RERED)
project was launched in 2003 by broad basing the development objectives with the enhanced credit line
(USD 75 m) from the same funding source. A GEF grant of USD 8 m was made available for the RERED
project.
At the end of RERED project in 2007, and again due to its resounding success, an additional credit line
amounting to USD 40 m was made available by the same funding organization for the extended phase of
RERED project operative from 2008 to 2011. The remaining grant components of ESD and RERED are
available for the extended RERED. A private sector oriented and independent administrative unit was
established under the DFCC Bank to steer and administer the project (initially ESD and thereafter RERED)
including the grant disbursement on behalf of GOSL. Six Participating Credit Institutions (PCIs) participated
in ESD and the number increased to 11 in RERED.
With the success of above projects and with the valuable experience gained, the Commercial Bank of
Ceylon - CBC (one of the PCIs) has managed to tie up with International Financial Corporation - IFC (Private
credit arm of World Bank) for 50% risk sharing of renewable projects undertaken by CBC.
In addition to the above dedicated credit facilities, some renewable energy projects (biomass based power
generation) have benefited from other credit lines such as Environmentally Friendly Solutions Fund (EFRIENDS) though it is not meant for the promotion of renewable energy projects. The principal objective of
this credit line made available by the Japan Bank of International Cooperation (JBIC) is to prevent industrial
pollution in Sri Lanka. The National Development Bank (NDB) and the Participating Credit Institutions (PCI)
provide long-term loans at low-interest to enable industries to reduce their pollution. Loans are either for
investment in anti-pollution equipment and facilities or for technical environmental protection training
costs.
Further details of the projects mentioned above are explained in following sections.
3.2.1.1 Energy Service Delivery Project – ESD [31, 12]
The ESD Project was implemented during 1997 – 2002 by the GOSL, with World Bank and GEF assistance.
The ESD Project comprised three components – a credit programme, a pilot grid-connected wind farm of 3
MW and a capacity building component for the Ceylon Electricity Board (CEB). The Administrative Unit (AU)
set up within DFCC Bank was the executing agency for the ESD Credit Programme component and the CEB
was the executing agency for the other two components.
3.2.1.2 ESD Project Credit Programme
The ESD Project Credit Programme provided the basis for a market-based approach to the introduction of
renewable energy development in Sri Lanka. It was designed to promote private sector and community
based initiatives for the provision of electricity services through grid-connected mini hydro projects, off-grid
village hydro schemes and solar photovoltaic electrification of rural homes. The ESD Credit Programme
resulted in a dramatic increase in the development of grid-connected and off-grid renewable energy
projects, prepared and implemented by the private sector and village communities.
At completion, the ESD Project Credit Programme had met or exceeded all targets:
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


31 MW of mini hydro capacity installed through 15 projects against a target of 21 MW
20,953 solar home systems (SHS) installed, with a total capacity of 985 kW, against a revised target of
15,000
350 kW of capacity through 35 village hydro schemes serving 1,732 beneficiary households against a
target of 250 kW through 20 schemes.
Mini hydro capacity
40
30
MW 20
10
0
Target
Installed
capacity
Solar home systems
25,000
20,000
15,000
No
10,000
5,000
0
Target
Installed
Nos
Village hydro schemes
400
300
kw 200
100
0
Target
Installed
Capacity
(Source: Energy Sector Unit – World Bank)
Figure 3.2.2 – ESD Project Targets & Achievements
The ESD Credit Programme was assisted by a US$19.7m line of credit from IDA of the World Bank and a
US$3.8m grant from GEF. Loans for individual investments or subprojects were disbursed through
participating credit institutions, namely DFCC Bank, National Development Bank (NDB), Hatton National
Bank (HNB), Sampath Bank, Commercial Bank and Sarvodaya Economic Enterprises Development Services
(SEEDS).
The Credit Programme provided medium to long-term funding to private investors, non-governmental
organizations (NGOs) and co-operatives for:
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Rapid Assessment and Gap Analysis



Off-grid electrification infrastructure through village hydro (OGVH) schemes and solar home systems
(SHS)
Grid-connected mini hydro (GCMH) projects and
Other renewable energy investments.
Off-Grid Projects, following an initial period of market development, entered a phase of rapid and sustained
growth during the final two years. The follow-on Renewable Energy for Rural Economic Development
(RERED) Project builds on the success of the ESD Project.
3.2.1.3 Pilot Wind Farm
In 1999, a pilot wind farm supplying an annual rated capacity of 4.5 Gwh
commissioned in a 17 ha land closer to Hambantota town in the South
under the ESD project, was successfully linked to the national grid. The
wind farm comprises of five 600 kW turbines (total of 3 MW). The CEB
continues to monitor and record operational data from the wind farm and
learn from the experience in integrating such projects with the national
grid. In 2006, the wind farm generated 2.31 Gwh [32].
(Source: Sunday Observer)
Figure 3.2.3 – Wind Farm
3.2.1.4 Renewable Energy for Rural Economic Development - RERED [12]
Following the success of the ESD project, the RERED Project was launched in 2002 to provide electricity
access to rural households and small and medium enterprises through the deployment of off-grid
renewable energy technologies as well as to promote private sector power generation from renewable
energy sources.
The specific objectives of the RERED project include expanding commercial use of energy generated from
renewable sources and fostering rural economic development and thereby improve quality of rural life by
providing access to electricity. The credit support made available under both projects played a pivotal role
in nurturing the sector.
Following the successful implementation of ESD project, several other financial institutions, including
commercial banks, leasing companies and micro finance institutions displayed a keen interest in
participating in the implementation of the follow-on RERED project. In addition to the 06 PCIs involved in
the successful ESD project, 05 new PCIs were selected under the RERED project, namely Seylan Bank,
Ceylinco Leasing Corporation, Lanka Orix Leasing Company, Alliance Finance Co and Sanasa Development
Bank.
A total of USD 83 m was committed to Sri Lanka under the RERED project.
The two renewable energy development projects have enabled the electrification of almost 130,000 rural
households as at 31st March 2009 [18]. The project initiatives have furthermore provided a firm foundation
for entrepreneur and technical capabilities as well as financing capabilities.
3.2.1.5 RERED Additional Financing [12, 31]
With the full commitment of RERED Project credit line, the need to seek additional sources of long term
funds to foster the continued growth of the renewable energy sector was identified. GOSL, with a view to
addressing the issue, requested the World Bank for supplementary financing for the RERED Project through
IDA credit.
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With the signing of the RERED Additional Financing agreement between the GOSL and the World Bank, the
RERED project, which was implemented over the period 2002-2007, was extended until 2011. IDA provided
an additional USD 40 m line of credit for RERED Additional Financing.
3.2.1.6 Projects Implemented under ESD and RERED [31]
Given below are the Off-Grid Village Electrification Schemes implemented and Solar Home Systems
installed under ESD, RERED and RERED-AF from 1998 to 2008.
Off-Grid Village Electrification Schemes Completed under ESD (1997-2002),
RERED (2003-2007) & RERED Additional Financing (2008-2011) Projects
ESD Project
RERED
RERED
AF
2008
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Cumulative
Capacity
0
22
75
128 350
661
810
1,011 1.171 1,432 1,577
kW
Cumulative
Number of 0
140 365 573 1,732 2,548 3,817 4,587 5,129 5,869 6,425
Households
(Source: http://www.energyservices.lk/statistics/esd_rered.htm)
Figure 3.2.4 – Performance of ESD & RERED – Off-grid Village Hydro
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Rapid Assessment and Gap Analysis
Solar Home Systems Installed under ESD (1997-2002),
RERED (2003-2007) & RERED Additional Financing (2008-2011) Projects
ESD Project
1998 1999 2000
Cumulative
Capacity
1.6
kW
Cumulative
Number of 50
Systems
Installed
RERED
2001
2002
2003
25.6
108.6 615.8
984.6
1867.9 2904.2 3909.9 4624.2
683
2574
13316 20953 39530
2004
62834
2005
83773
2006
2007
RERED
AF
2008
5170.2
5548.6
101551 115195 124800
(Source: http://www.energyservices.lk/statistics/esd_rered.htm)
Figure 3.2.5 – Performance of ESD & RERED – Solar Home Systems
3.2.1.7 Project Performance in Facilitating Finance [12]
Achievement of project disbursement targets - The long term financing arrangements extended under
both ESD and RERED credit programs, have been identified as a key attribute that enabled PCIs to meet
project funding targets. The credit facility provided the end user access to liquidity for both capital
investment and working capital on affordable terms. While some project developers required long term
financing to meet high infrastructure costs coupled with relatively long term cash flow generation, other
developers, such as solar system developers needed access to affordable finance. Some developers sought
readily accessible working capital. The financing structure of the two projects successfully addressed the
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Rapid Assessment and Gap Analysis
needs of the various end users. The availability of long term financing to PCIs was a pre-requisite to match
the long pay back periods, in particular of village and mini hydro projects.
Payback period and financing costs - The ESD and RERED credit programs had been structured to
effectively support the sector in terms of pay back as well as the rate of interest. Loans to sub borrowers
incorporated maturity periods up to 10 years, while the rate of interest under RERED was pegged to the
least volatile and least costly benchmark in the country, the Average Weighted Deposit Rate (AWDR).
PCIs that receive refinance at AWDR extended sub loans at variable margins over AWDR, re-priced semi
annually. The terms associated with grid connected mini hydro projects were typically AWDR plus 4% to 5%
for maturities of 6 to 8 years, while the terms for off-grid projects were AWDR plus 4% to 6% for similar
maturities. Solar home systems were however typically linked to AWDR plus a minimum margin of 10% for
maturities of 2 to 4 years, primarily due to high administrative costs involved. The long term nature of the
repayment program together with the reasonable interest rate structure, matched the long term
requirements of mini hydro developers.
Recoveries - The suitability of the above financing schemes is reflected in the satisfactory collection ratios
reported by PCIs that have been in excess of 95%. It is, however, pertinent to note that some PCIs that
extended sub loans for solar projects up to 5 year tenures had experienced difficulties in recoveries in the
latter years. The delays in collection were attributed to additional maintenance expenses incurred by the
end user, such as replacement of batteries used in solar home systems. Some PCIs thereafter disbursed sub
loans to end users for periods of 3 to 4 years. This strategy had reportedly resulted in a marked
improvement in their collection ratios.
3.2.1.8 Viewpoints of PCIs [12]
M.Boyagoda - Consultant commissioned by the Ministry of Finance, Government of Sri Lanka under the
RERED Project to Evaluate the Capital Market Constraints to Financing Renewable Power Projects in Sri
Lanka, conducted interviews with selected PCIs and other stakeholders in order to make an objective
assessment of their commitment to promote renewable energy projects as well as to ascertain specific
concerns in funding the sector. The following salient observations reflect the broad consensus among the
stakeholders.
1. Project lending under both ESD and RERED schemes to promote rural electrification had been mostly
committed for mini hydro projects. Two PCIs had, however, focused on financing solar home systems. 70%
of disbursements under the ESD project were for mini hydro projects, followed by solar projects that
received 28% of the funds. Meanwhile 67% of the RERED credit line had been deployed to fund mini hydro
projects and 32% for solar projects.
2. Most PCIs had engaged in a syndication process to synergize technical skills and minimize risk exposure.
Technical expertise was available inhouse with some PCIs, while some others obtained outside assistance.
3. The average loan tenor ranged from 6 to 8 years, besides a grace period of 1 to 2 years. The rate of
interest on an average amounted to AWPLR + 5% for mini hydro projects, while solar projects received
lending at a flat rate ranging from 10% p.a. to 12% p.a.
4. One PCI reported exposure to this sector of 5% of their total asset book while some PCIs are
considering the imposition of a sector exposure limit.
5. The lack of power generation at optimal capacity was a concern reported by PCIs. Power generated
reflected only 35% to 40% of expected capacity, the reasons for which are presently being investigated.
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6. Since most of the optimum sites for mini-hydro projects are already in use, the cost of developing less
favourable sites could be considerably higher resulting in the escalation of project cost estimates.
7. A time lag of 2 to 3 years is reported in the legal process relating to the acquisition of land, while
project cost estimates could escalate in the interim.
9. Lack of proper planning on the part of the CEB in supplying electricity access to under privileged areas.
The possibility of connection to the national grid has at times prompted borrowers to defer solar system
implementation plans. This is primarily due to end user preference to obtain grid connectivity rather than a
solar powered energy option.
10. Recovery issues were experienced in some instances. One PCI that focused on solar home systems had
disbursed almost 60% of that portfolio to the North and East provinces. Some PCIs had incurred losses
associated with the tsunami. While the overall recovery rate is very satisfactory, approximately 95%, such
incidences have prompted PCIs to consider requesting equity contributions up to 40% for future lending.
11. Financing of renewable power projects would be costlier, due to depreciation of the rupee on the one
hand and increasing cost of raw material such as solar cells, in the international market, on the other hand.
12. A lack of enthusiasm was witnessed in assisting wind power projects which remain in an experimental
stage, as well as biomass projects due to possible constraints in raw material supply.
13. While PCIs remain committed to promoting the sector, doubts were expressed in deploying their own
financial resources to fund renewable power projects, in the absence of RERED type assistance due to the
inherent high asset liability mismatches that could be compounded by engaging in long term fixed rate
lending. Given PCIs cost profiles any lending out of own resources would be pegged to the AWPLR plus a
probable margin of 5%. This would expose the producer to a severe interest rate risk.
3.2.1.9 E-FRIENDS Loan Scheme [33]
Environmentally Friendly Solutions Fund (E-FRIENDS) is a concessionary loan scheme implemented by
National Development Bank (NDB) with JICA supports through a Japanese ODA loan.
E-FRIENDS provides loans to private companies via Participating Credit Institutions, in order to support
private companies' medium and long-term investment in environment improvement activities including the
introduction of anti-pollution technologies. E-FRIENDS also financed the expenses for consulting services
and training, which is required by private companies to obtain technological and environmental support to
implement environmental improvement activities. So far, E-FRIENDS has provided some seven billion
rupees (LKR) for approximately 800 projects. The financing framework is shown in the below diagram [47].
(Source: http://www.jica.go.jp/english/news/press/2009/090420.html)
Figure 3.2.6 – Financing Framework of E-FRINDS Loan Scheme
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Rapid Assessment and Gap Analysis
Renewable energy projects are also benefited by this loan scheme as they are qualified under
environmentally friendly projects.
Principal Terms & Conditions for Sub-Loans under the Credit Component [34]






Loan Amount: Up to 100% of the project cost subject to a maximum of LKR 20 million (USD 174,000).
Equipment that has both pollution control function and results in a substantial increase in profitability
will be eligible for loan amount covering 70% of the cost.
Repayment Period: Maximum 10 years
Grace Period: Maximum 2 years
Security: Normally a mortgage on the project assets
Interest Rate: 6.5 %
E-Friends Interest Free Loan under the Technical Assistance Component [34]





The interest free technical assistance loan is available to cover the consultancy costs directly related to
the project, which is to be implemented under the E-Friends scheme.
Interest Free Loan Amount: Up to 75% of the cost subject to a maximum LKR 750,000 (USD 6,520).
Repayment Period: Maximum 5 years
Grace Period: Maximum 12 months
Security: Normally mortgage on project assets
Participating Credit Institutions (PCIs): National Development Bank, DFCC Bank, Hatton National Bank,
Commercial Bank of Ceylon, Sampath Bank, Seylan Bank, and branches of these banks.
3.2.1.10
CBC – IFC Project [35, 36]
The International Finance Corporation (IFC) and Commercial Bank of Ceylon (CBC) signed an agreement in
June 2009 to upgrade renewable energy projects in Sri Lanka. According to the agreement IFC will share 50
percent of the risks of the renewable energy projects undertaken by the CBC.
The project follows a unique “distributed generation” approach, with smaller scale production of electricity
at or near energy demand improving reliability of supply and lowering pollution by using renewable
sources. The project is expected to produce economic benefits for local project developers including small
and medium enterprises.
IFC will share its financing, project structuring capability and benchmark data for renewable energy
technologies with Sri Lanka. IFC will also help enhance the bank’s ability to appraise projects using these
technologies. An advisory component funded by the Government of Ireland and Japan and Global
Environment Facility will help the CBC to build the capacity and skills needed to implement the program.
Most of the prime hydro power potentials in the country have already been exploited. The remaining are
sub-prime projects where the risk is high. Other renewable energy options that CBC has focused are wind
and bio-mass, which are both risky ventures. Climate changes and other technical factors that would
obstruct the power generation can thwart revenue flows of these projects and so the bank will have to face
credit risk. Under the agreement the IFC shares 50 per cent of such risks.
3.2.1.11
The Netherlands Development Finance Company [37]
The Netherlands Development Finance Company (FMO) is the international development bank of the
Netherlands. FMO invests risk capital in companies and financial institutions in developing countries.
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FMO has been invited to arrange up to USD 55 m debt for South Asia Energy Management Systems Inc.
(SAEMS) for a portfolio of 12 small hydro power projects (SHP) in Sri Lanka and Uganda with a combined
capacity of 58MW.
SAEMS was established in February 2006, to undertake the development, construction, acquisition,
ownership and long term operation of hydro-electric and other renewable energy projects and cellulosic
ethanol biofuels production facilities world-wide. The portfolio consists of eleven projects in Sri Lanka and
one in Uganda. Five SHPs were acquired by SAEMS and are operational (18.5MW), four SHPs are under
construction (29.3MW) and three are under development (10.2MW). The total investment amounts to USD
83.5 m, of which FMO itself will invest USD 31 m, USD 20 m by means of a senior loan and USD11 m by
means of a mezzanine loan.
3.2.1.12
Future Funding Needs [12]
Both the ESD Project and the RERED Project were concerned with addressing the issue of providing long
term financing support for renewable energy investments. Such measures have served the purpose
excellently, with capacity installed often surpassing targets. However, given the magnitude of the task still
ahead, the need to formulate a viable long term financing mechanism to augment electricity generation,
transmission and distribution throughout the country, remains a critical need.
The funding needs of the sector has been assessed given the estimate considered in the National Energy
Policy and Strategies for Sri Lanka, that of 10% of electricity generation to comprise from renewable
energy. While sources attributed to the Central Bank estimates that new power plants of 200 MW would be
required annually to meet the growth in demand, it is anticipated that nearly 350 MW of the above
requirement would comprise of new generating capacity to be installed through renewable resources by
the year 2015. The additional funding requirement to facilitate the above increase in renewable energy
capacity is estimated to be approximately US$ 242 million. The refinance component of 80% would amount
to US$ 193 million.
3.2.1.14
Administrative Unit [38]
RERED’s Project Management Unit was converted to a body responsible for developing renewable energy
strategies and addressing implementation issues. This unit is currently the focal agency for the structuring
of a proposed renewable energy bond. The unit also has responsibility for administering the off-grid subsidy
rolled out by the Government. Its challenge is to further develop the renewable energy industry so that it
functions even in the absence of external financing.
3.2.2 Financial Institutions Supporting Energy Efficiency Projects & their Current
Status
ADB is providing assistance to establish laboratory facilities for measuring of energy efficiency of
appliances. This will help to implement energy labelling scheme. ADB is also providing assistance to carry
out energy auditor training programme.
3.2.3 Financial Institutions Supporting Power Development Projects & their
Current Status
Plan is to extend the grid to reach 97% of total households and the balance 3% will be electrified through
off grid systems such as SHS and micro hydro.
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“Grama Shakthi” program is being implemented to provide SHS for the balance 3% households (40,000
HHs) this year. Under this program Government is providing 1/3 of the total cost and 1/3 will provide by the
Donor agencies as a grant. The balance 1/3 of the cost will be charged from the recipient.
Given below are some funding available for power sector development;
Table 3.2.1 – Funds Available for Power Sector Development
Project Description
Funding Agency
Upper Kotmale hydro power project
Rehabilitation of old Lakshapana power plant
Rehabilitation of new Lakshapana and Wimalasurendra power plants
Broadland power plant
Rehabilitation of Ukuwela power plant
Coal power plant at Trincomalee
Uma Oya hydro power project
Moragolla hydro power project
Improvement of transmission and distribution system
Improvement of transmission and distribution system
Electrification prgramme
Electrification prgramme
Power distribution development
Line loss reduction program
Rural electrification
Total
JICA
Austria
France
China
JICA
India / Sri Lanka
Iran
ADB
JICA
ADB
China
SIDA
China
JICA
Iran
Total Cost
Million US$
289.24
30.60
50.96
69.40
14.56
76.40
446.40
82.50
70.00
477.60
94.40
55.00
16.50
51.60
94.60
1919.76
(Source: Sri Lanka Sustainable Energy Authority)
3.2.4 Financial Institutions Supporting Thermal Energy Projects & their Current
Status
According to the information available, there is no dedicated funding mechanism yet for thermal energy
projects.
3.2.4.1 Promoting Sustainable Biomass Energy Production and Modern Bio-Energy Technologies [39]
The above project is to be implemented in August 2012 and a project brief is given below;
Implementation Agency:
UNDP and FAO
Project Period:
Five years from 2012 to 2017 – To be commenced in August 2012
Executing Partners:
Ministry of Environment and Natural Resources (Forest
Department; FD); Sri Lanka Sustainable Energy Authority (SEA)
Project Objective:
Removal of barriers to realization of sustainable biomass
plantation, increase of market share of biomass power generation
mix and adoption of biomass based power generation technologies
in Sri Lanka
Project Strategy:
“Promoting market approaches for renewable energy” and
“Promoting sustainable energy production from biomass”
Total Project cost:
USD 19 million
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3.2.5 Incentives
Incentives can be broadly categorized as “Financial” and “Non-financial”. Financial incentives are the
outright grants, subsidies and loans available on concessionary terms. Provision of free services such as
training and advisory services could be treated as non-financial incentives.
Financial
Financial
Grants
Subsidies
RE
Financial
Non Financial
Soft Loans
Free
Services
(Advisory & Training)
Figure 3.2.7 – Incentive Regime
All these forms of incentives are available or had been available for the promotion and utilization of
renewable energy options in Sri Lanka in varying degrees, at different times, in different regions for
different target groups. In some cases, these incentives are available as a package while in some cases it is
just one of them depending on the need. Some incentives have been introduced with a clear plan of
phasing out with exit strategies.
In the early days, many NGOs such as Practical Action (formerly ITDG) operating in this field offered grants
for the developers as well as end users. Soft loans schemes such as ESD, RERED and even E-FRIEND,
consisted of grant components. Some Provincials Councils such as “Uva” and “Sabaragamuwa” offered
financial incentives to offset the upfront cost of low-income end users of Solar Home Systems and Village
Hydro projects. Free services of State, NGO and even private sector are available mostly in the form of
training and advisory services.
Some of the incentives available are briefly described below.
3.2.2.1 Grant Mechanism of ESD & RERED [11]
The grant mechanism of Energy Service Delivery (ESD) and Renewable Energy for Rural Economic
Development (RERED) projects for the solar industry reflects the objectives of the five main stakeholders:





Building a market around proven systems and ease of administration (Administrative Unit, DFCC)
Reducing grants over time with a clear exit strategy (GEF)
Providing incentives to deepen the market and enabling access for the rural poor (IDA)
Assuring sustainability of successful product lines and increasing scale (Solar Industry)
Affording quality and choice at reasonable prices (Consumers)
The grant mechanism developed by adopting the above objectives precludes subsidies for already viable
solar products; limiting grants only to systems smaller than 60Wp during the first year, then only to those
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Rapid Assessment and Gap Analysis
smaller than 40Wp during years 2 and 3, and finally only to systems smaller than 20Wp during the last two
years of project implementation.
The follow-on RERED Project tried to accommodate the interests of the five key stakeholders in structuring
the GEF co-financing grant. The maximum co-financing grant under the RERED Project was set at a value
lower than what was available under the ESD Project.
Table 3.2.2 – Grant Phasing Out Scheme
RERED Project
Size of panel
ESD Project
(1997- 2002)
First Year 2003)
Effective from
Oct 2002
10 <20 Wp
20 <40 Wp
40-60 Wp
Above 60
100 US$
100 US$
100 US$
100 US$
40 US$
70 US$
70 US$
No Grant
Second and Third
Year
(2004/5) Effect
from 31st July
2004
40 US$
70 US$
No Grant
No Grant
Fourth and
Fifth year
(2006/7)
40 US$
No Grant
No Grant
No Grant
(Source: Sri Lanka Solar Industry Market Survey)
The GEF grant program was structured with a clear exit strategy in place. The grant of US$70, given for
systems above 60Wp was removed in October 2002 with the changeover from ESD to RERED. The grant of
US$70, given for the systems above 40W was then removed on 01 June 2004. As the grant removal was
properly planed, all the relevant parties were well informed.
3.2.2.2 Government Subsidy for SHS [11]
In addition to the above grant scheme, the Government of Sri Lanka (GOSL) provided a consumer subsidy of
Rs. 7,500 (initially Rs10,000) per system per householder in the, Sabaragamuwa, Uva and Northern Eastern
provinces.
3.2.2.3 E-FRIENDS Loan Scheme [33]
Environmentally Friendly Solutions Fund (E-FRIENDS) is a concessionary loan scheme implemented by
National Development Bank (NDB) with JICA supports through a Japanese ODA loan. Though E-FRIENDS is
specially meant for environmental protection projects, renewable energy projects are also benefited by this
loan scheme as they are qualified under environmentally friendly projects. More details are given in
Chapter 6.
3.2.2.4 Promotion of Eco-efficient Productivity (PEP) Project
Promotion of Eco-efficient Productivity (PEP) project was implemented by The Ceylon Chamber of
Commerce with the financial assistance from The Royal Netherlands Embassy. PEP provided technical and
financial assistance to Private Sector organizations to adopt best practices in cleaner production and
environment management. Renewable energy projects (Biomass & Biogas) project also benefited from this
project. Eligible projects received up to 50% of the total project cost as a grant subjected to a ceiling of LKR
5 million (USD 43,500) per project. The technical and financial assistance from the PEP Project was limited
to private sector organizations having fixed assets of less than LKR 50 million (USD 435,000) excluding land
and buildings. Preference was given to Cleaner Production (CP) initiatives of women entrepreneurs. The
companies participated in the Project had to agree to share the experiences/results with other
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organizations, who could replicate such activities. Project commenced in mid 2006 and concluded in early
2009.
3.2.2.5 SWICH – Asia Programme
SWITCH Asia Programme was developed by the European Union (EU) under EURPOEAID in 2007 to support
the Asian countries adopting more sustainable growth patterns so as to minimize the use of natural
resources and the emissions of greenhouse gases, waste and other pollutants. The objective of the
SWITCH-Asia Programme is to promote sustainable consumption and production (SCP) among small and
medium-sized enterprises (SMEs) in Asia by moving SCP practices from demonstration to replication. To
achieve this objective the Programme works simultaneously on projects that target producers and
consumers. At the same time it addresses the level of policy-making and implementation of SCP related
policies.
So far, EU has funded 47 projects in 15 Asian countries in areas such as Green Public Procurement, Cleaner
Production, Eco-labelling, etc. Each of the funded projects will bring about quantifiable reductions of CO2
emissions and resources, water and energy consumption.
In Sri Lanka there are three SWITCH – Asia Programmes. Two of them were initiated by The Ceylon
Chamber of Commerce (CCC) one targeting the Food & Beverage sector and the other on the leisure sector
(Greening of Sri Lanka Hotels). The third project was initiated by the Industrial Technology Institute to assist
the export industry (EEPEx).
In addition to promoting specific SCP practices, the projects employ innovative replicating mechanisms,
such as voluntary agreements, public-private partnerships, upgrading technical standards or reinforcing
existing SCP service providers to make them self-sustainable on the market.
In the case of the SWITCH – Asia programme on SCP for the Food & Beverage industry which commenced in
January 2009, CCC was able to muster the foreign partners IVAM affiliated to the University of
Amsterdam, Netherlands and the Confederation of Indian Industry and the local partners Industrial
Technology Institute, Industrial Services Bureau and Industrial Development Board to be associated with
this programme. The resource persons from foreign partners who are specialised in the field of Sustainable
Development were of immense support on building capacity of the members of the project team who were
from the local partners including the lead partner the Ceylon Chamber of Commerce.
From the initial stages, the project has been involved with the Ministry of Environment, Ministry of Industry
and Commerce, Ministry of Finance, Central Environmental Authority, Sustainable Energy Authority,
National Cleaner Production Centre, Gamini Senanayake Associates (Private) Limited, University of
Moratuwa, Bio-mass Energy Association of Sri Lanka and National Engineering Research Development
Centre on various aspects for successful implementation of SCP practices in industries.
In addition to promoting best practices of SCP, the programme encouraged the SMEs in the food and
beverage industry to comply with international food safety standards (ISO 22000:2005 / HACCP). It is a
remarkable achievement to note that few SMEs have been able to obtain the ISO 22000:2005 and HACCP
certificates after the intervention of the SWITCH – Asia programme.
One of the objectives of the programme was fulfilled by preparing a policy document with 8 policy
instruments on SCP was handed over to the Minister of Environment. The policy on National Green
Reporting System of Sri Lanka was approved by the Cabinet of Ministers and was launched. A cabinet
paper has been already submitted on Public Green Procurement policy for approval.
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Service package includes training and consultancy for SMEs and policy advocacy and all such services are
provided free of charge. So far, over 500 SMEs have been benefited and of which around 30% has adopted
SCP practices.
This 4 year project will be completed in December 2012. The activities of SCP will be sustained even after
the project not only by the Ceylon Chamber of Commerce but also by the other partners of the programme
whose capacity has been built to continue the service to the industries and service providers.
3.2.2.6 Government Subsidy for Gliricedia Plantation
In order to promote the supply of Gliricedia as a commercially grown wood for biomass heat and power
applications, GOSL has offered a grant of LKR 7,500 per ha (USD 60) for ‘under plantation’ of Gliricedia in
commercial plantations, especially in coconut estates.
However, BEASL questions the effectiveness of this grant as it is not going to make a significant impact on
the upfront cost of planting. So far only around 500 acres has come under this grant scheme. Instead,
BEASL is in the opinion that it would be more effective if the grant is offered on the basis of a Gliricedia
plant at the rate of LKR 10 per plant (USD 0.1) rather than on land extent [40].
________
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3.3 PRIVATE INVESTMENT AND ENABLING BUSINESS ENVIRONMENT
This section shall identify critical gaps and barriers to private investment in energy access, energy efficiency
and renewable energy, as perceived by local and international business community in a country. The main
purpose is to identify key private sector stakeholders, opportunities and preconditions for scaling up their
engagement and investment in support of national SE4ALL goals. It is advisable that this section is written
based on contributions solicited from private companies.
27.
Thermal energy for households:
 Private sector actors involved in supply chain (energy supply companies, technology providers,
financiers)
 Barriers to private investment in modern energy supplies and technologies for cooking and other
thermal applications
28.
Power sector
 Private sector actors involved in supply chain (power generation and distribution companies,
Independent Power Producers (IPPs), financiers, technology providers)
 Barriers to private investment in new on-grid and off-grid power generation capacity (especially for
RES), grid extension/maintenance, demand-side management (DSM) and energy efficiency
29.
Modern energy for productive sectors:
Private sector actors on the demand and supply side (SMEs/agricultural enterprises, technology
providers, financiers )
 Barriers to private investment in modern energy for productive and socio-economic uses with a
focus on energy efficient and renewable energy technologies and solutions

3.3.1 RENEWABLE ENERGY MARKET & INDUSTRIES
This SECTION briefly describes the renewable energy market behaviour of Sri Lanka and major industrial
players engaged in either the producing /supplying /distribution of technologies/ machinery/equipment or
the producing / conversion of resources.
It is estimated that more than 50 organizations with over 2,000 stakeholders are commercially involved in a
rapidly growing renewable energy industry, which includes grid-connected, off-grid community and
household based renewable energy systems. The stakeholders include microfinance institutions,
commercial and development banks, NGOs, project developers, consultants, and equipment suppliers.
Free Market Economic Model of Demand & Supply
Energy
Resources
Energy
Supply
MARKET
Energy
Demand
End Use
Including production,
conversion & distribution
(Source: Sri Lanka Energy Balance 2006)
Figure 3.3.1 – Free Market Economic Model of Demand & Supply
The free market economic model of demand and supply which is depicted above is the basis for this
discussion. The demand and supply situation of main renewable energy sources in Sri Lanka, viz. Biomass,
Biogas, Small Hydro Power (Mini, Micro and Pico), Solar and Wind are discussed in the following sections.
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Table 3.3.1 – Demand & Supply Comparison of RE
Solar
Supply
Demand
Hydro
Biogas
Biomass
Wind
Availability of the resource
Availability of manpower
Availability of money
Availability of machines
Availability of methods
Accessibility to the resource
End user needs
End user awareness
End user affordability
Reliability of service
Availability of methods
The colour code used for the rating is as follows;
High
Medium
Low
On the supply side, availability of the energy resource, manpower (know-how, skills, capabilities, etc.),
money (financing, grants, incentives, etc.), machines (technology, machinery, equipment, etc.), and
methods (policies, institutional arrangements, etc.) shall be considered in the discussion. On the demand
side, accessibility to the energy resource, end user needs, awareness, affordability (financing, grants,
incentives, etc.), reliability of technology and equipment, and methods (policies, institutional
arrangements, etc.) shall be considered in the discussion.
As can be seen from the table above, of these five main resources, Solar could be treated as the most
developed, next is Small Hydro Power (mini, micro and pico) and followed by Biogas. The Hydro market is
found to be fully developed in terms of technology, equipment, construction, financing, maintenance &
operation. Biogas has around 78% success rate especially when the Chinese continuous systems are
adopted. The Wind market is the least developed. The Biomass market for power generation and thermal
applications of industry and commercial sectors is also not developed despite its high potential.
As the Solar and Small Hydro markets are well developed, their dynamism is further elaborated below.
3.3.1.1
Solar
Solar Home Systems (SHS) - According to Pradip Jayewardene, President, Solar Industries Association of Sri
Lanka, Sri Lanka has the world's most successful rural solar programme. More than 100,000 homes use
solar today, this is 2% of all homes in Sri Lanka which is around 5 Million. This is a very significant
percentage. Reasons for this phenomenon are the relatively small size of the country, highly distributed
rural population, high per capita GDP and more importantly the excellent cooperation between the private
sector and the government for over 15 years. End users have made the highest investment by purchasing a
solar electricity system.
Solar Industry - How did the cooperation between the government and the private sector work? Firstly,
the government acted as the funding agency by obtaining soft loans and providing these funds to private
sector financial institutions. These organizations in close cooperation with solar companies offered loans to
rural customers to purchase a solar home system. The government also set technical standards for all
equipment supplied under the project, provided consumer protection and screened companies who
wished to participate. The project also provides grants for companies on a systems sold basis as well as
grants for capacity building activities such as training and promotional work. What makes Sri Lanka unique
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is the quantum of investment in both money and effort that has gone into developing this market. In the
period 1997 to 2001 it is estimated that around USD 10 m was invested by the solar industry to build an
Island-wide distribution network to ensure that products were available in thousands of villages where end
users lived. Considering that almost every sale takes place at the customer's home and the delivery,
installation and credit collection also takes place at the home, and that almost 2,000 new customers are
coming in every month, one can imagine the logistics of such an operation. This is what the industry has
created. The government provided access to long term and lower cost funds and a framework for the
private sector to operate in a sustainable manner. Today nearly 15 companies compete in the market,
driving down costs, improving quality and service and bringing new innovation. The industry also provides
jobs for around 2,000 people. Sri Lanka has proven that solar PV is the least cost option for many rural
homes and customers are willing to accept solar as a good alternative to grid electricity. Sri Lanka has
achieved this by the far thinking policies of the government, assistance from donors and strong private
sector participation [41].
Solar Companies - According to a survey carried out by the Sri Lanka Business Development Centre (SLBDC)
in 2005, there were 8 solar companies (Access Solar, Alpha Solar, EB Creasy, Selco Solar, Shell Solar,
Softlogic, Solar Dynamics and Suriyavahini) operating in Sri Lanka and among them, Shell Solar was
considered as the market leader having about 40% market share while Selco Solar and Access Solar account
for around 24% each [42].
Panel Capacity by Solar System - According to the above survey, 42% of the systems surveyed had a range
of 20 to 40 Wp capacities of solar panels and 39% of the systems had a range of 41 to 60 Wp capacities of
panels [42].
Batteries Installed in Solar Systems - According to the above survey, there were 7 makes of batteries
(ABM, Ecosolar, Exide, Incoe, Lucas, Nico and Sandya) installed in solar systems. “Incoe” is considered as
the market leader having about 37% market share while “Lucas” and “Exide” account for around 24% and
21% respectively. Therefore, these three makes together have the market share of 81% [42].
Out of 300 systems surveyed, 30% of the batteries installed were 90 Ah capacity while 28% of batteries
were 100 Ah capacity. 27% of batteries installed had capacity of 70 A. Most of the batteries replaced from
the solar systems had a lifetime of 24 to 42 month period. The weighted average lifetime of the first battery
installed was 30.4 months [42].
Through an analysis carried out by J.R. Finucane in 2005 on the growth of the Solar Industry in Sri Lanka
under the RERED project, it was found that significant PV market opportunities will remain in the
foreseeable future, given targets and pace of rural grid extension programs and the market will be
competitive, with new entrants gaining market share and no significant barriers to entry [43].
3.3.1.2
Hydro
Grid connected small hydropower capacity has grown from just 120 kW in 1996 to 100 MW in 2006. The
development of the industry has been supported with appropriate policy changes, establishing of purchase
agreements and pricing mechanisms. This, indeed, is an outstanding achievement and depicts the
dynamism of the local entrepreneurship once the right institutional backing and investment climate are set
in place for the new industry.
The development of the code of practice for micro hydropower projects or village hydropower projects
could be treated as a good indication of the maturity of the market. This code sets out guidelines for
design, construction, commissioning and maintenance of micro-hydro projects, with a sound base of civil,
mechanical and electrical engineering principles and the background of practical experience in the industry
[23]
.
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Under the SARI (South Asia Regional Initiative for Energy) project of the United State Agency for
International Development (USAID), Sri Lanka Energy Forum in 2006 developed national micro hydro
standards covering three countries: India, Nepal and Sri Lanka. The ultimate goal of the process was to
harmonize standards and establish quality programs in the sector and expand the micro-hydro market and
provide sustainable energy services to the end users. The indirect objectives of the project were to address
the issues such as reducing trade barriers within the SARI region for micro-hydro energy technologies and
services as well as ensure sustainable existence of micro-hydro schemes in the region.
Micro-hydro sector in Sri Lanka is mainly linked with the RERED Project and hence the World Bank
specifications are already in place. The Technical Committee of Sri Lanka appointed for the above task
considered the RERED specification as the baseline of the drafting national standards and sought the ways
and means of further developing. The drafts covered code of practices, standards for certain electromechanical components, software applications for management practices, training requirements and
monitoring measures [44].
Code of Practice - The Sri Lanka Micro Hydro Standards were developed having ensured the financial and
technical capability of implementing projects under the ownership of community organizations. In Sri Lanka
micro hydro standards are not only for the reference of consultants and contractors but also for the
electricity consumer societies. It also provided guidelines for following activities [44];





3.3.1.3
Controlling mechanism in place of RERED project
Comfort to banks and societies while financing projects
Code of practice for manufacturers and consultants
Sustainability of the industry
Guideline for Public Utility Commission (PUCSL) in regulation measures.
Biomass
Despite its enormous potential, the biomass market for thermal applications of industrial and commercial
sectors and also for electricity generation is not developed. The good sign is that many entrepreneurs have
begun to sense prospects. Two emerging companies actively involved in this sector by offering unique
service packages are featured below.
EnerFab
Figure 3.3.2 – EnerFab Thermal Gasifier
M/s EnerFab was founded in 2005 with the vision to provide biomass based renewable energy
solutions to the local industry. Since then, EnerFab has been offering local industry turn-key
biomass technological solutions along with biomass supplied from sustainably grown and
harvested energy plantations.
Vision of EnerFab




Re-Greening of Sri Lanka
Restoring Sri Lanka’s Pristine Environment
Re-Vitalizing Rural Employment and Affluence throughout Sri Lanka.
Re-appreciating Sri Lanka’s Natural Resources
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Mission of EnerFab



To Promote the growing of trees, shrubs, plantations and living-organisms as a natural and
renewable source of food, fertility and fuel
To promote the construction and installation of equipment for processing Sri Lanka's natural and
renewable resources for the environmentally conducive generation of electrical and thermal
energy through solar, hydro, biomass and wind
To design, fabricate, install and operate structures and equipment towards achieving the above.
EnerFab Business Model - The uniqueness of EnerFab is that it offers a total and turn-key solution to its
clients. They do not just sell gasifiers and other equipment but the thermal energy requirement in any form
(steam, hot water, Thermic fluid, hot gas, etc) as per the client’s need. Their service package include,
provision of required buildings to satisfy even the architectural needs of the client, all equipment and
appliances including the burners, commissioning, operation and maintenance including manpower,
sourcing of fuel wood and all other needs to ensure an uninterrupted thermal energy supply to its clients.
This is very similar to the ESCO (Energy Supply Company) concept where the service provider guarantees
the agreed performance by relieving the client of all associated risks. EnerFab is paid for the unit of thermal
energy supplied based on an agreed price which is linked to the market price of fossil fuel replaced.
Of all these elements, from the perspective of the client, supply of fuel wood is the most critical at this
stage as the commercially grown wood supply base is not yet developed to meet the demand. EnerFab by
taking this burden out of the client has gained a competitive edge in the market. Presently, EnerFab
supplies around 50 MT per day of Gliricedia to its existing clientele of around 10 (capacities ranging from
0.3 to 3.5 MW of thermal energy) and maintains a buffer stock of around 1,000 MT. EnerFab sources its
Gliricedia requirement from out-growers and maintains a 20 acre nucleus. Their plan is to extend the
nucleus to 700 acres. EnerFab is confident of assuring the supply of Gliricedia with a lead time of around
just 2 months [45].
According to the Bio Energy Association of Sri Lanka (BEASL), it is estimated that around 250 MT of
Gliricedia is being traded currently for industrial/commercial thermal applications and for electricity
generation [40].
EnerFab Thermal Gasifier Systems are mostly offered for fuel switching (conversions) from either diesel or
LPG gas to biomass. Presently, furnace oil conversion is not economical due to the prevailing fuel prices,
but might change with price escalations [45]. A client of EnerFab is featured in Chapter 9 as a case study.
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3.3.2 Energy Efficiency
The table below provides some active ESCOs and the energy management activities carried out in 20092010.
Table 3.3.2 – Summary of Energy Management Activities Carried 0ut by ESCOs in 2009-2010
Project Description
Energy Conservation Measures
Annual Saving Potential
kWh
kVA
LKR
Simple Pay Back
Period
Annual Saving Achived through
Implimentation
kWh
kVA
LKRM
07 Years
To be analyzed
Depends on the
activitties
No Feedback recived
Shin Nippon Lanka
Redesign of HVAC system and replace the
Equipment Replacement
existing units with new units in Variable
in Holcim Cement
refrigerant flow HVAC system in Holcim
Factory, Puttlam
Cement Factory, Puttlam
204,300.00
3,166,650.00
NERDC
Energy Audit-Thermal
Systems
Improvements of Steam Distribution System
Energy Audit-Electrical
Systems
Improvements of AC System
Improvements of lighting & AC System
Introduce a capacitor bank
6103GJ
145200
41352
124210
4,812,000
715,000
212
1,532,920
DIMO
Bulding Sector
Garment Sector
180,000
528,000
720 3.6 million
5.8 million
180,000
528,000
720
3.6
5.8
ENERFAB
Garment Sector-Detailed
Energy Audits
Beverages-Detailed
Energy Audits
2940171
Heat Recovery Unit
465699
Building Sector-Detailed
Capacitor bank installation and ballast change
Energy Audits
3119
Minaral
Maximum Demand Analysis
Hotel Sector
Gassifier Installation
597.2
31901134
4331001
16
238.7
Pending
3119
16
0.15
1933600
13
ProffesionalMet
Textile
Supply,installation and commissioning of
wood fired boillers
2215
Rubber Gloves
Supply,installation and commissioning of
wood fired 1 Million Kcal/hr Techmic Heater
94.5
COIR
Supply,installation and commissioning of
wood fired 1 Million Kcal/hr Techmic Heater
11.4
Clarion International
Garment Sector
Beverages
Power Factor Correction
Power Factor Correction
2856
2285172
(Source: Sri Lanka Sustainable Energy Authority)
3.3.3 Power Sector
Table below provides the details of power generation by IPPs in 2010;
Table 3.3.3 – Power Generation by IPPs in 2010
Hydro
Thermal
NRE
Install capacity - MW
175
842
42
Generation - GWh
646
3600
83
(Source: Sri Lanka Sustainable Energy Authority)
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552
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3.4 Gaps and Barriers
Based on the outcome of analysis in previous section, this section shall identify critical gaps and barriers to
achievement of national goals, both with regard to financing and policies, institutions and capacities.
Further details on financing requirements will be presented in Annex 1, Table 1.2. The main purpose of this
section is to already begin to identify the main areas needing attention and possible candidates for
additional support.
30.
Thermal energy for households:
 Governance (institutions, policies, enforcement capacities)
 Supply chain (access to capital, technologies and know-how)
 Households (capacities and access to capital/affordability)
31.
Power sector:
 Governance (existence of enabling regulatory framework for investment, enforcement capacities)
 Supply chain (access to grid, capital, technologies, and know-how)
 End-users (affordability and access to capital)
32.



Modern energy for productive sectors:
Governance (existence of enabling regulatory framework for investment, enforcement capacities)
Supply chain (access to capital, technologies, and know-how)
End-users, agricultural and industrial enterprises, SME (capacities and access to capital)
33. Summary: key gaps, barriers and additional requirements
3.4.1 Barriers to Implementation of Energy Efficiency Measures
The major barriers in implementation of energy efficiency improvement projects have been;
1. Lack of financing
2. Lack of end user awareness and commitments
3. Lack of technical capacity among end users and
4. The absence of a regulatory mechanism.
The electricity tariff doesn’t reflect the true energy cost, especially in the domestic category. The tariffs are
built, insulated from the ups and downs of the rising energy prices, therefore, it does not act as an incentive
to encourage investments in energy efficiency activities.
Energy efficiency is not yet a priority for many industries, since there are many other burning issues like
material supply and labour related issues, which has a direct bearing on the viability of business.
Sri Lankan ESCOs are not yet capable of handling the entire cycle of a given project, commencing from
energy auditing to project implementation.
In the area of funding, following barriers exist;
1. Lack of legal and financial infrastructure to support performance contracts between end-users and
ESCOs,
2. Limited ability of local ESCOs to obtain bank financing or raise equity capital, particularly a problem
for new, small ESCOs that are financially weak,
3. Lack collateral and credit history,
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4. Lack of experience among the banks, both with Energy Efficiency Improvement (EEI) projects, but
also with the financial concept of performance contracts and lack of confidence on the part of banks
that ESCO performance estimates will turn out to be accurate.
Above all, lack of coordination, cohesiveness and long-term perspective of activities, projects and
programmes of SLSEA and the absence of a prudent implementation mechanism along with an appropriate
monitoring and evaluation scheme have been identified as major bottlenecks in executing an effective
national energy management programme despite the significant effort taken by the management and the
staff of SLSEA. Majority of current activities, projects and programmes of SLSEA are perceived to be of adhoc nature with short-term perspective. Problem is further aggravated by the inadequacy of technical
manpower at the management as well as at the operational level. It has been a difficult if not impossible
task to attract and retain skilled and competent manpower owing to non-attractive remunerations.
3.4.1 Barriers to Promote Renewable Energy
This section presents the barriers for the transferring of renewable energy technologies. Some barriers are
generic and common to all renewable energy options while some are specific. Wherever possible, such
specificities shall be highlighted in the following presentation.
Often the result of barriers is to put renewable energy at an economic, regulatory, or institutional
disadvantage relative to other forms of energy supply. Many of these barriers could be considered “market
distortions” that unfairly discriminate against renewable energy, while others have the effect of increasing
the costs of renewable energy relative to the alternatives [46].
All barriers could be broadly classified into 5 categories and often they are not mutually exclusive.
Technical
Financial
Information
RETs
Policy
Institutional
Figure 3.4.1 – Barriers for Promoting Renewable Energy
Barriers are summarized in the table below under each category and their degree of influence on a
particular RE option is also mentioned as either “Specially Applicable to” or “Not Applicable to”.
Table 3.4.1 – Barriers for Transferring RETs
Category
Barriers
Generic
Resource supply constraints.
Grid constraints
Technical
Harmonics distortions in the
grid
Lack of R&D
Sophisticated technologies
Reliability issues of technology
105
Specially
Applicable
To
Dendro
Hydro, Wind &
Dendro
Wind & Solar
√
Dendro
√
Not
Applicable
to
Sri Lanka
Rapid Assessment and Gap Analysis
Financial
Information
Policy
Institutional
Maintenance issues of
equipment
√
High initial cost
√
High interest rates
High transaction cost
High risks & uncertainties
√
√
Lack of resource data for
project planning
Lack of information on supply
& demand
Lack of information on
cost/benefit, performance,
and O&M
Lack of training, education,
etc.
√
Lack of national priority for RE
Subsidies for some fossil fuel
Subsidized electricity tariff for
low end users
High taxes & import duties
Transport restrictions of
biomass
Strict environmental
regulations
Electricity distribution
monopoly by utilities
Restrictions on locations &
constructions
√
√
√
Lack of recognition of RE by
national planners
Procedural delays for project
approvals
Bureaucratic red tapes
Inefficiencies of approving
authorities
Poor coordination between
institutions
Donor driven projects
√
Wind
Dendro
&
Hydro
Wind, Dendro
√
√
√
Dendro
SHS
Dendro
√
Hydro, Wind
√
√
√
Biogas
Wind, Dendro
Hydro
√
√
√
√
Some major barriers are further described below.
3.4.1.1 Technical Barriers
Resource Supply - In the case of renewable energy based systems such as Wind and Wood fuel fired plants
(Dendro thermal power), it was found that lack of assurance of resource supply or availability are the major
barriers for their promotions [47].
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In the case of Dendro power, quality of raw materials is also a constraint. This leads to poor combustion
efficiencies and keeping the quality of raw materials.
Reliability - In the case of renewable energy based systems such as Wind and Wood fuel fired plants
(Dendro thermal power), it was found that reliability of technologies themselves is a major barrier for their
promotion [47]. A low or moderate level of customer satisfaction with technical performance of SHS has also
been reported.
Technology Sophistication - Almost all modern RETs, especially electricity generation technologies, are
sophisticated and new to the country and technical expertise and facilities for design, manufacture,
promotion and sale, operation and maintenance are still lacking for the successful implementation of RE
projects. There are very few local manufacturers and agents who are involved in RE projects, and the
existing maintenance networks are not adequate at all. This lack of expertise and facilities is a major
technical barrier. At present, there is no familiar technology, except ICSs, that has been properly designed,
monitored and assessed in the country. The design and raw materials required to set up RE plants are not
based on the resources available locally. This would lead to high initial costs as well as the local community
finding it difficult to understand, adopt, operate and maintain the systems, resulting in reduced
productivity. Also, this would result in delay in attending to urgent repairs and necessary maintenance. The
country is currently in a technology-learning phase [48].
R&D - R&D and demonstration are essential for the successful implementation of RETs. Although there are
a number of universities and R&D organizations, the research base required for implementation of
national-level RE programmes is as yet undeveloped because of the lack of well-coordinated and
appropriately funded research projects, in addition to their limited capacities [48].
Technical Deficiencies - Operational inconveniences and lack of appliances in Biogas systems and
maintenance difficulties in Wind systems.
Grid Constraints - Inadequate absorptive capacity of the Sri Lankan power system (National Grid) to
accommodate renewable sources is considered as a major barrier. According to a study conducted by
“Siemens Power Technologies International Ltd.” in 2005 for the preparation of “Technical Assessment of
Sri Lanka’s Renewable Resource Based Electricity Generation” under the RERED project, it was found that
with the future development of the network, 2008 network will allow a maximum of 330MW to be
connected. Similarly the 2012 model will allow 640MW and the 2013 model 690MW [49].
Harmonics - Harmonic Currents from sources such as rectifier/inverter systems will greatly increase the
total harmonic distortion experienced on the network. Photo-voltaics and Wind generation systems
connected to the network via power electronics will act as sources of odd harmonics [49].
Intermittent Sources - Renewable energy is often an “intermittent” source whose output level depends on
the resource (i.e., Wind and Sun) and cannot be entirely controlled [46].
3.4.1.2 Financial Barriers
Financing - In SHS, consumer finance supply is a major constraint to continued growth, and may be
contributing to reduced sales levels.
The present loan schemes of local banks and other financial institutions do not accommodate small-scale
RE projects, unless they are integrated with an income-generating activity (such as a rural industry), in
addition to providing fuel for domestic energy applications. Such a limitation is based on their past
experience of poor recovery of loans in rural areas [48].
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Proven, cost-effective technologies may still be perceived as risky if there is little experience with them in a
new application or region. The lack of visible installations and familiarity with renewable energy
technologies can lead to perceptions of greater technical risk than for conventional energy sources. These
perceptions may increase required rates of return, result in less capital availability, or place more stringent
requirements on technology selection and resource assessment [46].
High Initial Cost - In the case of renewable energy based systems such as Wind and Wood fuel fired plants
(Dendro thermal power), it was found that lack of financing instruments and high initial cost are the major
barriers for their promotion [47].
As initial costs of RE technologies are too high, dissemination of such technologies requires a supportive
financial environment and subsidies, at least during the initial stage of adoption. Most of the financial
institutions do not have a separate identified credit line for the energy sector [48].
Even though lower fuel and operating costs may make renewable energy cost-competitive on a life-cycle
basis, higher initial capital costs can mean that renewable energy provides less installed capacity per initial
dollar invested than conventional energy sources [46].
Interest Rates - Interest rates for Renewable Resource Based Electricity Generation (RERBEG) projects are
high compared to those for the conventional power plants.
Long Delays - Inadequate information and past experience of success and reliability of RE projects in the
country have resulted in long delay in approving loans and reluctance to finance these projects in general
[48]
.
Transaction Cost - High transaction cost due to high cost of resource assessment, planning, developing
project proposals, approvals, negotiating finances, and negotiating power-purchase contracts with utilities.
Risk & Uncertainties - As fuel price risk is associated with Biomass energy, financiers may look for higher
risk premium in Dendro projects [46].
3.4.1.3 Policy Barriers
Low Priority for RE in National Planning - RE has been given the lowest priority in energy planning and
policy-making. There are no institutions responsible for the promotion of RETs in the country, resulting in
the lack of national-level coordination among different agencies [48].
Energy planning in the country has been carried out at the national level with emphasis on commercial
fossil fuels [48].
Development thinking in the country promotes and favours only commercial and modern fuels. There is a
lack of awareness and proper assessment of the role played by traditional fuels because traditional fuels do
not fall within the cash economy. Despite the fact that the major energy consuming sector is the cooking
sector and biomass is the major energy resource there is no government policy to address the related
issues. As a result there is no institutional mechanism or organizational structure to initiate and sustain any
interventions other than the few isolated activities carried out by a few NGOs and GOs on a short term
project basis [22].
Taxes & Duties - Taxes as well as duties for Renewable Resource Based Electricity Generation (RERBEG)
projects are high compared to those for the conventional power plants.
Taxes are levied on all the imported as well as local components and services of RE-based plants sold in the
local market. But at present, developers of any large conventional power generation plant enjoy tax
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benefits, which give a competitive advantage to conventional power generation over RE-based generation
[48]
.
Regulations - Policy barriers to the development of RE systems lie in environmental regulations, tax
systems, electricity sector regulation, electricity tariff, etc. [48]
Environmental Regulations - The CEA, which is the main body overseeing environmental policy and
regulatory processes in the country, has not overlooked the RE sector. However, at present, the regulatory
framework governing the use of natural resources in mini-hydro projects, which is equally applied to other
RE-based schemes, is unclear and characterized by a multiplicity of institutions at various levels. Further,
the local governments’ capacity for environmental regulations is generally weak [48].
Monopoly of Electricity Distribution - According to the electricity sector regulations, only CEB has license
to generate and directly sell electricity to consumers, apart from Lanka Electricity Company (LECO)
operating in a limited distribution area. Any other independent party can generate and sell electricity to the
CEB, which, in turn, will sell it to the customers. However, distribution rights are not given formal clearance,
and growth of the RE sector in general requires a clear process and institutional mandates [48].
Utilities may not allow favorable transmission access to renewable energy producers, or may charge high
prices for transmission access. Transmission access is necessary because some renewable energy resources
like Windy sites and Biomass fuels may be located far from population centers. Transmission or distribution
access is also necessary for direct third-party sales between the renewable energy producer and a final
consumer [46].
Tariff - The CEB electricity tariff for the domestic sector is heavily subsidized for the lower slabs of
consumption, into which over 50 % of the consumers fall. This makes grid-connected electricity cheaper,
for domestic consumers, than electricity from RE-based decentralized sources [48].
Fossil Fuel Subsidies - Lighting in rural communities in the country is usually based on kerosene lamps, and
kerosene is a subsidized commodity across the country. Electricity from decentralized generating schemes
is also mainly used for lighting, and, therefore, a cost comparison is always made with kerosene [48].
Many argue that renewable energy “costs more” than other energy sources, resulting in cost-driven
decisions and policies that avoid renewable energy. In practice, a variety of factors can distort the
comparison. For example, public subsidies may lower the costs of competing fuels [46].
Restrictions on Locations and Construction - Wind turbines and Biomass combustion facilities may face
building restrictions based upon height, aesthetics, noise, or safety, depending on the location. Wind
turbines have faced specific environmental concerns related to locating along migratory bird paths and
coastal areas [46].
Land Issues – This is applicable especially for Hydro projects particularly in the lands of the Forest
Department. These lands are available only on short term lease (1 year) whereas funding agencies require
around 20 year lease. SLSEA is mandated to take over such lands (either individually or under the proposed
‘Energy Source Area’ declaration) and make available for the investors and developers on long lease.
However, this is yet to be implemented.
3.4.1.4 Information Barriers
Data - In comparison with other energy systems, commercialization of RE systems involves many
stakeholders and many resources. Development of RE requires an area-based (decentralized) approach.
Collection and analysis of data on energy supply and demand should be carried out in each locality to
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design appropriate RETs. Such activities should be carried out by different institutions at different levels,
and there should be proper coordination and interaction among these institutions [48].
Training & Education - In particular, village-level social organizations are very weak in promoting new
technologies. Limited experience and exposure of the rural populace to community development activities
has contributed to poor organizational skills in initiating and implementing RE schemes. Lack of technical
expertise to carry out pre-feasibility studies at community level is a major hindrance to the identification of
possible sites and technologies. Also, rural communities are yet to be taught specific installation, operation
and maintenance skills, which most modern RETs demand. The absence of such skill development
institutions and programs in the country act as a barrier to the promotion of RETs [48].
The markets function best when everyone has low-cost access to good information and the requisite skills.
But in specific markets, skilled personnel who can install, operate, and maintain renewable energy
technologies may not exist in large numbers. Project developers may lack sufficient technical, financial, and
business development skills. Consumers, managers, engineers, architects, lenders, or planners may lack
information about renewable energy technology characteristics, economic and financial costs and benefits,
geographical resources, operating experience, maintenance requirements, sources of finance, and
installation services. The lack of skills and information may increase perceived uncertainties and block
decisions [46].
Awareness & Education - Lack of proper education at different levels is a barrier to the effective transfer of
information on RE technologies. Awareness of RE technologies and associated environmental aspects
among the general public is minimal. There are no specific subject modules on RE in the curricula of
primary and secondary education systems. Even at tertiary level, the relevant subjects are taught only in
some engineering fields of specialization [48].
Consumer Perception - The social status associated with modern fuels, technologies and related
conveniences offered, push the consumers to perceive traditional technologies as primitive and not
keeping with the modern standards. However, with a strong policy to support R & D activities to improve
efficiencies and convenience of existing technologies using traditional fuels such as in wood gasifier stoves,
“Anagi stoves”, biogas stoves, large improved stoves for commercial activities and improved combustion
systems in thermal applications in brick. Pottery, limekilns etc, could help to change such perceptions and
build confidence of the consumers [22].
3.4.1.5 Institutional Barriers
Donor Driven Projects - At present, there are many GOs and NGOs involved in RE activities, but in an
uncoordinated manner. These organizations have limited capacity and resources to undertake RE projects
successfully. Moreover, their involvement and interests, in most cases, are just driven by the availability of
funding for particular projects rather than influenced by long-term national interests, thus failing to have a
real impact [48].
Institutional Inefficiencies - An institutional barrier to the effective promotion of RETs also lies in the
inefficient functioning of government institutions as a result of delay in decision-making and
implementation, high organizational costs, leakage of funds, non-accountability, etc. [48]
Linkage Issues – Lack of coordination between project approving authorities is a major hindrance for
project approvals.
Capacity and Competence Issues – Lack of and incompetent human resource in project approving
authorities is a major hindrance for project approvals.
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Priority Issues – National importance of promoting renewable energy is not well understood by many
including project approving authorities.
_______
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4
Ideas for the Formulation of Projects, Programmes & Activities
Given below are the ideas generated through a focus group brainstorming exercise held on 7 th and 8th
September 2012 that can be used to formulate and develop projects, programme and activities for UN new
initiative of SE4ALL.
This exhaustive list of ideas need to be further reviewed and hence should not be treated as final and
conclusive. The ideas should be prioritized using multiple criteria such as the Degree of impact, Economic
and technical feasibility, innovativeness and practicability.
List is arranged under three SE4ALL goals; access to energy, energy efficiency and renewable energy.
4.1
Access to Energy & Energy Security
Given below are the country targets;
 All households (100%) to have access to basic energy needs by 2017
 Energy security (Availability, Adequacy, Reliability, Quality and Affordability) of the nation
ensured by 2017
Policy
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Defining energy security indices to be achieved (e.g. 99.9% reliability, …. Affordability, etc.)
Develop a mechanism of obtaining advices / opinions from totally independent technical expert
committee (devoid of government influence) on quality and reliability of existing system on
continuous bases.
Promote adequacy rather than availability
National policy on agricultural mechanization in terms of energy use efficiency (Need for
equipment, Pros and cons, Scenarios – Import vs. options)
Information led policy dialog and media strategy focusing on short to long term energy security
(Imports, Domestic production, Sustainability)
Long term supply contact for petroleum and coal
Incorporate energy independence for lighting and ventilation in building codes
Understand and develop strategies to minimize the uncertainties in energy mix (Detailed data,
Modelling, Scenario analysis)
Choose low energy intensity industries as the economic development path
Delay the exploration of petroleum / gas in Mannar
Sources / Resources
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Source diversification
Indigenous resource development
Explore new sources
Extensive use of renewable energy
Access to resource information
Improve biomass supply chain through regional companies and incentives
Work towards a fully electricity driven energy systems (Multiple fuel resource generation, one
common supply route)
Generation, Transmission and Distribution
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Grid improvement and reducing losses
Use of high performance machinery and equipment for power generation
Intra-regional connectivity of grid
Enhance and improve current capacity
Decentralized generation
Minimize voltage drop during peak hours especially in rural areas
Proper maintenance programme for generation, transmission and distribution
Improve distribution system to eliminate breakdowns in electricity systems
Energy industry


Develop local energy industry
Promote private sector as energy service organizations at regional level through capacity
building
Energy efficiency

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Enhance end use energy efficiency
Control on imported electrical appliances / components to ensure quality and energy efficiency
Capacity building

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
Improved capacity in national planning process to do an in-depth analysis on energy security
(Training staff, Government endorsement, transparency)
Strengthen the capacity at local level for energy planning and management
Training and capacity building on technology development and resource planning and
management
Awareness & Promotion


Conducting media programmes on energy reliability and responsibility of general public.
Promote energy security at household, organizational, cluster / sector levels.

Promote R&D for technology development
R&D
Modesty

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4.2
Energy modesty
Drive the nation towards less resource consumption society
Energy Efficiency
Given below are the country targets;
 Energy intensity of economy of 500 toe/XDR million by 2017
 This will ensure a 20% saving of energy with respect to 2010 energy consumption by 2020
Policy

Energy abuse penalty policy to prevent luxury use, inefficient use, waste, non-compliance of
prescribed guidelines, etc.
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Technology and equipment importation policy
Intellectual Property Right (IPR) policy for innovation in EE
Consciously and systematically provide exposure of EE policies into other national and
enactments
Promote decentralized policies in line with national policies (Provincial and Local Authority
level)
Industrial production policy (Selection of products and processes, Incentives / disincentives,
maximum permissible energy use, etc.)
Urban energy management policy (Hybrid systems, net metering incentives, rainwater use,
biogas systems, etc.)
Working from home concept to minimize the need for travel
Promote Green Procurement in state sector
Replace inefficient machines and equipment in state sector organizations with high efficiency
machines and equipment
Standards & Regulations


Establish standards for commonly used appliances (Strategy)
Mechanism for EE clearance industries with the provision for renewal (similar to Environmental
protection licences – EPL)
Funding

Industry

Financing schemes and instruments to broad base sustainable energy development (Strategy)
Gradual phasing out of energy intensive industries
Technology


Grassroots / indigenous technology promotion (Action)
Dedicated entity for technology information clearing house including new and emerging
technologies ((Action)
Capacity building

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
Empower Local Authorities for EE (Action)
Provide state sector e-services to minimize need for travel (Action)
Energy Ambassador at each workplace (Promote Energy Managers at each work place to
Energy Ambassadors after evaluating their performance)
Awareness & Promotion

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
Inculcate EE culture in the nation (Strategy).
Public ally available national indices on national energy efficiency (Action)
Water is energy (Strategy)
Monitoring & Evaluation



Impact monitoring of various EE measures (Action)
Assessment of economic impact (including externalities) of energy intensive industries (Action)
National indices on national EE (Action)
R&D
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
Promote R&D for technology development (Strategy)
Modesty

Energy modesty (Strategy)
Rewards

4.3
Recognize high achievers (Action)
Renewable Energy
Given below are the country targets;




Generation of electricity from NCRE to reach 10% by 2015, 20% by 2020 and beyond.
Ten (10%) percent of industrial thermal energy to be switched to biomass.
Ten (10%) percent of transport energy from non-petroleum fuels.
Increase of biomass as a clean cooking fuel by 10%.
Policy
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RE policies at National, Provisional & Local Government levels
Master plan and a road map for RE which is to be reviewed and revised once in two years, make
targets and achievements publicly available
Establish combined RE policies with land, water and energy (Characterization of Sri Lankan
situation, Detailed modelling training and use, etc.)
Policies promoting forest & wild life areas (Grow biomass in fire barriers, Elephant fences, Forest
communities as biomass suppliers)
National policy on fossil fuel importation and use to promote biomass use and other applications
Develop policies with ministries of industries and plantations for the promotion of biomass
plantations
Service delivery policy to promote RE in transport (Solar charging stations, Hydrogen use,
compressed biogas, etc.)
Industrial RE use optimization policy (Minimum integration, subsidies, incentives, etc.)
Develop mechanism / policy to produce Ethanol at community / domestic level only for fuel
purposes
National Hydrogen development and use policy (Understanding options for generation and storage,
identification of present and future uses, legal framework, institutions)
National water access & use policy (Linking up with water management / water resources policies
regarding hydro power generation – Integrated resource planning, Optimum use discussions,
Capacity to do what if Scenarios, etc)
Demarcate / declare and develop areas for RE promotion with the help of other government
agencies
Revise the net metering system (Simplify the administrative process and incentivise - cost to be
minimum) to make it attractive and affordable even for small consumers
Rationalize feed in tariff pricing policy
Public quoted company for RE development (SEA has provision for this) by attracting Equity from
public, developing a process for small investors to participate and to obtain CDM benefits.
Place the major thrust on biomass as the variability of other sources are high and only the biomass
could realize around 80% plant factor.
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Develop proper mechanism to implemented biomass plantation (Otherwise, it will not be possible
to meet 20% target by 2020)
Implement inter ministerial discussions and identify country goals
Promote large & centralized wind farms over 100 MW
Public Private Partnership (PPP) for RE investments - e.g. Mannar Wind Park. Government could
provide land and other infrastructure as its contribution and the private investors could contribute
by way of technology, equipment, management and operation to avoid long and undue delays in
the clearance and approval process
Service delivery policy on RE (Introduce charging stations, Biogas stations, Firewood exchange, etc.)
Tax concessions for RE products (Introduce appropriate tax systems at the budget. This facility is
available for solar panels but not for the other parts)
Develop common industrial parks with energy symbiosis to share renewable sources as well as
waste heat.
Promoting biomass production by providing subsidies and tax concessions
Fiscal incentives for biomass energy
Registration / certification scheme for biomass suppliers
Policy and guidelines to enhance the range of biomass applications (Processing for volume
reduction, gasification and transport options)
Discouraging standalone industry setups which could operate in industrial parks where they have
potential in sharing RE benefits
Promoting energy sharing (grid sharing) mechanisms among neighbouring countries / regions
within the country
Incentives to encourage ICS industry
Develop infrastructure for non motorized transports
Integrated transport network
Good town and country planning
Ensue road safety for cyclists and link / highlight benefits of cycling and less use of petroleum (Cross
subsidies for infrastructure, economic studies, scenario analysis, investment, enforcement)
Special transport tariff (for off-peak) for EV (Electric Vehicle) charging
Promote mass transport systems
MRT in place of personalized transport
On-line remote working concepts
On-line services
Standards & Regulations

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Incorporate RE in building codes / approvals (Rain water harvesting and self generation to be
included, Develop the guide lines for residential buildings, Energy consumption of buildings to be
considered when approving the building plans)
Establishing fuel wood standards (Formal and informal). E.g. Moisture content
Quality assurance of biomass sources and technologies
RE3 certified products
Develop bio-fuel standards
Assessments
 Resource assessment / mapping of existing, new & emerging sources
 Develop a mechanism for optimization of resources (Suitable energy mix)
 Assess the potential of multi purpose schemes with irrigation, gravity / pressure tunnels for hydro
power generation
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 Optimize resources – technology – application (Resource mapping for effective utilization of
resources, Technology mapping for the use of appropriate technology, Application mapping for
resources use minimization)
 Introduce sustainable assessment methodologies (Beyond ROI – Environmental externalities, socioeconomic benefits to be considered)
 Assess the economic and environmental benefits of using biomass as a clean cooking fuel
Planning


Setting decentralized target by developing a bottom up system (Divisional to District to Provincial
to National level)
Quantified realistic generation targets in GWh by 2020 to meet the expected demand of 20,000
GWh (SH – 1,200, Wind – 500, Biomass – 2,300, Total – 4,000)
Monitoring & Evaluation


Report / publicise RE targets and achievements including cost
NCRE targets and achievements to be evaluated in terms of “Carbon Foot Prints” / GHG reductions
and collectively at national level, Carbon Trading mechanism with Annex 1 countries
Harnessing RE

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Promote off grid / self generation (For water pumping, Salterns, Ice making)
Promote RE as non grid energy for generation of Hydrogen for transport sector
Rehabilitation Estate Sector micro hydro systems
Upgrade existing hydropower stations (Re-power) such as Lakshapana, Wimalasurendra, etc. as
capacity can be increased up to 20% (through advocacy and enactments)
 Hybrid system for costal management (Introducing Wave & Tidal power)
 Exploit energy capacity of irrigation systems
 Convert sea wave energy to generate compressed air and use it for electricity generation
 Gravity rope ways for transport
 Water transport
 Establish sugar factories to convert their molasses to bio fuels (Ethanol)
Biomass
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Co-generation with waste agri biomass (Develop a mechanism for Identifying the potential)
On-line database on biomass availability
Plantation coupled Dendro plants
Promote dedicated energy plantation
Promote commercial timber industry
Biomass linking to forestry and timber
Streamline biomass supply chain
Biomass collection network
Biomass exchange centres
Setup infrastructure for sustainable supply of biomass for energy
Make available processed biomass in retails shops for improved stoves
Develop charcoal supply market and charcoal stores (make available in super markets)
Pricing mechanism for biomass
Declare suitable species (with relaxed legal aspects to cut and transport) and promote them
Briquetting of bio mass
Integrated industry / use (Thermal energy, Timber, Furniture, Biogas, Fertilizer, Shade, etc.)
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Encourage community businesses to initiate / invest more on biomass fuel production
Popularize Aurveda Treatments that uses only biomass as energy
Commercialize biomass ICS coupled with standardized fuel
Promote smoke free biomass stoves with fuel supply chains
Technology
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Dedicated entity for technology information clearing house including new and emerging
technologies
Promote co-generation with agri biomass, waste, etc.
Waste to energy at Local Authority level
Integrate electrical energy services with transport energy needs (matching demand with supplying)
Integrate electrical energy services with thermal energy services
Introduce thermal storage systems (such as making ice banks in low peak periods where there are
cooling loads / demand)
Strengthen the national grid network to absorb more RE to generate electricity (Identify the
barriers and implement an accelerated programme)
Introduce advanced / improved technologies (Saving of biomass is a source itself)
Establish central thermal energy supply at industrial estates (specially in new industrial estates)
Enhance energy efficiency of biomass systems
Compressed Methane to be available as an industrial gas
Wind and solar application for agriculture
Promote / develop industries to convert waste biomass (especially food waste) to Ethanol at large
scale
Introduce solar energy driven three wheelers
Electrical Vehicle (EV) taxi fleet for Colombo
Railway electrification
Hybrid vehicles
“Sisuseriya” + (Feeder roads by non motorized transports – Busses linked to trains)
Blend bio fuels
Water hycinth and other water body plants to be used for energy generation in industries
Popularize international protocols on ICS
Centralized waste water and food waste based biogas for urban and community use (Incentives,
finances, institutional mechanisms)
Biomass cooking culture at homes
User centric cook stove designs
Gasification for cooking
Improved kitchen to use biomass as fuel
Make available more choices of ICS for use
Capacity building
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Introduce RE3 concept at technical / vocational educational establishments (for the creation of
green jobs)
Introduce training programs for sustainable energy development at various professional levels.
Strengthen institutional mechanisms
Technical know-how to industrial users to improve efficiency of biomass use
Develop local light engineering to meet maintenance requirements of RE systems
Sustainable Energy Development Faculties in universities
Develop ICS producing clusters and distribution networks
Develop compact biogas digestion systems
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Awareness & Promotion
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Inculcate RE culture
RE branding for self generation
Launch a Green Labelling programme
Upgrade existing EE zones to RE3 Zones (RE +EE) or create new RE3 zones to integrate RE with EE.
Promote RE3 as a brand and introduce a system to have RE3 certified users
Promoting RE3 elite groups (RE3 clubs)
RE3 theme / demonstration park of international repute
Integrate / amalgamate RE3 with existing 5S / productivity systems (5S + RE3) - Beyond 5S –
introduce Platinum +
Promote the concept of sustainable productivity
Develop database on RE excess capacities in industrial parks and facilitating externally located
industries to get into these clusters or parks
Steps to remove fear of failure in gasification in industries
Publish biomass related crop data (Growth rates, water / fertilization needs, density, moisture,
other uses, calorific value, etc)
RE3 facilitation courses at tertiary and technical education
Conducting awareness campaigns together with media sector, development sector, transport
sector and health sector for the use of NCRE
Promotion of foot-cycles in town areas with incentives
“Cyclon” (Mega rally, involvement of Celebrities, 5,000 to 10,000 cycles, car free areas / days)
Role models appearing in advertisement using RE
Promote institutional cooking with biomass
Change cooking practices
Advertise / Distinguish biomass powered products (such as firewood fired bread)
Promote domestic fuel wood plantation / residue use
Introduce out-door cooking place system to new houses which have space foe such constructions
R&D





Promote R&D for RE
Inviting grass-root level R&D for transport sector greening (non-petroleum based)
R&D on liquid bio fuels through indigenous sources
R&D on Improved Cooked Stoves (ICS)
R&D on cleaning of biogas and packaging (Compressing, storage, delivery points)
Funding





Tradable RE bills of exchange / certificates (Develop a proper mechanism)
Government grants / loans to be given for RE & make necessary budgeting allocation
Introduce re- financing mechanisms for RE investment similar to RERED project
Develop programmatic carbon credit project
Promote JVs with foreign investors
Rewarding



Recognize industrial parks for their renewable energy utilization level
National reward scheme for biomass energy conversion
Technology characterization to recognize local value addition
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Rapid Assessment and Gap Analysis


4.4
Recognize local manufacturers
RE star rating for organizations / institutions
Resource Panel
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Eng. Upali Daranagama, Ministry of Power & Energy (MoPE)
Dr Ananda Mallawatantri, United National Developemnt Program (UNDP)
Dr Thilak Siyambalapitiya, Resource Management Associates (RMA)
Dr Thusitha Sugathapala, Sri Lanka Sustainable Energy Authority (SLSEA)
Eng. Harsha Wickramasinghe, Sri Lanka Sustainable Energy Authority (SLSEA)
Eng. M.W.Leelaratne, Ex-National Engineering Research & Development Centre (NERDC)
Eng. Sena Peiris, National Cleaner Production Centre (NCPC)
Eng. Ranjith Pathamasiri, Sri Lanka Sustainable Energy Authority (SLSEA)
Eng. Ananda Namal, National Engineering Research & Development Centre (NERDC)
Eng. Wimal Nadeera, Sri Lanka Sustainable Energy Authority (SLSEA)
Eng. Anura Vidanagamage, Industrial Solutions Lanka Limited (ISL)
Eng. Ronald Comester, Ceylon Electricity Board (CEB)
Eng. Nimal Perera, Sri Lanka Energy Managers Association (SLEMA)
Eng. Nameez Muzarfer, Practical Action
Ms Kushani De Silva, United National Development Program (UNDP)
Moderator
Eng. Gamini Senanayake, M/s Gamini Senanayake Associates Private Limited (GSA)
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Rapid Assessment and Gap Analysis
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