Sri Lanka cautioned on rising renewable energy costs

Apr 14, 2014 (LBO) – Sri Lanka’s central bank has sounded a note of caution of caution over the rising burden of renewable power on consumers as the proportion of non-conventional renewable power (NCRE) increases in the grid. Mini-hydro feed in tariffs are among the cheapest. Almost all sources non-conventional of renewable power except waste heat are several times more expensive than coal which costs about 10 rupees a unit in Sri Lanka.

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

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

Unlike larger plants state-run Ceylon Electricity Board is expected to purchase all the output from small renewable plants, whether it is required or not, which can mean it’s own cheaper plants are run at a lower capacity at certain times of the year or day.

The Central Bank said there 262MW of renewable power, 11MW or biomass power an