Sri Lanka power expert comments on solar economics

Sept 06, 2010 (LBO) – Tilak Siyambalapitiya, an expert of power has responded to a recent Lanka Business Online story on a solar power project by a financial sector firm, explaining the economics of solar power. The response is reproduced below.

I write with reference to your recent news item on Solar SupplementĀ.

I am curious to know how and why a company in the Financial Sector, who certainly should know their numbers better than any politician, would ever want to invest Rs 19 million on a 48 kilowatt solar photovoltaic system to produce electricity, and be happy about it. While some company executives may smile, the shareholders must be crying about it. Oh why ?

You also reported that Rs 19 million was only the cost of inverters to connect solar panels to the grid, while the solar panels themselves were already available, presumably at no costs.

In case you missed the point, and for the benefit of the general readership, let us look at the costs and the benefits. First let us look at it from an economist’s point of view. So here we go: The solar electricity system would have an economic life of 20 years. The economic discount rate is 10%. So, every year, a sum of Rs 2.23 million has