Recommendations for Strengthening the Current Approval Process for Mini-Hydro Power Plant Projects A Phase by Phase Summary

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1 E N V I R O N M E N T A L F O U N D A T I O N ( G U A R A N T E E ) L I M I T E D Recommendations for Strengthening the Current Approval Process for Mini-Hydro Power Plant Projects A Phase by Phase Summary Phase One: Pre development A prefeasibility study is done to determine the economic viability of the project. The report must be done by a consultant accredited by the SEA. Any other consultant not recognized by the SEA is required to notify the who will evaluate the suitability of the consultant and register them accordingly. The pre-feasibility report, inter alia, contains site description, name of the stream/ river, name of the village and administrative divisions, land use and general socioeconomic background of the area etc. The specific environmental considerations in Pre-Feasibility Study are; i. Localised social & environmental benefits likely to result due to the project ii. iii. Localised negative social & environmental impacts likely to result due to the project Proposed measures to mitigate negative impacts - Approval Process for On-Grid Renewable Mini-Hydro Projects, Discussion of Environmental Impact Evaluation Procedures Mini hydro projects proposed within sensitive areas should be rejected at this stage and an alternative site should be given Role of the SEA As per their mandate the SEA should play a proactive role in identifying projects which may harm the environment. The must have a clear understanding of the environmentally sensitive areas of Sri Lanka and align it with the Renewable Policy under which it functions. The SEA must also strengthen its coordination with other government agencies to effectively share information. The should work with developers and other Project Approving Agencies (PAA s) to strengthen the monitoring process and include regular environmental audits and play a collective role in enforcing the existing regulations. Transparency should be maintained amongst the public, developers and all parties involved. The establishment of an online database would guarantee this and also allow the SEA to keep their records up to date and in order.

2 The database should include the following: - Project capacity - Details of turbines - Design parameters - Head difference from weir to turbine - Diversion of water flow from the main stream - Environmental flow - Power generation - IEE/ EIA report Steps could also be taken to re assess the sustainable carrying capacity of hydro power in the country and encourage other renewable energy sources. Role of the CEA The environmental clearance for the initial feasibility study can be centralized within the CEA with a national expert panel. The environmental sensitivity of a site should be assessed by an independent panel of professionals. The CEA should issue guidelines to assess the environmental impacts at the prefeasibility stage so that due weightage will be given to this section and possible threats may be identified at the earliest stage possible. The carrying capacity of the river/stream must be taken into consideration when granting approval for multiple projects along a river. If the project is found to be feasible the proponent is required to file an application with the SEA and pay the application fee. If the application meets all requirements it will be registered in the SEA database. Thereafter, the application will be evaluated by the Project Approving Committee (PAC) which will consist of, - General Manager, Ceylon Electricity Board (CEB) - Director General, Central Environmental (CEA) - Conservator General, Forest Conservation Department (FD) - Director General, Department of Wildlife Conservation (DWC) - Director General, Department of Irrigation (ID) - Director General, Mahaweli of Sri Lanka - Land Commissioner, Land Development Ordinance - Director General, Board of Investment - Director General, Coast Conservation Department And provisional approval will be granted if the project is judged viable. EFL 2

3 The adverse impacts of a hydro project are felt by the community only after the construction begins, causing an inconvenience to both parties. This can be prevented if the developer were to consult local communities prior to the commencement of the project. All discussions/negotiations must be transparent and inclusive and ensure the equitable distribution of the benefits from the project. Developers must ensure that natural resources relied upon by local residents are protected under any circumstances. Phase Two: Approval The developer must receive formal approval from the key stakeholder agencies, especially the Divisional Secretary, CEA and a Letter of Intent (LOI) from the CEB. Approval of Divisional Secretary - The Divisional Secretary must take the following documents into consideration before granting approval. i. consent of the respective Provincial Council ii. consent from Provincial Land Commissioner to obtain water rights iii. approval from Land Commissioner General* iv. long term lease from the Minister of Lands (if state land is being used) *relevant for small hydro developers CEB Letter of Intent this document provides proof of the CEB s intent to purchase electricity from the proposed project. Phase Three: Feasibility study Three studies are done during this phase - Feasibility Study This should include an assessment of all factors influencing the project and address all questionable factors/ details of the project. This often includes a comprehensive project design as well. - Environmental Examination An EIA or IEE will be done depending on the estimated environmental impacts of the project. The National Building Research Organisation (NBRO) is required to produce a report on the soil stability and other geological factors affected by the project. A scoping committee will be appointed by the project approving agency depending on the nature of each project. The conditions laid out in the approval are monitored at the project commissioning stages by the CEA, but post project compliance is hardly enforced, unless there is a complaint of a violation by an affected party. - A Guide to the Project Approval Process for On-Grid Renewable Project Development, Sri Lanka EFL 3

4 The IEE/EIA document is at times considered a formality and is not given its respective importance. The consultants conducting the IEE/EIA play the central role in ensuring that all environmental impacts are identified accurately and suitable mitigation measures are recommended. Therefore, a set of criteria must be satisfied when selecting consultants to carry out an IEE/EIA and developers, companies and consultants producing faulty IEE/EIA s should be blacklisted. The project approving authority should hold the responsibility of conducting site visits to verify facts and figures before approving an IEE/ EIA. The IEE/EIA document itself is flawed in its ability to accurately identify possible threats to the environment. Thus, in addition to the TOR, a set of standardized guidelines and methodology should be introduced and prevent the use of outdated data. A revised format should also contain the following, field surveys should be compulsory ecological surveys to be done during the dry and rainy seasons night sampling to provide an unbiased report of fauna inclusion of aquatic plants and invertebrates in recordings of fauna and flora - Survey to Complete Acquisition of Lands A detailed survey with a comprehensive list of all land required for the project, original ownership and method of acquisition (lease, rent or purchase). The acquisition of land must be done in a transparent manner and the aforementioned land survey should be made available for the viewing of the project area residents. Phase Four: License The next step in the process is to obtain the following licenses to proceed with the project. Permit Granted by the Project Approving Committee for a span of 20 years. Generation License Granted by the Public Utilities Commission of Sri Lanka (PUCSL) Power Purchase Agreement Projects less than or equal to 10 MW come under a Standardised Power Purchase Agreement (SPPA) signed between the CEB and Developer. Phase Five: Finance This phase includes 3 steps. i. Investment Approval - Must be obtained from the Board of Investment (BOI) ii. Equity Finance iii. Debt Finance The developer may only approach a financial institution for this facility once the Power Purchase Agreement has been granted. formal negotiations with the equity and debt providers starts only after securing all land resources to implement the project, all statutory approvals, Permit and a signed power purchase agreement are available to the Developer EFL 4

5 - A Guide to the Project Approval Process for On-Grid Renewable Project Development, Sri Lanka Financial institutions must be made aware of the risks posed by carelessly planned projects and be made to play a role in halting such projects by refusing financial aid. Financial institutions may also implement a policy to only fund environmentally sustainable mini hydro projects. Phase Six: Implementation Construction will begin, including: Procurement of Equipment If registered with the BOI, approval from the authority is needed to commence construction. Building plans must be approved by the local authorities. After construction a Certificate of Conformity (CoC) must be issued to prove that the construction matches the plans submitted. Any damage to local infrastructure due to the construction of the project must be paid by the developer. Power Line Construction Cost is completely borne by the developer. The guidelines suggest a cost/benefit analysis to reduce this cost. Phase Seven: Commissioning After construction is completed the suitability of the power plant for grid connection is ensured by the CEB. Steel Structures some of these (such as penstock pipes) are subject to pre-commission testing. Manufacturer s procedures equipment, such as turbines, used to convert energy need to meet international standards. Protection Testing plant must meet the standards set by CEB Guide for Grid Interconnection of Embedded Generators, Sri Lanka (2000) and must be examined and certified as suitable for connection to the grid by a Commissioning Engineer appointed by the CEB. The local community should collaborate with the developer to mitigate any environmental impacts from the project. Phase Eight: Operation and Maintenance Operation will begin after the plant has been judged as suitable to connect to the grid by the CEB. Metering of Electricity Generation It is the practice of the CEB to check the power generation and consumption of the power plant monthly. EFL 5

6 Plant Maintenance Project Closure The transference of ownership of semi - constructed or functioning plants have been an issue in recent years and necessary regulations must be brought in to address this. With reference to the Polluter Pays Principle (PPP) an environmental tax should be introduced to compensate for the damage and exploitation of natural resources caused by a mini hydro power plant. Summary of Recommendations Phase Existing Requirements Effective/ Ineffective Recommendations for Improvement Additional Recommendations Responsible Authorities Phase 1: Pre - Development Feasibility study The must have a clear understanding of the environmentally sensitive and Protected Areas (PA's) of Sri Lanka and be vigilant of projects in proximity to such areas. Areas falling within PA's according to the 2007 Gazette notification by the SEA should be degazetted (refer EFL No - Go Area Map) The SEA must strengthen its co - ordination with other government agencies to effectively share information. Further, there should be a report on literature review on the biodiversity and other impacts of the project at the prefeasibility stage before an IEE/EIA is conducted. All discussions/negotiations must be transparent and inclusive and ensure the equitable distribution of the benefits from the project. Developers must ensure that natural resources relied upon by local residents are protected under any circumstances. EFL 6

7 Phase 1: Pre - Development Transparency should be maintained amongst the public, developers and all parties involved. The establishment of an online database would guarantee this and also allow the SEA to keep their records up to date and in order. In addition, the online database should include project developers, capacity, location, expected E - flow, etc. The carrying capacity of the river/stream must also be taken into the consideration. pre - feasibility report to be done by a consultant accredited by the SEA The environmental sensitivity of a site should be assessed by an independent panel of professionals. The flow duration curve done during the IEE/EIA stage should be done during this phase as well. The environmental flow of the river before and after (projected calculations) construction should be included. The pre-feasibility study is sometimes inadequate and inaccurate. Consultants making repetitive errors in reports or found to purposely furnish low quality reports, should be blacklisted. environmental clearance The CEA should issue guidelines to assess the environmental impacts at the prefeasibility stage so that due weightage will be given to this section and possible threats may be identified at the earliest stage possible. Develop a database with the environmental impacts of all sensitive areas in the wet zone. Responsible officers should visit sites and study the possible negative impacts before granting permission. Social and environmental impacts should be carefully studied. The flow duration curve should be included in the prefeasibility report and should includ the factor of time in their approach. Central Environmen tal (CEA) EFL 7

8 Phase 2: Approval Phase 3: Feasibility study formal approval from the key stakeholder agencies, especially the Divisional Secretary, CEA and a Letter of Intent (LOI) from the CEB. Feasibility study effective The CEA approval should be given with reference to the IEE and the monitoring process & recommendations suggested. the project design must be considered from all perspectives, including its effect on the surrounding environment; inconvenience to residents; etc., and not only from an engineering point of view. The carrying capacity of the river/stream must be taken into consideration when granting approval for multiple projects along a river. Whenever there is a cascade of power plants, the cumulative impact needs to be assessed. Environmental and social feasibility should be an integral part of project design. The flow duration curve should have a 4 dimensional approach, which includes the time factor. The calculation of the curve should be done with due consideration to the 4 dimensional nature of a river (length, breadth, depth and time). Developers and authorities should be made aware of this. Central Environmen tal (CEA) Environmental examination a set of criteria must be satisfied when selecting consultants to carry out an IEE/EIA and developers, companies and consultants producing faulty IEE/EIA s should be blacklisted. Consultants should be registered at CEA and if complaints are received against them and verified, they should be blacklisted. Furthermore, banks and financial institutions should have a say in selecting consultants. Introduction of a nominal head for every IEE/EIA to ensure accuracy and efficiency. Central Environmen tal (CEA) EFL 8

9 Survey to complete acquisition of lands effective In addition to the TOR, a set of standardized guidelines and methodology should be introduced and prevent the use of outdated data. A revised format should also contain the following, - field surveys should be compulsory - ecological surveys to be done during the dry and rainy seasons - night sampling to provide an unbiased report of fauna - inclusion of aquatic plants and invertebrates in recordings of fauna and flora - attention to minor habitats that will be affected due to the reduced water flow - species in the flora and fauna list found to be endangered, threatened or vulnerable, according to the IUCN Red List, should be given attention and mitigatory measures must be given as well. Due to time constraints IEE/EIA studies are done within short periods, nevertheless, multiple site visits should be conducted (preferably during different seasons) by consultants. The Terms of Reference (ToR) should be strong and address issues specific to the nature of the plant. Transparency should be maintained and the land survey must be available for viewing by the project area residents. Central Environmen tal (CEA) Divisional Secretariat Phase Four: License Phase 5: Finance Permit, Generation License and Power Purchase Agreement i. Investment Approval ii. Equity Finance iii. Debt Finance effective effective claims of seasonal intakes by plants should be declared in the Power Purchase agreement Financial institutions must be made aware of the risks posed by carelessly planned projects and be made to play a role in halting such projects by refusing financial aid. Financial institutions may also implement a policy to only fund environmentally sustainable mini hydro projects. Developers must ensure that their annual profit will recover the project cost within 10 years. If there is a loss of productivity the loan payback period will be altered, causing issues for credit institutions and the developer. SEA, PUCSL, CEB EFL 9

10 Phase Six: Implementation Procurement of Equipment and Power Line Construction effective increase tariffs in relation to environmental sensitivity of the site concerned. Avoid excessive damage to trees and shrubs when constructing power lines. SEA and CEB Phase Seven: Commissioning Steel structures, manufacturer s procedures, protection Testing An Environmental Officer should be placed at the site during the construction to oversee the environmental and social impacts, mitigate them and monitor the consistency with IEER/EIAR EMP. standards for equipment set by the SEA should be reinforced. The local community should collaborate with the developer to mitigate any environmental impacts from the project. Phase Eight: Operation and Maintenance The CEA and ID should monitor these plants once a year and costs should be covered by the Developer. Similarly, third party monitoring should be brought in to the place and at least quarterly monitoring should be carried out by third parties and a report should be furnished to CEA and other relevant authorities. Developer should have to bear all expenses. A water meter, similar to meters on oil pumps can be introduced to monitor flow. Central Environmen tal (CEA) and SEA Metering of electricity generation and project maintenance The SEA should work with developers and other Project Approving Agencies (PAA s) to strengthen the monitoring process and include regular environmental audits and play a collective role in enforcing the existing regulations. SEA and Divisional Secretaries should carry out individual monitoring in addition to annual monitoring organised by CEA. With reference to the Polluter Pays Principle (PPP) an environmental tax should be introduced to compensate for the damage and exploitation of natural resources caused by a mini hydro power plant SEA, CEB, CEA and Divisional Secretariat Note: renowned Sri Lankan botanist and orchid specialist, Samantha Suranjan, suggests channelling the fraction of water released to feed all micro habitats, ensuring the continuation of native and/or endemic species despite the decline in population. EFL 10

11 This documented was reviewed by: Sriyantha Perera Founder and President Rainforest Protectors Association Ravindra Anil Cabraal (PhD) Renewable Specialist Independent Consultant R.H.S. Suranjan Fernando (PhD) Environment and Biodiversity Specialist Freelance Consultant Prof. KDN Weerasinghe Senior professor, Agric. Engineering Faculty of Agriculture University of Ruhuna Mr. Buddhima Mendis Independent Consultant EFL 11