SRI LANKA ENERGY SUPPLY STATUS AND CROSS BORDER ENERGY TRADE ISSUES

Transcription

1 SRI LANKA ENERGY SUPPLY STATUS AND CROSS BORDER ENERGY TRADE ISSUES Abstract Priyantha D C Wijayatunga, Sri Lanka Energy Managers Association D G D C Wijeratne, Ceylon Electricity Board Energy supply in Sri Lanka is mainly based on three primary sources, namely hydroelectricity, biomass and petroleum. The supply from each of these sources is such that 11percent is attributable to hydroelectricity, 55 percent to biomass and 34 percent to petroleum oil products. Fuel-wood and other biomass such as coconut residues, paddy husks and sawdust are largely used for domestic cooking accounting for about 85 percent of the biomass usage. In the absence of locally available fossil fuel resources all the future petroleum and other fossil fuel requirements such as coal will have to be imported. A submarine cable link between Sri Lanka and India for power transfer is likely to be beneficial once the economic viability is established mainly due to possibility of accessing cheaper electricity generation options both in India and other countries in the long term. The constraints such as the electricity supply deficit over demand in the region and the security concerns, which will have a negative impact on such development, will also have to be carefully examined. 1. SRI LANKA ENERGY SUPPLY Energy supply in Sri Lanka is mainly based on three primary sources, namely hydroelectricity, biomass and petroleum. In 1997, Hydro-electricity and biomass accounted for approximately 827 thousand Tonnes of Oil Equivalent (TOE) and 4030 thousand TOE respectively. Approximately 2,539 thousand TOE came from petroleum crude and oil products giving an aggregate primary energy supply of approximately 7396 thousand TOE. These correspond to 11percent from hydroelectricity 55 percent from biomass and 34 percent from petroleum oil products (Figure 1) [1]. The use of other renewable energy sources such as wind power and solar electricity is estimated to be insignificant in comparison to energy from the above three major sources while the use of coal is also negligible at present [2]. Hydro 11% Biomass 55% Petroleum 34% Source: Sri Lanka Energy Balance-1997, Energy Conservation Fund, Sri Lanka Figure 1: Primary Energy Supply in Sri Lanka (1997) The energy supply is expected to increase approximately to million TOE by the year

2 2010 at an annual growth rate of about 4 percent. Hydro power and biomass based energy supplies which are considered to be the only large scale indigenous primary energy sources available in Sri Lanka, are expected to remain virtually fixed during this period. Petroleum oil, gas and coal, all imported fossil fuels, will gradually increase their share in the national energy picture [3]. As can be seen in Table 1 the per capita energy consumption in Sri Lanka is considerably low compared to the average consumption level in the low-income country group. The growth of the consumption is also relatively low in comparison to other countries in the region [4]. Table 1: Per capita energy and electricity consumption in selected countries Country or country group Average Annual Commercial Energy Consumption (equivalent kilograms of oil per person) Average Annual Electricity Consumption (kwh per person) Bangladesh India Nepal Pakistan Sri Lanka Thailand Low income country group* Source: World Development Report, World Bank, 1999/2000, *World Bank categorisation of countries according to GDP PETROLEUM Petroleum oil products with an annual supply of approximately 2 million TOE, contributed to 31.5 percent (1996) of the primary energy supply in Sri Lanka at a cost of Rs 18.3 billion. This is supplied either through the output of the local refinery with an annual refining capacity of 2.2 million tonnes of crude oil and from direct importation of refined products. Household commecial & others 4% Electricity Sector 15% Industry 22% Transport 59% Source: Sri Lanka Energy Balance-1996, Energy Conservation Fund, Sri Lanka Figure 2: Composition of petroleum product consumption (1996) During the period 1988 to 1997, the consumption of all petroleum products have been on the increase with liquid petroleum gas (LPG) and auto diesel showing a faster consumption 2

3 growth rate compared to others. The demand for heavy diesel and fuel oil shows a marked increase whenever there is a heavy demand on thermal electricity usually resulting from dry years where hydro generation capability is at its minimum. The present (1998) annual consumption of 2 million TOE of petroleum is expected to grow up to 4.9 million TOE by the year 2010 mainly as a result of increased direct consumption in transport and industrial sectors, recording an average annual growth rate of 7 percent in this sector [3]. BIOMASS Biomass, the most widely used source of primary energy in Sri Lanka had a consumption equivalent to approximately at 10 million metric tonnes in the year 1996 shared between domestic, commercial and industrial sectors. Biomass generally implies fuel-wood, agrowaste through forest and non-forest sectors including twigs, branches and roots. Most of the biomass supply in the country is derived from non-forest resources with home-gardens providing a major component of it. Only around 10 percent of fuelwood supply originate from forests. Table 2: Fuelwood Supply Demand Balance Year Potential Supply 000 tonnes Estimated Consumption 000 tonnes Source: FAO-RWEDP, 1999 As seen in Table 2 the availability of biomass over the demand is positive in the country as a whole but there are supply deficits in certain regions where the usage of fuelwood is relatively high. Fuel-wood and other biomass such as coconut residues, paddy husk and saw dust are largely used for domestic cooking. The total fuelwood consumption in domestic cooking amounts to 8.7 million tonnes which is about 85 percent of the total annual biomass consumption in different sectors. Small manufacturing industries such as bakeries, tile and brick making also use fuel-wood as their source of energy supply consuming approximately 1.2 million tonnes annually. Baggase resulting from sugar production is almost completely utilised for electricity generation within the sugar factories themselves. Rice husk is being increasingly used in rice mills and in tobacco barns as a major energy source during processing. HYDRO POWER Hydropower utilisation in the country is mainly confined to the electricity generation sector consisting of large hydro plants in three river systems and mini/micro-hydro plants scattered mainly in the highlands. Large hydro reservoirs operating a total generation capacity of 1135MW at present contribute around 4000 million units of electricity annually. In addition, there are about 14 privately 3

4 owned small hydro plants with a total capacity of about 12MW already connected to the national grid supply approximately delivering 12 million units of electricity annually [5]. Future large hydropower supply is expected to remain virtually fixed with only two major hydropower plants of a total capacity of 220MW are to be added in the near future. 2. ELECTRICITY SUPPLY AND DEMAND Demand The overall annual electricity demand grew from 823 million units in 1972 to 3588 million units in 1996 at an annual compound growth rate of 6.8 percent. The growth during the period recorded an average annual rate of 4.7 percent while it rose sharply to 10 percent per annum in the early 1980s. However, between 1982 and 1989, the growth rate dropped to 4.9 percent and increased again to 8.9 percent from 1989 to The electricity demand growth in the next 15 years is expected to continue at a rate of 9-10 percent annually. The countrywide electrification level stands approximately at 57 percent of the households in the country with a relatively large percentage of rural households not being connected to the national grid. There is a wide variation of the district-wise electrification level with remote districts in the North recording little over 10 percent while Colombo recording around 98 percent electrification level. As shown in Table 1 per capita electricity consumption in Sri Lanka is relatively low even within the region, particularly in comparison to the average consumption of the low-income country group. Generation The largest contribution to electricity generation in the Sri Lanka power system comes from hydropower. The use of hydroelectricity in a particular year entirely depends on the extent of effective installed capacity and rainfall in catchment areas. Typically hydropower contribution can vary between percent at present depending on the rainfall pattern. Any deficit after utilising hydro-electricity to the maximum is supplied by oil-fired thermal plants at present [5]. The expansion of large hydroelectric system during the next 15 years is likely to be limited to 220MW due to poor economic viability of major part of the remaining hydropower potential. This implies that there will be a significant shortfall between the demand and hydropower output, which needs to be bridged by thermal plants [5]. At present the total thermal generation capacity of the Sri Lanka system is about 550MW, which are all based on oil. Additional thermal electricity sources as presently planned by CEB are also either oil or coal based. If one considers this requirement is to be supplied entirely by oil, additional oil required per annum for power generation alone by the year 2010 will amount to more than three times what is used in thermal power stations at present. Such a situation will undoubtedly apply a considerable pressure on the foreign exchange reserves of the country. 4

5 3. ELECTRICITY SECTOR REFORMS The government of Sri Lanka has initiated reforms in the electricity sector to be in line with its published policy paper, Power Sector Policy Directions of 1998 [6], replacing the existing monolithic structure where the Ceylon Electricity Board heavily dominates within the electricity supply industry. The proposed restructuring will result in vertical separation of generation, transmission and distribution functions along with further horizontal separation of the generation and distribution sectors. The structure proposed is based on a single-buyer model with the transmission/bulk power trading company acting as the sole buyer of electricity from different generating companies and the seller to the distribution companies. Currently a new electricity act is being drafted incorporating the new industry structure and an independent regulatory framework for the electricity industry. 4. CROSS BORDER ENERGY TRADE The geographical location of Sri Lanka is such that its cross-border energy trade needs be confined to trading energy with India in some form or the other. Of particular interest in this scenario is likely to be direct or indirect electricity trade between these two countries through a submarine link, which was being once seriously considered in 1970s, and 1980s. Some of the issues associated with such electricity trade from the point of view of Sri Lanka would be the following. A direct cable link with India will enable Sri Lanka to access generation technologies in which only few countries in the region has the technical capacity to develop such as nuclear electric plants. Also the benefits of economies of scale in traditional generation technologies can be reaped using such a link. Setting up of the submarine link and its uninterrupted operation can be considered as a major challenge particularly due to security situation in the region where such a link would be located. Strengthening the Sri Lanka transmission system in the North-western region is necessary for it to be able to transfer bulk power to the major load centres mainly located in the South. Treatment of electricity trade within the reformed industry structure needs to be clearly understood in the absence of a wholesale market in the short term. Also the ownership and operational responsibilities of the submarine link within such a structure is an important aspect to be examined. Possibility of wheeling power from other countries where there can be new generation sector development through India is a challenge in the short term due to the absence of a wellconnected national transmission grid in India. Different technical standards such as those associated with frequency and voltage variations will require special attention when setting up of a cable link between the two countries. The environmental concerns associated with electricity generation to be traded between the two countries need to be taken seriously since the benefit of energy use and the cost of environmental impacts will be now confined to two different countries. 5

6 Long term prospects of energy trade between the two countries would entirely depend on the excess power generation availability in the two countries. It is unlikely that such a situation will exist in the future considering the high rate of growth in the demand for electricity in both these countries. 5. CONCLUSIONS Considering the heavy dependence on imported primary energy resources for future electricity generation in Sri Lanka, a cable link between Sri Lanka and India for power transfer is likely to be beneficial once the economic viability is established. This is particularly important with India having the technical capability on nuclear power generation development, which can bring down the generation costs substantially. Also such a link will create an environment for Sri Lanka to access other regional energy resources, which may be made available in the long term. But the constraints such as the electricity supply deficit over demand in the region and the security concerns will have a negative impact on the development of cross border energy trade between Sri Lanka and other countries in the region. REFERENCES 1. Annual Report 1997, Central Bank of Sri Lanka, April K K Y W Perera, Energy Status in Sri Lanka: Issues-Policy-Suggestions, Institute of Policy Studies, Sri Lanka, Draft Energy Policy for Sri Lanka, Ministry of Irrigation Power and Energy, Sri Lanka, World Development Report 1999/200, World Bank, Long Term Generation Expansion Planning Studies: , Generation Planning Branch, Ceylon Electricity Board, January Power Sector Policy Directions, Ministry of Irrigation and Power, Sri Lanka, K K Y W Perera, Priyantha Wijayatunga, Energy Resources, Natural Resources Profile, National Science Foundation, Sri Lanka Energy Balance-1996, Energy Conservation Fund, Sri Lanka,