• Energy today and trends

• What are the priorities?

• Meeting the energy needs of tomorrow

Source: World Bank Databank

Source: SEA, 2011 Energy Balance

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Sri Lanka Oil Demand Forecast

Cost mm$/year Oil demandSource: CEYPETCO

Source: SEA

• Peak MW demand expected to more than double by 2025

• CEB expects energy demand to increase at ~6.5% per annum and they plan to meet it principally by coal power

Source: SEA

Source: SEA

• Oil based generation expected to decline to 7% of total generation by 2020 from 50% in 2011

• Coal generation share to increase to over 50% by 2020 and to 70% by 2025

Computed from: Historical data and CEB (2011), Generation Expansion Plan 2011-2025

• Volatile prices– Petroleum and

coal price

– Dendro fuel

• Resource uncertainties for hydro, wind, solar

• Currency depreciation

• National and international policies

• International crises

Source: www.indexmundi.com. Coal cost forecast from UK, Department of Energy and Climate Change, October 2012

• Key sectors

• Risk and uncertainty

• Technological

• Policy

• Transport

• Electricity supply and demand

• Petroleum supply

• Why is the most efficient form of transport, least used? – Why not benefit from shifting more goods and passenger

transport to rail?– Why is capacity utilization of such a valuable national asset low?– Adopt open access policy to permit others to access to rail lines?

• Increase efficiency in mobility and use of less fuel intensive modes such as:

– Increase road transport fuel efficiency– Reduce congestion– Adopt “transport substitutes” (e.g., ICT sector and non-motorised

transport)

• Support next major lighting transition to LED lighting

• Day-lighting for offices/factories• Adopt and promote appliance efficiency

standards and labelling• Support industrial/commercial efficiency

improvements– Focus on 1500 industrial/commercial customers

accounting for 80% of their sector’s energy use

• Coal power dominance could pose price risks

• Important that energy planners undertake risk assessments over and above traditional engineering sensitivity analyses

Sources: PUCSL 2012/13 NCRE Tariff Order. Coal fuel cost from UK/DECC forecasts adjusted using PUCSL Puttalam coal power plant cost parameters, national inflation and LKR depreciation

Invest in supply technologies with costs not correlated with oil/coal power costs•Pumped storage to use coal power more efficiently and to increase value of intermittent renewable energy•Renewable energy development needs

– Improved governance and reduced pre-investment delays

– Credit line to offer lower cost debt financing

– SEA support to access Government-owned unused marginal lands for fuelwood growing

NCRE TypeCapital Cost

Share of TariffFuel Cost

Share of Tariff

Proposed 2012/13 Tariff with Lending Rate per PUCSL

Tariff if IBRD-type Loans can be

Obtained

Percent Decline in Tariffs with Lower

Interest DebtBiomass Dendro 47% 47% 25.09 24.41 3%Biomass Agriwaste 62% 31% 17.89 17.09 5%Mini-hydro 92% 0% 16.15 14.63 10%Wind 96% 0% 21.64 19.39 12%Solar (Calculated) 97% 0% 24.96 21.90 14%

Cost of Debt (LKR) 17.88% 13.50%

• Use a portion of ~1.7 million hectares of scrub and abandoned agricultural lands to grow fuelwood

• 1000 MW of biomass power will need about 250-350,000 hectares of such lands

• But, despite declaring Gliricida as a 4th plantation crop in 2005, little has been done

SEA could access such lands under the authority granted it and make lands available for

fuelwood development

Part IV (12) of the SEA Act gives it authority to promote/develop renewable resources: • Minister can declare an area with renewable resources as an Energy Development Area. •SEA is then "responsible for conserving and managing all renewable energy resources within a Development Area and take all necessary measures to promote and develop such energy resources…”

• Refinery upgrade• Oil and gas exploration

IEA (2011) Technology Road Map: Smart Grids

• Sri Lanka is in advantageous position of higher energy productivity today

• But faces high energy costs and could run risk of energy supply disruptions or further price shocks

• Focus could be on five areas:1. Transport sector interventions

2. Refinery upgrade and oil/gas exploration

3. Broader energy efficiency interventions

4. Increase diversity of electricity supply

5. Build the electric utility of the future - The Smart Grid