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| Sunday, 16 November 2003 |
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| News Business Features Editorial
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The energy debate : Dendro and hydropower - only local resources available by G. J. PONNUKONE This has reference to the article that appeared in the Sunday Observer of November 2 by Mr. Nihal Perera in response to my earlier article titled: "Myth of cheap coal power." I wish to remind the readers that my above article was in response to an article by Mr. Ranjith C. Dissanayake in the Sunday Observer of October 12. I give below my response to the issues raised: * In order to meet the growing annual electrical energy demand of 7%, we need new thermal power plants and we need to augment the existing transmission and distribution (T&D) network. Otherwise, the T&D losses will increase very steeply to unacceptable levels. In fact the associated T&D capital costs would be 60 to 100% of the corresponding generation costs. In order to reduce the present T&D losses from 22% to 15% as envisaged by CEB, a capital US$1000 per new kW would be required to augment the T&D network. * Mr. Dissanayake had quoted the value of Rs. 4 per kWh as the expected price of electricity from coal. This value has been frequently quoted by the proponents of coal based electricity in many seminars and newspaper articles. I was trying to make the point that this value is of academic interest. Because, it was based on unrealistic assumptions such as the availability of soft loans. The reality is that soft loans are no longer available for fossil fuel based thermal power plants. Commercial loans are available at 10% interest payable in 10 years. * Successive governments (SLFP and UNP) have made it clear that the responsibility of establishing and operating all future power plants (other than large hydro) will be with the private sector. Expecting the private sector to raise finance at commercial terms and supply electricity at US Cts 4 per kWh is not realistic. I wish to draw the attention of the readers to a phenomenon known as "Small-Print Syndrome." A contractor would quote a price of US Cts. 4 per kWh in bold, large letters in the main section of the contract document. Somewhere else in the document, in very small print, there will be a clause specifying that the actual cost payable will be based on current market interest rates. I am warning the general public not to fall prey to this trick. After all multinationals do not come to Sri Lanka to do charity. They are coming to do business. * As regard the generation cost of the newly commissioned combined cycle plant at Kelanitissa, Mr. Perera has got his facts mixed up. The fuel cost alone for this plant is Rs. 4.25 per kWh. If the capital recovery cost and the O&M costs are added, the total cost would be higher. * In thermal power plants a fuel such as coal, oil, gas or wood is burnt to generate heat. This heat is used to raise high-pressure steam. This is expanded through a turbine driving a generator to produce electricity. To generate 1 kWh of electrical energy we require approximately 0.25 kg of oil OR 0.5 kg of coal OR 1 kg of wood. We need to pay hard earned US$ for coal or oil and transport it over a distance of 5000 kilometres. Whereas we can sustainably grow wood locally paying Rupees to our farmers. Distance to be transported would be 5 to 50 kilometres. Both coal and wood are solid fuels. Weight for weight, wood has half the energy content of coal. To say wood is not an alternative to coal is totally unacceptable. Since wood is grown locally, there is no need to establish large centralized generating stations. We could establish appropriate sized power stations at appropriate locations to minimise the expenditure on augmenting T&D networks. T&D losses too would be reduced and system stability enhanced. * In proposing dendro power to supplement hydropower to meet our energy requirements, I am not trying to hoodwink any body. I am concerned about the millions of dry zone farmers in our country. Development of dendro power would give them an opportunity to supplement their income and alleviate their poverty. * As we do not have the ability to earn adequate foreign exchange to pay for imported fuels, we are compelled to explore local resources. Apart from hydropower, dendro is the only other economically feasible local resource available in Sri Lanka. There are no alternatives to dendro. * I am NOT aware of any dishonest person in the CEB or the Ministry of Power and Energy. I disassociate myself with the comments made by Mr. Perera in this respect. |
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