Sri Lanka's first utility scale solar plant to add 10MW to the Grid

www.ft.lk, 22nd December 2016, By Himal Kotelawala

Sri Lanka’s first-ever utility-scale solar power plant was officially declared open in Baruthankanda, Hambantota yesterday. The privately owned plant is expected to add 10MW to the national grid, supplying approximately 20GWh annually – enough to power 15,000 typical Sri Lankan households.

The expansive renewable energy power plant, spread out across a 45-acre land, is owned and run by Sagasolar Power Ltd., a subsidiary of Lanka Orix Leasing Company (LOLC) established in collaboration with the international financial advisory firm and boutique investment bank Faber Capital Ltd.

Speaking at the opening ceremony, Power and Energy Minister Ranjith Siyamabalapitiya said that under the proposed Sooryabala Sangramaya (Solar Crusade) programme, the Government, with similar partnerships with the private sector, will seek to further expand the country’s growing renewable energy sector.

Pointing out that Sri Lanka recorded its lowest rainfall this year, the Minister said that discussions had taken place at the highest levels of Government to address the issue.

“Despite this, 50% of our energy needs are still met through hydro power. But before power generation, water priority must be given to agriculture and water supply. Then there are the maintenance costs of power plants to consider. Drought is when solar energy is at its peak. If we had a proper solar energy system in place, together a with a storage mechanism, we’d have a solution in hand,” said the Minister.

The Government now has the ability to go into partnerships with private sector, reiterated Siyambalapitiya, adding that there are proposals to construct solar plants along highways and even on reservoirs.

The Minister also revealed that the private sector, and even international companies, may be approached to invest in the proposed 100MW project in Moneragala.

Deputy Minister Ajith P. Perera who also spoke at the event said that Sri Lanka is committed to play its part in bringing down rising global temperatures by gradually embracing renewable energy, with the rather ambitious end-goal of meeting 100% of the country’s energy requirements through renewable energy sources by 2050.

“Renewable energy will decide the future. Today, solar energy is the cheapest in the world for power generation. But only a limited amount of solar energy can be added without storage. There are issues pertaining to wind and solar energy, but these can be overcome. The Government is committed to protect the country’s energy sources while protecting the environment. We have taken a decision to convert the country’s power generation to 100% renewable energy by 2050,” said Perera.

Overcoming the challenges pertaining to clean energy, said Perera, will require a sufficiently strong framework, and with this in mind the Government is committed to purchasing renewable energy at competitive prices.

Small and medium enterprises can also contribute, he added.

“Rooftop units for individual homes will also be encouraged. Homeowners who install solar panels and contribute to the national grid will be paid Rs. 22 per unit per household for the first seven years and Rs. 15.50 after that,” he said.

“We have taken a policy decision that everything will be purchased at a competitive price, from small scale to industrial scale. It’s time to give priority to solar energy,” added the Deputy Minister.

Located adjacent to the upcoming Hambantota Expressway, the Sagasolar plant was built on land within the Energy Development Area declared by Gazette notification 1720/5 on 23 August 2011 under the Sri Lanka Sustainable Energy Authority Act. Some forest reportedly had to be cleared for the project.

When inquired about this by Daily FT, Deputy Minister Perera said: “These aren’t protected forests. Some amount of land has to be cleared. If you think about it, diesel generation or even LNG or coal, releases a lot of carbon dioxide into the atmosphere. If you consider the total impact, solar energy is the best for the environment.”

According to Sagasolar, Hambantota has one of the highest levels of Annual Global Horizontal Irradiation (GHI) in Sri Lanka and the project is expected to reduce carbon dioxide emissions from power generation in the national electricity system by a margin of 11,000 tonnes per year.

The project debt, said the company in a media release, is financed by a banking consortium experienced in renewable energy projects, with DFCC Bank taking the largest exposure followed by Commercial Bank and Hatton National Bank. The project is a collaboration between the LOLC Group and Faber Capital Limited, the key equity providers.

“In the recent years, renewable energy has gained prominence in the Sri Lankan economy, and LOLC Group is poised to play a key role in enhancing our commitment in environmental stewardship. We are highly excited to venture into solar power generation, the first of its kind and magnitude by the private sector, reflecting our true passion for a greener tomorrow,” LOLC Group Deputy Chairman Ishara Nanayakkara was quoted as saying.

Faber Capital Managing Director Dilshan Hettiaratchi said: “Generation of energy from solar power is the next frontier in Sri Lanka’s energy generation journey. The country has successfully harnessed sustainable resources for generation of energy needs for over half a century. The main resources used were Hydro, with Wind supplementing generation capacity over the last decade. With this exciting project, Solar has also been introduced to the generation mix. We at Faber Capital invested in this landmark project over a year ago and combined the implementation and financing elements required to complete the project. We hope this project will be a catalyst to popularise energy generation through solar power, which is arguably the most sustainable green resource available in the country.”
 
Images: Energy Minister Ranjith Siyamabalapitiya, Deputy Minister Ajith P. Perera and LOLC Group Deputy Chairman Ishara Nanayakkara at the opening – Pix by Ruwan Walpola

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