KGGTF Sri Lanka Energy

Project Summary:

The objective of this grant is to support the Government of Sri Lanka to reach their target goals of achieving 20% energy from non-conventional renewable sources in the country’s electricity mix by 2020, and becoming energy self-sufficient by 2030. Sri Lanka spends 50% of its export income on fossil fuel imports, which has resulted in economic vulnerability as the country is exposed to volatile energy prices.  While there is enormous potential for renewable energy in Sri Lanka there are technical issues around grid stability and backup capacity that need to be addressed.  Policies and the regulatory framework need to be created to support successful multi-stakeholder engagement and promote investment. Capacity building must also be established. Key components of the program will include an assessment that demonstrates the technical and economic viability of deploying variable renewable technologies (also called NCRE) and Liquefied Natural Gas, along with a technical diagnosis and study of grid integration.  Establishing wide stakeholder engagement and building institutional capacity across technical, economical and policy arenas will also be critical to effectively implement the transition.  This grant continues to build on previous programs, all of which aim to translate the Government’s vision and targets into implementation-ready plans and projects.  

List of Activities:

1. Support to solar project development and grid integration of NCREs
   1. Grid Integration Studies of NCREs - Report on the scalability of NCREs in the Sri Lanka system and options to increase the flexibility of the system to scale-up NCREs, Recommendations of energy storage technologies such as pumped storage and grid-scale energy storage systems
   2. Stakeholder consultations for solar PV development - Regulation reform to promote effective development of NCREs, Green growth aspirations reflected in the NCRE Integration Plan and 2017-2036 LTGEP
2. Pre-feasibility studies for LNG development including analytical work from technical, economic and regulatory aspects
   1. Pre-feasibility studies for LNG development - Report on the economic viability of LNG development to support climate change and less dependency on foreign resources
   2. Stakeholder consultations for LNG development - Green growth aspirations reflected in the NCRE Integration Plan and 2017-2036 LTGEP 

Outcomes:

Output 1:

• 1.1. Grid Integration Report for NCRE development 
• 1.2. Stakeholder consultation report on policy and regulatory reforms 

Output 2:

• 2.1. Pre-Feasibility Study Report for LNG development and economic viability for scaling-up NCREs 
• 2.2. Stakeholder consultation report on policy and regulatory framework for LNG development

Outcomes:

• Improved efficiency:  The proposed activities will contribute to increasing the efficiency of the electricity sector in Sri Lanka through a cost-effective long term scale up of renewable energy based on proper planning and growing private sector investments, and by supporting efficiency in the short term operation and dispatch of renewable generation through the use of advanced control systems, storage options and improved forecasting. These measures will reduce the costs to consumers from potential curtailment of renewable energy generation and increase the overall efficiency of the sector. Finally, by tapping into the potential demand side response from large electricity consumers in Sri Lanka, in particular the tourism and tea processing industries that have large and potentially shift-able loads, could dramatically increase the flexibility of the power system. 
• Greater resilience:  Supporting the increase in variable renewable energy generation in Sri Lanka will displace or delay the need for imported coal, oil or gas generating plant, thereby reducing the country’s dependence on fossil fuels. Sri Lanka’s island power system presents particular challenges in meeting power system reserve and diversity requirements while accommodating the variable output of renewable energy, and hence requires improvements of the planning and system operations beyond the immediate connection as proposed under this project – improvements which will also increase the resilience of the power sector when faced with extreme weather events and other climate related challenges. 
• Increased competitiveness: Helping Sri Lanka diversify its energy mix through the use of indigenous energy sources such as wind will reduce the country’s long term dependency on imported fuels and its exposure to volatile world market prices. Wind power generation will work as a hedge that contributes to dampening tariff fluctuations for residential, commercial and industrial consumers, particularly important for the tourism and tea industries for which energy prices constitute a significant part of their variable costs, thereby providing increased security on long-term energy costs. Energy price stability is important for investments in these sectors and will contribute to their competitiveness.

Collaboration with K-Partners and Others:

• Korea International Corporation Agency (KOICA)
• Korea based Green Climate Fund
• Global Green Growth Institute (GGGI)
• The Ministry of Power and Renewable Energy (MPRE) of Sri Lanka
• The Ministry of Mahaweli Development and Environment of Sri Lanka
• Ceylon Electricity Board (CEB)
• Public Utilities Commission of Sri Lanka (PUC)
• Sustainable Energy Authority of Sri Lanka (SEA)