Hydro Power as an Energy Source:

Hydro power provides a significant amount of energy throughout the world and is present in more
than 100 countries, contributing approximately 15% of the global electricity production. The top 5
largest markets for hydro power in terms of capacity are Brazil, Canada, China, Russia and the
United States of America. China significantly exceeds the others, representing 24% of global
installed capacity. In several other countries, hydro power accounts for over 50% of all electricity
generation, including Iceland, Nepal and Mozambique for example. During 2012, an estimated 27
30GW of new hydro power and 23GW of pumped storage capacity was commissioned.

In many cases, the growth in hydro power was facilitated by the lavish renewable energy support
policies and CO2 penalties. Over the past two decades the total global installed hydro power capacity
has increased by 55%, while the actual generation by 21%. Since the last survey, the global installed
hydro power capacity has increased by 8%, but the total electricity produced dropped by 14%,
mainly due to water shortages.

Wind Power as an Energy Source:

Wind is available virtually everywhere on earth, although there are wide variations in wind
strengths. The total resource is vast; estimated to be around a million GW for total land coverage. If
only 1% of this area was utilized, and allowance made for the lower load factors of wind plants (15
40%, compared with 7590% for thermal plants) that would still correspond, roughly, to the total
worldwide capacity of all electricity-generating plants in operation today.

World wind energy capacity has been doubling about every three and a half years since 1990. Total
capacity at the end of 2011 was over 238GW and annual electricity generation around 377TWh,
roughly equal to Australias annual electricity consumption. China, with about 62GW, has the
highest installed capacity while Denmark, with over 3GW, has the highest level per capita. Wind
accounts for about 20% of Denmarks electricity production. It is difficult to compare todays
numbers with those two decades ago, as measuring methodologies and tools are different.

As governments begin to cut their subsidies to renewable energy, the business environment
becomes less attractive to potential investors. Lower subsidies and growing costs of material input
will have a negative impact on the wind industry in recent years.
 Solar PV as an Energy Source:
Solar energy is the most abundant energy resource and it is available for use in its direct (solar
radiation) and indirect (wind, biomass, hydro, ocean etc.) forms. About 60% of the total energy
emitted by the sun reaches the Earths surface. Even if only 0.1% of this energy could be converted
at an efficiency of 10%, it would be four times larger than the total worlds electricity generating
capacity of about 5,000GW. The statistics about solar PV installations are patchy and inconsistent.

The use of solar energy is growing strongly around the world, in part due to the rapidly declining
solar panel manufacturing costs. For instance, between 20082011 PV capacity has increased in the
USA from 1,168MW to 5,171MW, and in Germany from 5,877MW to 25,039MW. The anticipated
changes in national and regional legislation regarding support for renewables is likely to moderate
this growth.
 Bio-energy and Waste as an Energy Source:

Bioenergy is a broad category of energy fuels manufactured from a variety of feedstocks of

biological origin and by numerous conversion technologies to generate heat, power, liquid biofuels
and gaseous biofuels. The term traditional biomass mainly refers to fuelwood, charcoal, and
agricultural residues used for household cooking, lighting and space-heating in developing
countries. The industrial use of raw materials for production of pulp, paper, tobacco, pig iron so on,
generates byproducts such as bark, wood chips, black liquor, agricultural residues, which can be
converted to bioenergy.

The share of bioenergy in TPES has been estimated at about 10% in 1990. Between 1990 and 2010
bioenergy supply has increased from 38 to 52EJ as a result of growing energy demand. New policies
to increase the share of renewable energy and indigenous energy resources are also driving
demand. However, it is difficult to make accurate comparisons with earlier figures because of poor
availability and low level of standardization of data.

1.3.2 The World Energy Outlook in the past 20 years

sharp increase in the price of oil since 2001 after 15 years of moderate oil prices
financial crisis and slow economic growth with drastic reduction in energy consumption in large
economies
shale gas in North America
Fukushima Daiichi nuclear accident
 The volatile political situation in the energy supplying countries in the Middle East and North
Africa, The Arab Spring
lack of global agreement on climate change mitigation
collapse of CO2 prices in the European Emissions Trading System exponential growth in
renewables, in particular in Europe due to generous subsidies for producers which can become a
problem instead of an opportunity deployment of smart technologies
energy efficiency potential still remaining untapped
growing public concerns about new infrastructure projects, including energy projects and their
impact on political decision-making process

The above Outlook has resulted in:

The changes in the energy industry over the past 20 years have been significant. The growth in
energy consumption has been higher than anticipated even in the high-growth scenarios. The
energy industry has been able to meet this growth globally assisted by continuous increment in
reserves assessments and improving energy production and consumption technologies. The
results of the 2013 WEC World Energy Resources survey show that there are more energy
resources in the world today than 20 years ago, or ever before.

It is obvious that moving away from fossil fuels will take years and decades, as coal, oil and gas
will remain the main energy resources in many countries. Fuel-switching does not happen
overnight. The leading world economies are powered by coal: about 40% of electricity in the
United States and 79% of the electricity in China is generated in coal fired thermal plants. These
plants will continue to run for decades. The main issue for coal is the CO2 penalty.

Contrary to the expectations of the world running out of oil within a few decades, the so called
notion of peak oil which prevailed 20 years ago, has almost been forgotten. The global crude oil
reserves are almost 60% larger today than in 1993 and the production of oil has gone up by
20%. If the unconventional oil resources such as oil shale, oil sands, extra heavy oil and natural
bitumen are taken into account, the oil endowment of the world could be quadrupled. An
increasing share of oil will be consumed in the rapidly growing transport sector, where it will
remain the principal fuel.

Natural gas is expected to continue its growth spurred by falling or stable prices, and thanks to
the growing contribution of unconventional gas, such as shale gas. In addition to power
generation, natural gas is expected to play an increasing role as a transport fuel.

The future of nuclear energy is uncertain. While some countries, mainly in Europe, are making
plans to withdraw from nuclear, other countries are looking to establish nuclear power
generation.

The development of renewables, excluding large hydro, has been considerably slower than
expected 20 years ago. Despite the exponential growth of renewable resources in percentage
terms, in particular wind power and solar PV, renewable energy still accounts for a small
percentage of TPES in most countries. Their contribution to energy supply is not expected to
change dramatically in the coming years. The continuing growth of renewables strongly depends
on subsidies and other support provided by governments. Integration of intermittent
renewables in the electricity grids also remains an issue, as it results in additional balancing
costs for the system and thus higher electricity bills.
 Energy efficiency helps addressing the energy trilemma and provides an immediate
opportunity to decrease energy intensity. This will achieve energy savings and reduce the
environmental impacts of energy production and use.

1.3.3 In Summary:
Finally, demand for energy will continue to grow. Even if global energy resources seem to be
abundant today, there are other constraints facing the energy sector, above all, significant capital
investment in developing and developed economies is needed. The environment and climate, in
particular, pose an additional challenge. Clean technologies will require adequate financing, and
consumers all over the world should be prepared to pay higher prices for their energy than
today. Energy is global and to make the right choices, decision makers should look at the global
picture and base their decisions on a thorough life cycle analysis and reliable energy
information.

One of the major challenges facing the world at present is that approximately
1.2 billion people live without any access to modern energy services. Access
to energy is fundamental pre-requisite for modern life and a key tool in
eradicating extreme poverty across the globe.

1.4 Sri Lanka Energy Situation

1.4.1 Energy Resources Used in Sri Lanka
Both indigenous resources available in the country (such as biomass and hydro power) and
imported fossil fuels are the main resources used in the country to fulfill its energy needs.

Indigenous Energy Resources Available in Sri Lanka

Attributed to geo-climatic settings, Sri Lanka is blessed with several types of renewable energy resources.
Some of them are widely used and developed to supply the energy requirements of the country. Others
have the potential for development when the technologies become mature and economically feasible
for use.

Following are the main renewable resources available in Sri Lanka.

Biomass
Hydro Power
Solar
Wind

In addition to the above indigenous renewable resources, the availability of petroleum within Sri Lankan
territory is being investigated. Apart from the above and for some Peat resources in the Muthurajawela
swamp, there are no known commercially tradable energy resources in the country.
Biomass
Large quantities of firewood and other biomass resources are used for cooking in rural households and
to a lesser extent, in urban households. A large portion of energy needs of the rural population is fulfilled
by firewood. There are other uses of biomass for energy in the country, especially for thermal energy
supply in the industrial sector.
 ii) Hydro
Hydro power is a key energy source used for electricity generation in Sri Lanka. A large share of the
major hydro potential has already been developed and delivers valuable low cost electricity to the
country. Currently, hydro power stations are operated to supply both peaking, intermediate and base
load electricity generation requirements. A substantial number of small hydro power plants operate
under the Standardized Power Purchase Agreement (SPPA) and many more are expected to join the fleet
during the next few years.
iii)Solar
Two solar power plants at the Hambantota Solar Park, are operated at a relatively low level, with annual
plant factors of 16.01% from the 737 kW plant and 15.04% from the 500 kW. This is mainly due to
technical issues and overcast weather conditions which prevailed in 2013. In a typical year, both plants
operate with plant factors closer to 18%.
Approval has been granted for three 10 MW Solar PV plants and several more solar based power plants
with storage capability, however no appreciable progress has been achieved by the developers. This may
be due to the unfamiliarity of solar technologies to the local financiers and low skills of project
developers.

More than 100,000 Solar Home Systems were installed during several attempts to introduce standalone
systems to provide basic lighting and TV applications in rural households but there are no reliable data to
indicate how many of them are in actual operation. The main reasons of disuse of these systems may be
attributed to:
Rapid state sponsored Rural Electrification providing more versatile source of reliable electricity.
The maintenance of the electricity infrastructure is taken care by the CEB
Most of the system limitations (which were meant only for lighting and TV applications) were ill
understood by the users.
Mainly a private sector driven marketing mechanism and lack of expertise in the private sector to
maintain them
High initial costs and lack of understanding of regular maintenance of the system example the
batteries and other basic elements.
This effort has given way to solar roof top units spurred by high cost of grid electricity to households in
the high consuming categories. Net-metering scheme which was introduced in 2010, reached maturity
much sooner than expected with more than fifty service providers connecting more than 3 MW of roof
top PV systems to the national grid as at end 2013. This development in turn contributed towards
reaching the policy target of generating 10% of electricity from NRE sources well ahead of the time
target of 2015. By end 2013, approximately 550 installations operated, with a capacity of 3.3 MW. The
estimated generation was 4.7 GWh. Generation statistics were estimated based on average energy yields
expected in a Typical Meteorological Year (TMY).
iv)Wind
Wind development was first initiated as a wind driven water pumping systems for irrigation purposes.
This initiative supported by the Government of Netherlands in late 1970s and early 80s gave way for a
detailed wind resource data collection initiative in mid 1980s. in the South Eastern and North Western
quarters of the country with a few monitoring stations in the central hills. This was the first step towards
introduction of wind for power generation. The first pilot scale 3MW wind power project was installed
with world Bank assistance in the early 1990s.
With the availability of more data on wind resources in the entire country conducted with assistance of
the USAID, so called NREL studies, Sri Lanka was identified as a high wind resource country. With this
revelation and the Small Power Purchase Agreement spurred the installation of several 10MW wind
power projects mainly in the North Western Puttalam area now with about 75 MW installed in the
country.
With the wider acceptance of the need to move away from the prevalent method of developing wind
resources through small scale private initiatives, the Mannar Island wind resource assessments were
initiated. Two studies funded by ADB under the Technical Assistance Programme TA 8167 - SRI Capacity
Building for Clean Power Development, were completed, leading to valuable addition of knowledge on
the potential of wind as a major contributor to the energy resources map of Sri Lanka and the limits of
permissible penetrations of various renewable energy resources in the national grid.

v)Oil/Gas Exploration
A significant milestone was achieved in the oil and gas exploration work in Sri Lanka, with the granting of
the exploration licenses for the Mannar Basin Block SL2007-01-001, to Cairn Lanka (Pvt) Ltd (CLPL) and
entering into an agreement with the Government on July 7, 2008. CLPL has completed its work
commitment for the first phase successfully, which resulted in two successive gas and condensate
discoveries in two of the three exploration wells drilled in 2011 and a fourth well in the second phase in
2013. The investments made in this venture exceeded USD 200 million, which is a clear indication of the
economic impact of this sector that can make in Sri Lanka. Subsequent to the first licensing round, the
Government of Sri Lanka (GoSL) through PRDS launched the second licensing round, opening up more
blocks (thirteen blocks) in the Cauvery and Mannar Basins for international operators. The bid round was
closed on November 29, 2013 and one bid each for three blocks have been received from the existing
CLPL for Mannar Block 5, while a bid for two blocks in Caurvery Basin blocks, C2 and C3 was received
from Singapore-based Bonavista Energy Corporation.

The Government is yet to declare a policy on gas and a roadmap for commercialisation of the gas
discoveries. There is immense potential for economic diversification through the identification of
services and industries which may be developed locally to provide not only inputs to these activities, but
also to market and distribute the final output. Consequently this is expected to make a significant
contribution to the economic growth of the country while creating numerous direct and indirect
employment opportunities. No decisions have been made on the second round of bidding, and the
industry is hopeful of a clear roadmap, and fear the loss of already acquired capacity and knowledge may
dissipate if further delays are experienced in this nascent industry.
Table 1.4.1 Indigenous Energy Resources in Sri Lanka and their
Applications

Source: Sri Lanka Energy Balance 2013. Sustainable Energy Authority

Table 1.4.2 Imported Energy Resources used in Sri Lanka and their
Applications

Source: Sri Lanka Energy Balance 2013. Sustainable Energy Authority

1.4.2 Energy Supply in Sri Lanka

The four main sources of Energy Supply in the country are:

Biomass
Petroleum (Imported)
Coal (Imported)
Electricity (Generated from both indigenous and imported sources)

Energy needs of the country are fulfilled either directly by primary energy sources such as biomass,
hydro power and other new and renewable sources of energy, or by secondary sources such as
electricity produced using coal and petroleum, or petroleum products either imported directly or
produced at the refinery.

The primary energy supply of Sri Lanka consists of biomass, petroleum, coal, major hydro and new and
renewable energy.
Biomass is the most common source of energy supply in the country, of which the largest use is in the
domestic sector for cooking purposes. Due to the abundant availability, only a limited portion of the total
biomass use is channeled through a commodity market and hence the value of the energy sourced by
biomass is not properly accounted. However, this situation is fast changing with many industries
switching fuel to reduce the cost of thermal energy. As a result, a sizable fuelwood supply is emerging to
supply the new demand, albeit many questions on sustainability.

Table 1.4.3 Primary Energy Supply by Source

Source: Sri Lanka Energy Balance 2013. Sustainable Energy Authority

Sources of Production of Biomass

Biomass comes in different forms. Following are the most common forms of biomass available in Sri
Lanka.

Fuel wood
Municipal Waste
 Industrial Waste
Agricultural Waste

Table 1.4.4 Traditional Energy Resources and their Conversions

Source: Sri Lanka Energy Balance 2013. Sustainable Energy Authority

Energy Supply from Petroleum

Sri Lanka totally depends on petroleum imports, both in the form of crude oil and as finished products.
The importation of crude oil and finished petroleum products has increased over time. In 2013 however,
the imported quantity of crude oil increased by 6.7%, while finished product imports decreased by
32.4%. This decrease is visible nearly in all fuels used in transport, power generation and industries.
Table 1.4.5 Crude Oil and Petroleum product imports
.
Source: Sri Lanka Energy Balance 2013. Sustainable Energy Authority

Energy Supply from Coal

The demand for coal continued to rise in 2013 as well, owing to the operation of the coal-fired power
Plant. With the commissioning of the entire Coal Power plant in 2014, of 900 MW this coal importation is
expected to increase up to 2.5 Mt per year.
Table 1.4.6 Coal Imports in 000t
Figure 1.4.1 Solid and Liquid Fuel Imports to the Country
Source: Sri Lanka Energy Balance 2013. Sustainable Energy Authority