ceb on a coal spree.docx

8/10/2019 CEB On A Coal Spree.docx

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CEB On A Coal Spree

By Cameli a Nathaniel

Air pollution from coal-fired power plants contributes to a significant number of negative

environmental and health effects.

It is highly strange that at a time when much of the world is now switching to renewable andother clean energy options on a vast scale, and to increased energy efficiency, the Ceylon

Electricity Board (CEB) apparently continues to propose increased dependence on coal

through to 2030. With the proposal to build more coal power plants, Sri Lanka will no doubt

face many environmental implications in time to come. However, the CEB is highly

complacent with their decisions. Air pollution from coal-fired power plants contributes to a

significant number of negative environmental and health effects. When coal is burned to

generate electricity, the combustion releases a combination of toxic chemicals into the

environment that in turn enter the human body. It is also believed that coal combustion

affects not only the human respiratory system, but also the cardiovascular and nervous

system.

The overdependence on coal (77 percent of generation by 2030) that the CEB seems to be

heading into is hugely risky and environmentally damaging. According to Dr Janaka

Ratnasiri, Former Chief Technical Adviser of the Ministry of Environment the Long Term

Generation Expansion (LTGE) Plan that the CEB has produced is totally impracticable and is

an “environmentally damaging plan”. According to the report, the CEB has planned to install

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16 coal power plants (14 at 300 MW and 2 at 250 MW) with an aggregate capacity of 4,700

MW between 2014 and 2032. Work on 2 plants, each of 300 MW, is progressing at Puttalam

while feasibility studies for the 500 MW plant at Trincomalee are being currently carried out.

As for the remaning 12 plants of 300 MW each, no commitments have been made nor any

potential sites identified.

Damage to the environment

The main problem encountered in trying to build coal power plants (CPP) is the selection

of suitable sites which need to be close to the coast (for easy transport of coal) and with

adequate land to dump the ash collected at the rate of 288 tonnes per day or 78.8 kilo tonnes

annually from each of the 300 MW plant (Puttalam Coal Power Plant – EIA Report, 1997).

This means that there will be over 1.235 million tonnes of ash collected annually from the 16 plants.

Sri Lanka is a small country with a high population density especially along the coastal belt.

As such, it would be very difficult to find land to build coal plants including land for

dumping ash. Even the selection of the site for the first coal plant took decades over

environmental concerns and public protests.

Another damage caused by coal plants is the spread of fly ash which gets carried over long

distances by the wind. The fly ash from the 900 MW Puttalam plants will be carried over to

the interior of the land during the South West monsoon winds and ash from the 500 MW

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in the short term, it looks as if coal power is a cheaper option than any other energy source.

“That is why the CEB is focusing ma inly on coal, as other sources available, such as oil

based power generation, are much costlier. However, there are very serious environmental

implications by using coal based power generation. The CEB has not taken heed of the

environmental implications i n their planning process,” he added.

Cabraal raised the concern that the concentration on one supply source is contrary to good

investment practices. “From a macro economic perspective coal over dependence also

contributes to an adverse balance of trade.”

Sri Lanka has a power system that was first hydro dominated, and then oil dominated, soon

will be coal dominated (see Table 1). “The risks and high costs the country faced due to over

dependence on hydro power generation and then oil was significant. There is a need to avoidsimilar concentrations with coal,” he added.

Prices subject to uncertainty

With coal and oil prices subject to uncertainty, and likelihood of depreciation in value of the

Sri Lankan rupee, the expansion plan runs the risk of subjecting Sri Lanka to significant

electricity price uncertainties and price rises. Meanwhile, Cabraal said that an expansion

optimizing study must be done in Sri Lankan Rupees and not in US dollars as has been donein the current planning exercise. “The Sri Lankan rupee has depreciated in real terms

compared to the US dollar over the past years.”

See Figure 3 which shows the Real Effective Exchange Rate index from 1995 to 2012.

During this period the Sri Lankan rupee has depreciated about 50 percent in real terms. “ This

corresponds to an average annual real currency depreciation of 2.4 percent per annum

between 1995 and 2012. The rate was double that at 5 percent in the past seven years,” he

said.

Therefore, if this real effective currency depreciation is not taken into account, the optimized

investment plan will show an over investment in investments with high recurring costs such

as coal and oil power, according to Cabraal.

Currency depreciates, current cost increases

With the Norochcholai coal plant, CEB has already experienced the effect international fuel

cost increases and currency depreciation can have in increasing the cost of electricity – and



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this may foretell a much larger problem when coal generation share is much higher.

“Already, the expansion plan assump tion of exchange rate of LKR 114 per USD has been

exceeded, as the exchange rate today is about 15 percent higher at LKR 131 per USD, thus,

further increasing the cost of coal electricity.”

The CEB Board and management appear to bear little or no personal or corporate

consequence in making wrong investment decisions, he claimed. “If the decisions are wrong

and lead to higher costs, they pass on the cost to the government as a debt obligation, or to

the consumers in the form of higher tariffs, or declare losses. We have seen this happening in

terms of recent tariff increases and high financial losses. The conversion of CEB debt to

Government equity in the 2014 Budget is an example of the Government taking over CEB

obligations. Unless the Government ensures that CEB management is held liable for

decisions they take, little will change to make the CEB more efficient and responsive

organisation,” he added.

CEB assures CPPs will be subject to EIA

However, speaking to The Sunday Leader, the Additional General Manager of the CEB M C

Wickremasekera said “each and every project is subjected to an Environmental Impact

Assessment (EIA) and we cannot go ahead with any project without the EIA. With our

current plan we feel that it will be possible to obtain the EIA and we will comply with the

requirements. We will definitely not proceed with the setting up of any of these plants

without the EIA approval,” he assured.

When asked why the CEB is planning on setting up more coal power generation plants when

the rest of the world is trying to discontinue coal power generation (due to the environmental

implications), he said that, in comparison with the more developed countries, our power

generation requirement is insignificant.

“When we compare our requirements with the more developed countries, their power

requirement is over twenty times that of ours. In that context, although they will curtail the

setting up of new coal power plants, there are those that are currently in operation and they

are generating far more than us. These developed countries are already polluting the world.

Having said that, I must assure you that each and every plant that we construct will be subject

to the EIA and it is only after the gr een light is given will we proceed,” he said.



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Wickremasekara: Norochcholai coal is safe

Commenting on the allegations that these coal power plants, when operational, will release

significant amounts of mercury, nickel, chromium and zinc into the environment, which –

without a doubt – are harmful to humans, Wickremasekera said that these allegations are

absolutely false and that the coal that is being used at Norochcholai does not contain such

measurable amounts of these substances.

“In fact, the coal we im port contains low sulphur levels. We have taken all measures to

drastically minimise any environmental implications.

Even to trap the minute levels of sulphur, we have the flu gas desulphurisation technology.

[Flue-gas desulfurization (FGD) is a set of technologies used to remove sulphur dioxide from

exhaust flue gases of fossil-fuel power plants.] Even without this method we still meet with

the environmental stipulated parameter, but in order to take precautionary measures we have

decided to use FGD as wel l,” he assured.

Regarding the increasing cost of coal, he said that, while the coal prices are bound to

increase, the fact remains that it would still be a cheaper option to other forms of power

generation. “Prices of all commodities will increase in the l ong run. However, our next option

is petroleum and that is a much higher cost than coal, as we have economically harnessed allavailable resources. Hence, after considering all other options, we decided to opt for coal. As

far as other renewable power sources are concerned, solar is a rather uncertain energy source.

For instance, if solar produces 500 MW, then on a day that there is cloud cover it could

reduce to nothing at all. We must have an alternate source of energy to meet the demand. So,

under these conditions we have opted for the most viable option.”

ceb on a coal spree.docx

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