FRED’s Fight: Cutting feed-in tariffs impact renewable energy growth
The Government is reconsidering the Cabinet paper to reduce the feed-in tariff reductions for renewable energy projects after multiple protests from stakeholders.
“They plan to hold this decision after the local government elections,” an industry official told The Sunday Times Business on Wednesday in Colombo.
The Federation of Renewable Energy Developers (FRED) on Tuesday urged the government to reverse its equity premium reduction for Ground Mounted Solar PV, and reverse feed-in tariff reductions for renewable energy projects. They also urged the authorities to prioritise Energy Storage (BESS) solutions, ensure accurate data and transparent methods, and entrust tariff setting to the independent regulator (PUCSL) for open dialogue with stakeholders.
At a media conference in Colombo, FRED officials said that these actions, including discouraging key renewable energy sources and reducing feed-in tariffs, threaten to derail the nation’s progress towards a sustainable and secure energy future.
The association is concerned about the government’s stance against key renewable energy sources, such as mini hydro, wind, ground-mounted solar, and biomass power plants. These sources offer dispatchable power and crucial spinning reserves, which are essential for grid stability.
The tariff committee’s decision to reduce feed-in tariffs for renewable energy projects is also deeply alarming. FRED believes this approach is reactive rather than proactive, ignoring the challenges posed by increased solar penetration, eroding investor confidence, hindering the energy transition, and ignoring the real problem of inadequate grid infrastructure and energy storage.
The larger the project, the lower the cost for panels and other infrastructure in terms of ground-mounted solar, one official explained. He added that for large projects, such as the 125-megawatt Sampur, which is a government-to-government project, suppliers can attract a grant up to a 20 to 30 per cent discount. “But for an entity constructing one to 10 megawatts of ground-mounted solar power plants, such discounts are impossible due to the scale.” He pointed out that the smaller entities get a feeding tariff of Rs. 19.27, whereas large projects get Rs. 18. “It is fair that we get a higher tariff than the Rs. 19.27, such as ranging between Rs. 22 or Rs. 23. We are not asking for a higher tariff than the previous one, which was at Rs. 25.48 for ground-mounted solar,” he noted.
The government’s recent decision in pricing the Feed in Tariff by temporarily reducing the equity premium for Ground Mounted Solar Photovoltaic (PV) projects only in comparison to other resource is ostensibly aimed at addressing challenges faced by system operators due to the growth of solar installations, reveals a fundamental misalignment in Sri Lanka’s energy strategy, Thusitha Peiris President FRED said. Sri Lanka’s dependence on coal and thermal oil has made the country vulnerable to price fluctuations in global markets and exchange rate volatility, exacerbated by the country’s economic situation and ongoing global events such as wars.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!