Why spill water and reject sunlight while burning imported fuel?

Sri Lanka has invested decades in promoting private investment in renewable energy, resulting in successful small hydropower projects and widespread rooftop solar installations. These efforts have decreased the nation's reliance on imported fuel, attracted private capital, and fostered a more diverse energy system.

Despite these advancements, renewable generators are increasingly compelled to curtail production during periods of low electricity demand, particularly on Sundays, Poya days, and holidays. This phenomenon is particularly pertinent to run-of-river mini-hydropower, where natural water flow may be diverted downstream when generation ceases. Similarly, rooftop solar systems cannot postpone their utilization of abundant midday sunlight to meet evening peak demand.

The Ceylon Electricity Board (CEB), as system operator, may sometimes need to curtail renewable generation to maintain a continuous balance between generation and consumption. Technical reasons like maintaining grid stability, voltage support, operating reserves, and addressing transmission constraints can also necessitate curtailment. However, these legitimate engineering considerations should not be used as a blanket explanation that limits public scrutiny of curtailment decisions.

Critically examining the economics of electricity dispatch, the merit-order dispatch principle dictates that lower-cost generation should be utilized before progressively more expensive generation. When cheaper renewable electricity is intentionally curtailed while more expensive oil-fired generation continues unabated, consumers and renewable producers have a right to question the rationale behind such decisions.

Mini-hydropower's unique challenges warrant special attention. Unlike reservoir hydro, most mini-hydropower plants have limited water storage capacity. When water is available but generation is halted, that water simply bypasses the turbines and flows downstream, resulting in lost electricity production. Importantly, no imported diesel, furnace oil, or coal is required for this process, avoiding fuel-related foreign exchange expenditures.

Sri Lanka's mini-hydropower industry has been largely driven by private investment. The CEB presently records 219 commissioned mini-hydro projects, with an aggregate capacity of roughly 430 MW. While acknowledging the government's role in encouraging private-sector development, the Standardised Power Purchase Agreement (SPPA) has historically imposed significant limitations on the developer's negotiating power.

Under the SPPA, mini-hydro developers have typically sold their electricity through a standardized, non-negotiable agreement, leaving little room for individual contract negotiation. Consequently, developers often find themselves with little choice but to accept unfavorable terms when curtailment occurs due to grid security concerns.

Germany, another advanced electricity system, provides a relevant comparison, as it also experiences renewable curtailment. However, Germany addresses the issue differently, managing transmission congestion and avoiding excessive financial consequences for private renewable producers.