CEYLON ELECTRICITY BOARD LONG TERM GENERATION EXPANSION PLAN 2015-2034 Transmission and Generation Planning Branch Transmission Division Ceylon Electricity Board Sri Lanka July 2015 CEYLON ELECTRICITY BOARD LONG TERM GENERATION EXPANSION PLAN 2015-2034 Transmission and Generation Planning Branch Transmission Division Ceylon Electricity Board Sri Lanka July 2015 Long Term Generation Expansion Planning Studies 2015- 2034 Compiled and prepared by The Generation Planning Unit Transmission and Generation Planning Branch Ceylon Electricity Board, Sri Lanka Long-term generation expansion planning studies are carried out every two years by the Transmission & Generation Planning Branch of the Ceylon Electricity Board, Sri Lanka and this report is a bi- annual publication based on the results of the latest expansion planning studies. The data used in this study and the results of the study, which are published in this report, are intended purely for this purpose. Price Rs. 3000.00 © Ceylon Electricity Board, Sri Lanka, 2015 Note: Extracts from this book should not be reproduced without the approval of General Manager – CEB Foreword The ‘Report on Long Term Generation Expansion Planning Studies 2015-2034’, presents the results of the latest expansion planning studies conducted by the Transmission and Generation Planning Branch of the Ceylon Electricity Board for the planning period 2015- 2034, and replaces the last of these reports prepared in April 2014. This report, gives a comprehensive view of the existing generating system, future electricity demand and future power generation options in addition to the expansion study results. The latest available data were used in the study. The Planning Team wishes to express their gratitude to all those who have assisted in preparing the report. We would welcome suggestions, comments and criticism for the improvement of this publication. July 2015. Transmission and Generation Planning Branch Letters: 5th Floor, Head Office Bldg. Tr. and Generation Planning Branch Ceylon Electricity Board 5th Floor, Ceylon Electricity Board Sir Chittampalam A. Gardinar Mw. P.O. Box 540 Colombo 02 Colombo, Sri Lanka e-mail : [email protected] Tel : +94-11-2329812 Fax : +94-11-2434866 Prepared by: Reviewed by: M.B.S Samarasekara G.S.P Mendis Chief Engineer (Gen. Plan. and Design) Additional General Manager (Transmission) M.T.K De Silva T.A.K Jayasekara Chief Engineer (Gen. Development Studies) Deputy General Manager (Trans. & Gen. Planning) Electrical Engineers T.L.B Attanayaka R.B Wijekoon D.C Hapuarachchi M.D.V. Fernando M.A.M. Rangana Any clarifications sought or request for copies of the report should be sent to the Deputy General Manager (Transmission and Generation Planning) at the address above. CONTENT Page Contents i Annexes v List of Tables vi List of Figures viii Acronyms x Executive Summary E - 1 1 Introduction 1 - 1 1.1 Background 1 - 1 1.2 The Economy 1 - 1 1.2.1 Electricity and Economy 1 - 2 1.2.2 Economic Projections 1 - 2 1.3 Energy Supply and Demand 1 - 3 1.3.1 Energy Supply 1 - 3 1.3.2 Energy Demand 1 - 4 1.4 Electricity Sector 1 - 5 1.4.1 Access to electricity 1 - 5 1.4.2 Electricity Consumption 1 - 6 1.4.3 Capacity and Demand 1 - 7 1.4.4 Generation 1 - 9 1.5 Planning Process 1 - 10 1.6 Objectives 1 - 11 1.7 Organization of the Report 1 - 11 2. The Existing and Committed Generating System 2 - 1 2.1 Hydro and Other Renewable Power Generation 2 - 1 2.1.1 CEB Owned Hydro and Other Renewable Power Plants 2 - 1 2.1.2 Hydro and Other Renewable Power Plants Owned by IPPs 2 - 5 2.1.3 Capability of Existing Hydropower Plants 2 - 5 2.2 Thermal Generation 2 - 7 2.2.1 CEB Thermal Plants 2 - 7 2.2.2 Independent Power Producers (IPPs) 2 - 9 3 Electricity Demand: Past and the Forecast 3-1 3.1 Past Demand 3-1 3.2 Econometric Demand Forecasting Methodology 3-3 3.3 Econometric Demand Forecast 3-6 3.4 Development of END USER Model (MAED) for Load Projection 3-7 3.5 Sensitivities to the Demand Forecast 3-9 3.6 Comparison with Past Forecasts 3-11 Page i 4 Conventional Generation Options for Future Expansions 4-1 4.1 Hydro Options with a Projected Committed Development 4-1 4.1.1 Candidate Hydro Projects 4-1 4.1.2 Available Studies on Hydro Projects 4-2 4.1.3 Details of the Candidate hydro Projects 4-3 4.1.4 Current status of Non-Committed Hydro Projects 4-4 4.2 Hydro - Capacity Extensions 4-5 4.2.1 Samanalawewa 4-5 4.2.2 Laxapana Complex 4-5 4.2.3 Mahaweli Complex 4-6 4.2.4 Pump Storage Option 4-7 4.3 Thermal Options 4-8 4.3.1 Available Studies for Thermal Plants 4-8 4.3.2 Thermal Power Candidates 4-9 4.3.3 Candidate Thermal Plant Details 4-10 4.3.4 Fuel 4-12 4.3.5 Screening of Generation Options 4-15 4.3.6 Thermal Plant Specific Cost Comparison 4-15 4.3.7 Current status of non-Committed Thermal Projects 4-16 4.4 India-Sri Lanka Transmission Interconnection 4-17 5 Non-Conventional Renewable Generation Options for Future Expansions 5-1 5.1 NCRE Study for 2015 to 2025 5-3 5.2 NCRE Resource Estimation 5-3 5.2.1 Estimating Wind Energy Production 5-3 5.2.2 Estimating Mini Hydro Energy Production 5-6 5.2.3 Estimating Solar Energy Production 5-6 5.2.4 Estimating Biomass Energy Production 5-8 5.3 Municipal Solid Waste 5-8 5.4 Other 5-8 5.5 Net Metering 5-9 5.6 Inclusion of NCRE in the LTGEP 5-9 5.7 Development of NCRE 5-10 6 Generation Expansion Planning Methodology and Parameters 6-1 6.1 Grid Code Generation Planning 6-1 6.2 National Energy Policy and Strategies 6 - 1 6.3 Preliminary Screening of Generation Options 6-2 6.4 Detailed Planning Exercise 6-3 6.4.1 SDDP and NCP Models 6-3 6.4.2 MAED Model 6-3 6.4.3 WASP Package 6-4 6.4.4 MESSAGE Software 6-4 6.5 Hydro Power Development 6-4 6.6 Assessment of Environmental Implications and Financial Scheduling 6-5 6.7 Modeling of NCRE 6-5 Page ii 6.8 Study Parameters 6-5 6.8.1 Study Period 6-5 6.8.2 Economic Ground Rules 6-6 6.8.3 Plant Commissioning and retirements 6-6 6.8.4 Cost of Energy Not Served (ENS) 6-6 6.8.5 Loss of Load Probability (LOLP) 6-6 6.8.6 Reserve Margin 6-6 6.8.7 Discount Rate 6-6 6.8.8 Plant Capital Cost Distribution among Construction Years 6-6 6.8.9 Assumptions and Constraints Applied 6-6 7 Results of Generation Expansion Planning Study 7-1 7.1 Results of the Preliminary Screening of Generation Options 7-1 7.2 Base Case Plan 7-2 7.2.1 System Capacity Distribution 7-5 7.2.2 System Energy Share 7-8 7.2.3 Fuel, Operation and Maintenance Cost 7-10 7.2.4 Reserve Margin and LOLP 7-13 7.2.5 Spinning Reserve Requirement 7-13 7.2.6 Base Case analysis using MESSAGE Energy Planning tool 7-14 7.2.7 Investment, Pricing and Environmental Implications 7-14 7.3 Impact of Demand Variation on Base Case Plan 7-15 7.3.1 Capacity Distribution and Fuel Requirement 7-15 7.4 Impact of Discount rate Variation on Base Case Plan 7-16 7.5 Impact of Fuel Price Variation on Base Case Plan 7-16 7.5.1 Fuel Price Escalation based on International Energy Agency Forecast 7-16 7.5.2 High Coal Price Scenario 7-17 7.5.3 High Coal and Oil Price Scenario 7-17 7.6 Restricted Coal Development Scenarios 7-18 7.6.1 Energy Mix Scenario 7-18 7.6.2 Coal Restricted Scenario 7-19 7.7 Natural Gas Breakeven Price Analysis 7-21 7.7.1 LNG Breakeven Price 7-21 7.7.2 NG Breakeven Price 7-22 7.8. Natural Gas Availability in Sri Lanka by 2020 7-22 7.8.1 Natural Gas Average Penetration Scenario 7-23 7.8.2 Natural Gas High Penetration Scenario 7-25 7.8.3 Impact of Natural Gas Price delivered at Power Plant 7-27 7.9 HVDC Interconnection Scenario 7-27 7.10 Demand Side Management Scenario 7-29 7.11 Social and Environmental Damage Cost Analysis 7-29 7.12 Comparison of Energy Supply alternatives in 2030 7-30 7.13 Summary 7-31 Page iii 8 Implementation and Financing of Generation Projects 8-1 8.1 Committed Power Plants in the Base Case 8-1 8.1.1 Committed Plants 8-1 8.1.2 Present Status of the Committed Power Plants 8-1 8.2 Candidate Power Plants in the Base Case Plan from 2015 to 2027 8-2 8.3 Implementation Schedule 8-3 8.4 Required Investment for Base Case Plan 2015 - 2034 8-4 8.5 Recommendations for the Base Case Plan 8-4 8.6 Investment Requirement Variation for Scenarios 8-8 9 Environmental Implications 9-1 9.1 Greenhouse Gases 9-1 9.2 Country Context 9-1 9.3 Uncontrolled Emission Factors 9-4 9.4 Emission Control Technologies 9-5 9.5 Emission Factors Used 9-6 9.6 Environmental Implications – Base Case 9-7 9.7 Environmental Implications – Other Scenarios 9-8 9.8 Climate Change 9-13 10 Revision to Previous Plan 10-1 10.1 Introduction 10-1 10.2 Demand Forecast 10-1 10.3 Fuel Prices 10-5 10.4 Status of Last the year Base Case Plan 10-5 10.5 Overall Comparison 10-7 Page iv References Annexes Annex 2.1 Reservoir System in Mahaweli, Kelani and Walawe River Basins A2-1 Annex 3.1 Sensitivities of Demand Forecast A3-1 Annex 4.1 Candidate Hydro Plant Data Sheets A4-1 Annex 4.2 Cost Calculations of Candidate Hydro Plants A4-2 Annex 4.3 Candidate Thermal Plant Data Sheets A4-3 Annex 5.1 NCRE Tariff Effective From 01/01/2012 A5-1 Annex 5.2 NCRE Additions for Low Demand Case A5-2 Annex 6.1 Methodology of the Screening of Curve A6-1 Annex 6.2 Energy Flow Chart of Electricity System A6-3 Annex 7.1 Screening of Generation Options A7-1 Annex 7.2 Capacity Balance for the Base Case A7-5 Annex 7.3 Energy Balance for the Base Case A7-6 Annex 7.4 Annual Energy Generation and Plant Factors A7-7 Annex 7.5 Fuel Requirements and Expenditure on Fuel A7-14 Annex 7.6 Reference Case A7-15 Annex 7.7 High Demand Case A7-16 Annex 7.8 Low Demand Case A7-17 Annex 7.9 High Discount Rate (15%) Case A7-18 Annex 7.10 Low Discount Rate (3%) Case A7-19 Annex