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PROPOSAL FOR REVIEW
PROJECT TITLE: SRI LANKA: RENEWABLE ENERGY AND CAPACITY BUILDING
GEF FOCAL AREA: CLIMATE CHANGE
GEF ELIGIBILITY: FCCC RATIFIED 23 NOVEMBER 1993
TOTAL PROJECT COSTS: $2,114,000
GEF FINANCING: $1,514,000
GOVERNMENT COUNTERPART FINANCING
OF GEF COMPONENT: $200,000
COFINANCING/PARALLEL FINANCING: $400,000/UNDP & OTHERS
ASSOCIATED PROJECT: NOT APPLICABLE
GEF OPERATIONAL FOCAL POINT: NOT AVAILABLE
GEF IMPLEMENTING AGENCY: UNDP
EXECUTING AGENCY: GOVERNMENT OF SRI LANKA, MINISTRY OF IRRIGATION, POWER AND ENERGY
LOCAL COUNTERPART AGENCIES: CEYLON ELECTRICITY BOARD; MINISTRY OF SCIENCE AND TECHNOLOGY; AND ENERGY CONSERVATION FUND
ESTIMATED APPROVAL DATE: JULY 1996
PROJECT DURATION: 3 YEARS
GEF PREPARATION COSTS: $18,000
SRI LANKA: RENEWABLE ENERGY AND CAPACITY BUILDING
BACKGROUND
1. In 1994, Sri Lanka's population was estimated at 17.8
million inhabitants, about 80% of which were estimated to live
in the rural areas. For 1993, GNP was approximately $10.1 billion,
giving a GNP per capita of approximately $574. In 1993, agriculture
was estimated to account for 21.3% of GDP.
2. Biomass continues to account for the largest fraction
of Sri Lanka's primary energy supplies, and it is consumed largely
in the domestic sector. Hydro is the next most significant primary
resource with the 1400 MW of installed capacity generating more
than 3500 GWh in 1992. The country imports more than 2000 million
tons of oil and petroleum products primarily for the transport
sector. To avoid a potential generating capacity gap, the Ceylon
Electricity Board is considering the introduction of thermal power
stations (diesel, coal and gas) totalling some 1300 MW capacity
by 2010.
3. Significant parts of the country remain unelectrified
and thus stand alone energy technologies are in demand. There
are estimated to be more than 5000 solar (photovoltaic) home systems
in use in the country, more than 20 village micro-hydro schemes
and a few micro hydro and wind powered battery chargers (for charging
automotive batteries used in households). In October 1995, the
Ceylon Electricity Board (CEB) approved the establishment of a
Pre-Electrification Unit (PEU) to support the private sector and
NGO developers of renewable energy schemes. In addition, the
Ministry of Science and Technology has recently established an
Alternative Energy Division. The National Engineering Research
and Development (NERD) Centre has on-going solar, wind and micro-hydro
R&D programmes. CISIR and the Universities are also active
in some of these areas.
4. Given the experience to date of owrkin in this field in
Sri Lanka and the nature of the barriers to the widespread adoption
of these technologies, the UNDP and the World Bank consider that
two complementary projects are necessary to lay the foundation
for the sustainable development of renewable energy and enhanced
energy efficiency in the Sri Lankan economy. One project will
address the financing barriers and will support activities largely
in the private sector. The other project will seek to create
the public infrastructure for sustainable private sector development
in the renewable energy arena. The two project approaches are
described in the following paragraphs. The decision to carry
out these complementary activities through two separate projects
reflects the different focus of the activities and the relative
comparative advantages of the two organizations.
5. The World Bank has prepared an Energy Services Delivery
(ESD) project for support from the IDA and GEF. The objectives
of this project (to be appraised in July of 1997) are: a) to
encourage the participation of the private sector, NGOs and co-operatives
to provide grid-connected and off-grid energy services with renewable
energy technologies; b) to design a Demand Side Management (DSM)
strategy and c) to strengthen the public and private institutional
capacity on renewable energy and DSM. There are three project
components; a) an ESD credit line to offer long term financing
for renewable energy (with micro hydro and solar photovoltaic
pilot projects); b) a 3MW pilot wind farm and c) technical assistance
to support these and for DSM programme development.
6. This project was designed in conjunction with the ESD
project to enhance the effectiveness of the ESD project and to
lay the foundation for future expansion of renewable energy exploitation
in Sri Lanka. In contrast to the Bank's ESD project, the UNDP
Renewable Energy and Capacity Building Project seeks to create
the public sector infrastructure necessary to support private
sector investment. The activities defined under the UNDP project
will be undertaken largely through the public sector. Both projects
are necessary in order to lay the foundation for future sustainability
of this sector in Sri Lanka.
Institutional Background
7. The Ministry of Irrigation Power and Energy is responsible
for the supervision of the energy sector in Sri Lanka. Under
its auspices, the Ceylon Electricity Board is a key player in
the Renewable Energy and Energy Efficiency sector. Although this
project will be executed by the Ministry of Irrigation, Power
and Energy, the CEB will be responsible for the execution of certain
of its elements. The CEB, together with the Ministry of Finance,
are the Executing Agencies for the World Bank's ESD project.
8. Since 1990, matters relating to the environment have been
handled by the Ministry of Transport, the Environment and Women's
Affairs. The environment division is the focal point for all
matters relating to UN Framework Convention on Climate Change.
A co-ordinating group on Climate Change has representatives from
the Ministry of Irrigation, Power and Energy, Ministry of Science,
Technology and Human Resources, Ministry of Agriculture, Lands
and Forestry.
9. In 1995, a National Committee for preparing a Sri Lanka
Energy Policy was formed comprising 14 members representing the
main ministries, petroleum corporation, Chamber of Commerce and
individual experts.
PROJECT OBJECTIVES
10. The objective of the proposed project is to remove
barriers to the expanded and sustainable utilization of renewable
energy in Sri Lanka. The project will facilitate and accelerate
the use of renewable energy technologies and energy efficiency
measures in Sri Lanka thus reducing the need for additional fossil
fuel thermal power stations and greenhouse gas (GHG) production
(ie., CO2) associated with fossil fuel power stations
and the decentralized use of kerosene and woodfuel. The project
was designed as a technical assistance project to fit under GEF
Climate Change Programme 6, Promoting the Adoption of Renewable
Energy by Removing Barriers and Reducing Implementation Costs.
11. The project has been developed with the objectives of
supporting activities which complement and enhance the World Bank/GEF
Energy Services Delivery project. The project's design was finalized
in conjunction with a joint programming mission undertaken between
the World Bank ESD task managers and a UNDP consultant in October/November
of 1995.
Barriers to the Expanded Use of Renewable Energy
12. This project is intended to remove three specific
barriers to the expanded utilization of renewable energy in Sri
Lanka. The first barrier is the limited information base about
renewable resource potential, particularly in the case of wind,
small hydro, and woody biomass resources. The second barrier
is the limited familiarity with and confidence in the renewable
energy technologies on behalf of both the private sector and consumers.
The third barrier preventing widespread sustainable use of renewable
energy is the shortage of skilled personnel trained in the techniques
and practices relevant to the expanded use of renewable energy
and enhanced energy efficiency.
13. The removal of these three barriers forms the basis for
the objectives of this project. Under the three primary objectives
of removing these barriers are grouped eight specific activities
or project components intended to reduce the significance of those
barriers.
Objective 1: To provide improved information regarding
the renewable resource potential in order to pave the way for
expanded renewable energy investment activity in the wind, small
hydro, and biomass fields. Under this objective are envisioned
three specific activities:
1.1 to measure the wind resource
potential of Sri Lanka more widely in Sri Lanka and in more detail
in order to provide sufficiently detailed data to allow private
wind farm developers and the CEB to assess the economic competitiveness
of wind farm sites. While wind resource assessments have been
undertaken for the Southern region, wind potential for north Sri
Lanka like the Nuckles region , Puttalam region or areas south
of Sinha Raja forest, remain to be assessed. This activity is
designed to lay the foundation for future windfarm investment.
1.2 to develop a methodology for
the evaluation of the mini hydro potential of river systems in
Sri Lanka in order to gain a National assessment of the mini
hydroelectric potential of the country. The objective here is
to look at a single river basin in a comprehensive fashion and
develop environmentally sound system of harnessing the mini hydro
resources of the nation. Most studies to date have focused on
developing large hydro projects which have very different parameters
to deal with. This activity will provide information for investors
and private sector firms seeking to install small hydro facilities
under the current ESD-sponsored Credit Line.
1.3 to undertake a detailed study
for Sri Lanka to identify by location, type and extent the land
available for commercial fuelwood plantations and to investigate
all aspects of private sector commercial forestry and use of agricultural
wastes for energy. The information will serve to strengthen the
evaluation of applications for biomass power under the ESD Credit
Line.
Objective 2: To improve access to and
confidence in the renewable energy technologies which are promising
for Sri Lanka. This will entail two activities, one targeted
at private-sector suppliers of small hydro equipment and the other
aimed at increasing consumer confidence in small hydro and solar
PV equipment. The activities under these objectives are listed
as follows:
2.1 To establish performance
and quality specifications and guidelines for photovoltaic and
mini hydro equipment (in cooperation with appropriately experienced
foreign organisations). This would also develop qualification
testing facilities and test methodologies to ensure satisfactory
equipment performance. This will serve to improve consumer confidence
in equipment and increase willingness to invest through the ESD's
credit line.
2.2 To support co-operation between
Sri Lankan private sector manufacturers of renewable energy technology
and foreign manufacturers or expert centres in order to develop
the capacity of the Sri Lankan industry in renewable energy technology
and improve the quality and range of equipment available locally.
In particular, this will facilitate in the development of small
hydro facilities in the range of 150 kW to 5 MW for deployment
under the ESD line of credit.
Objective 3: To improve the awareness of and familiarity
with the various forms of renewable energy which are promising
for Sri Lanka by working to enhance training for professionals
and information for the general public. This objective will be
achieved through three sets of activities:
3.1 To strengthen the capabilities and
resources of the private sector by providing energy efficiency
training through development of updated resource materials and
equipment for training courses provided by the Sri Lanka Energy
Managers Association (SLEMA), NERD Centre and others. Training
the private sector will support and complement CEB's DSM programme
initiative under the WB/IDA project.
3.2 To incorporate renewable energy and
energy efficiency into the curriculum of educational institutions.
Specialized training courses will be introduced rather than pure
academic courses. (Of direct relevance to the ESD project would
be the development of course materials at colleges and universities
for future architects, engineers and planners.); and
3.3 To promote and popularize renewable
energy technologies, particularly wind, small hydro, PV's, and
biomass power which will improve the public's familiarity with
these technologies and improve their ability to take advantage
of the opportunities available under the ESD and its associated
credit line.
PROJECT DESCRIPTION
14. As currently envisioned, the project will consist
of eight activities in pursuit of removing the three barriers
under the three objectives. The following section discusses each
component of the proposed project. The discussion focuses on
the objectives of the component, a description of the activity,
justification, transaction barriers to be overcome, the proposed
partners for implementing the activity and the anticipated outcome.
Objective 1: Improved Renewable Resource Assessments
This objective will be achieved via the following three
activities, all aimed at improving the information base for renewable
energy investments.
Activity 1.1 : National Wind Resource
Assessment (Cost: US$ 380,000)
Description: Wind monitoring stations
will be set up along the West coast and other regions of Sri Lanka
and hourly wind data logged at normal meteorological data measurement
height and also at wind turbine hub height.
Justification: The wind resource has only
been measured comprehensively in the southern lowland areas (since
1990 by CEB with support from the Netherlands Government). However
should wind farm developments proceed at the rate experienced
in India, for example, it is necessary to identify which areas
in addition to the southern lowlands are suitable for wind farm
development (both in terms of
wind resource and the grid potential to absorb
the power). To date, the necessary wind data exists only in one
small area of the country. This activity will provide a an expanded
wind resource assessment to lay the foundation for future wind-farm
development.
Partners: Ceylon Electricity Board (CEB)
Expected Outputs: This activity is expected
to yield the following outputs:
a) identification of possible locations
for wind farm development;
b) enhanced capacity of CEB for wind
farm application assessment;
c) wind resource data-base for national
energy policy; and
d) data for wind pump and wind-powered
battery chargers will be readily available.
Activity 1.2: Mini Hydro Power Resource
Assessment (Cost: US$ 330,000)
Description: Working in consultation
with international consultants the mini hydro potential of a complete
river system will be investigated by means of investigating the
hydrological cycle in the areas (rainfall, evaporation, river
flow and sub surface flow) along with topography and head analysis.
This investigation will be undertaken along with environmental
scientists to take into consideration such areas (e.g.central
hilly waterfall areas) where any significant civil construction
(weir, forebay, penstock, power house) and water diversion is
considered detrimental to the environment and thus not an exploitable
resource.
Previous efforts undertaken by ESMAP and the CEB
have focused on assessment of small hydro potential on tea estates.
The WB/ESD project focuses on mini hydro system for 20 villages.
The UNDP renewable energy project will use the CEB to conduct
a detailed analyses for either Gin Ganga or the Walawe Ganga.
The methodology and procedures developed will then be applied
to other areas in order to obtain a national assessment.
Justification: A Master plan for the Electricity
Supply of Sri Lanka was completed by CEB in 1989 with support
from Germany. This study did not however consider detailed mini
hydro potential with respect to complete river systems. In addition
ITDG Sri Lanka (an NGO) is evaluating the resource in tea estates
where mini hydro was introduced but has since been discontinued
(but this does not provide national data). Mini hydro is an environmentally
benign energy resource with the potential for indigenous manufacture.
This information will accelerate the uptake of small hydro installation
under the present ESD project and future investment programmes.
Local partners: CEB and environmental
scientists (e.g. from UDA who are undertaking studies in the central
waterfall areas) and local NGO (ITDG Sri Lanka)
Expected Outputs: Five outputs are anticipated
from this activity:
a) a detailed assessment of the mini-hydro
potential of at least one river system;
b) a methodology for the evaluation of
small hydro for application in other river assessments;
c) strengthened capacity of CEB for small
hydro and environmental impact assessments;
d) the environmental considerations for
mini-hydro in Sri Lanka will be assessed; and
e) data on small hydro will be made available
for national energy policy.
Activity 1.3: Assessment of Dendro Thermal
Power and Commercial Biomass (Cost: US$ 300,000)
Description: A detailed assessment
of the potential for energy from Biomass will be undertaken by
international and national experts. Consideration will be taken
of commercial uses of Biomass, marginal lands, forestry management,
appropriate types of plants etc. Pilot dendro thermal electricity
generation stations either being proposed privately or initiated
by the study will be examined in detail.
Justification: Biomass is the principal
energy resource of Sri Lanka. Improved utilisation and management
of the resource can reduce future needs for fossil fuel power
generation and reduce deforestation. In 1993 an inter ministerial
group set up by the late president recommended such an activity.
However, in order to formulate a national energy policy/plan
which fully takes into consideration a low greenhouse gas production
renewable energy source such as biomass, the resource has to be
identified taking into consideration any ecological impacts in
sensitive areas. The proposed World Bank line of Credit for the
ESD project will be available for electricity from Biomass. Therefore,
the results of this activity can lead to further investment almost
immediately.
Local partners: Alternative Energy Division
(AED)of the Ministry of Science and Technology in association
with local and international consultants
Expected Outputs : This activity is targeting
five specific outputs:
a) a detailed assessment of commercially
viable energy plantation potential in Sri Lanka;
b) a data base on forest plantation
and woody biomass availability for national energy policy;
c) pilot projects identified,
including one dendro-thermal power plant feasibility study, including
the environmental impact assessment;
d) strengthened capacity of AED
in the biomass arena; and
e) identification of appropriate
energy crop type.
Objective 2: Improve Access to and Confidence in Renewable
Energy Technologies
The two activities included under this objective are intended
to improve the quality of the renewable energy technologies available
locally as well as instilling in consumers a greater confidence
in their quality and reliability.
Activity 2.1 Renewable Energy Equipment
Certification (Cost: US$ 250,000)
Objectives: to ensure adequate control
on the performance and quality of renewable energy equipment entering
the market in Sri Lanka to strengthen consumer confidence and
to prevent damage to the reputation of renewable energy due to
inappropriate equipment entering the market.
Description: Guidelines will be developed
by a national expert committee (in consultation with experienced
national and international organisations) on the design, performance
and quality of renewable energy technology equipment that may
be entering the market. This will be accompanied by the development
of some qualification testing procedures and test facilities for
equipment certification at the National Engineering Research and
Development (NERD) centre, and to monitor equipment being offered
for the ESD and other projects. Such facilities are nearly non-existent
for micro and mini hydro equipment and will be the first priority
in view of expansion plans for this source of power generation.
To date, though emphasis has been put on development of specifications
for solar photovoltaic, additional training is required to match
the increasing demand for this service.
Justification: This component seeks to
remove barriers to technology penetration. It is essential that
equipment be certified by the recommended national committee to
attract banking mechanisms that ensure long term financial sustainability.
Failure to maintain quality or appropriateness of renewable energy
equipment may seriously damage the development of the market.
By removing thise barriers to accepttance, it is hoped to improve
the rate of private sector investment under the ESD credit line.
Local partners: NERD Centre (Ministry
of Science and Technology), with inputs from CEB, Ceylon Institute
of Scientific and Industrial Research (CISIR) University of Moratuwa,
private sector industry and Sri Lanka Standards Institute.
Expected outputs: This activity is intended
to achieve four specific outputs:
a) design guidelines and specifications
for renewable energy equipment in Sri Lanka
b) improved quality control of equipment
in use;
c) enhanced capacity and facilities at
NERD for renewable energy equipment certification; and
d) greater consumer confidence (and therefore
confidence to invest) in renewable energy equipment.
Activity 2.2: Private Sector Capacity
Building on Mini-hydro technologies
(Cost: US$ 260,000)
Description: This activity will support
Sri Lankan industry to liaise with foreign companies and manufacturing
and marketing experts to develop improved equipment. This is particularly
important in the mini hydro grid connected sector where no indigenous
industry exists at present (indigenous capacity is stand alone
village micro-hydro) and thus where dialogue with foreign industry
and visits to, for example, the Chinese Small Hydro Centre in
Hangzhou or the UNDP-GEF hilly hydro project in India would be
beneficial.
Justification: This component seeks to
improve the quality and the quantity of small hydro equipment
available in Sri Lanka. The long term sustainability of the renewable
energy technologies in Sri Lanka is dependent upon the equipment
suppliers remaining competitive and having skills resulting from
a greater range of renewable energy equipment being made available
in Sri Lanka. As there is no indigenous manufacture of grid connected
mini-hydro equipment in the range of 150 kW to 5 MW (in contrast
to stand-alone micro hydro of capacity less than 150 kW), this
component seeks to develop the industry and increase skill levels
through international exchange of staff and experiences. This
will lead to imediate strengthening of line of credit applications
under ESD.
Local partners: Private Sector industry
with support from NERD
Expected Output: The expected outputs
from this component are twofold, namely:
a) increased availability of mini-hydro
components in Sri Lanka; and
b) improved engineering and technology
skills in the industry
Objective 3: Improved Knowledge and Skills of Renewable Energy
and Energy Efficiency
Activity 3.1: Strengthening Private Sector
Energy Efficiency Capabilities (Cost US$ 140,000)
Description: Since 1984, SLEMA has
offered and conducted energy efficiency training courses and workshops
for current energy managers and associated professionals. These
activities were partially supported by the Government of the Netherlands.
It is proposed to strengthen this capacity by supporting the major
revision of seminar reference books and course material in association
with international experts from the region since existing training
materials are out of date and do not fully conform with current
best practices for energy efficiency measures. Procuring updated
instrumentation will also be covered here. The target audience
for this activity will be existing and potential energy managers
in industrial and commercial facilities. It is executed in a
manner parallel to but distinct from the way CEB staff is covered
by the IDA project. A series of energy efficiency workshops targeted
at selected sectors of the economy will be conducted. As other
organisations are also involved in this area, e.g. NERD, it is
proposed the Energy Conservation Fund (ECF) execute the project
and call for proposals from other energy efficiency organisations
to organise and conduct workshops or seminars to complement those
of SLEMA.
Justification: This component seeks to
remove barriers to technology penetration. Although SLEMA has
undertaken energy efficiency workshops periodically since 1984,
they recognise that there is scope for updating the information
and format of the workshop material. These workshops are a direct
path for introducing best practices on energy efficiency to energy
managers throughout the commercial and industrial sectors. The
effects of this component, by raising awareness and technical
capability among the target groups, will support and complement
CEB's DSM initiative with existing commercial and industrial sector
customers. This will lead to an improved level of awareness of
best practices in energy management and increase the likelihood
that these customers participate in CEB's DSM management.
Local partners: Energy Conservation Fund
and SLEMA
Expected Outputs: This activity will have
two outputs, listed below:
a) updated materials and capabilities for energy
efficiency training and promotion, and
b) improved level of awareness and capabilities
on implementing energy efficiency in the private sector.
Activity 3.2: Energy Efficiency and
Renewable Energy in Education (Cost US $ 330,000)
Description: Curricula would be developed
for the teaching of energy efficiency in building design in the
engineering and architectural schools of the University of Muratowa,
Open University ASL, and other institutions, where appropriate.
It is proposed that regional and international energy efficiency
experts experienced in teaching practices work with the lecturers
and Sri Lankan organisations (CEB DSM Unit, UDA, SLEMA etc..)
to develop the curricula. In a similar manner it is proposed
to enhance the renewable energy teachings in the Universities
of Muratowa and Perademiya though curriculum development and enhancing
facilities. This will be done in association with others working
in the field regionally and internationally. In order to take
these activities to the most fundamental level, the university
staff will also develop material suitable for increasing the level
of awareness of energy efficiency/conservation in secondary schools.
In contrast to Activity 3.1, this focuses on improving the training
for future energy managers instead of present energy managers.
Justification: This component seeks strengthen
the capabilities of Sri Lankan institutions to educate and train
their charges with respect to energy efficiency and renewable
energy, the keys to solving the climate change problem. There
is little evidence to indicate that energy efficiency is taken
into consideration in modern building design in Sri Lanka. The
World Bank ESD is supporting the development of an energy efficiency
building code (with the CEB DSM unit and UDA). It is important
to introduce this to young architects and building professional
at the earliest opportunity through incorporation into their professional
training.
Local partners: Energy Conservation Fund
working with the Ministry of Education and educational establishments.
Expected Outcome: This activity, which
is designed to increase the knowledge and familiarity of Sri Lankan
professionals with enhanced energy efficiency and renewable energy,
will have three specific outputs:
a) a new awareness of energy efficiency
in building design with architects;
b) new curricula developed with renewable
energy in universities; and
c) increased awareness of energy efficiency
and renewable energy in schools.
Activity 3.3: Renewable Energy Technology
Promotion (Cost: US$ 60,000)
Description: To undertake a promotion
campaign for renewable energy equipment on radio, television,
the press and using other methods that may be identified. This
activity will coincide with the availability of the Credit Line
Component of the ESD project and will seek to increase public
participation in the ESD programme.
Justification: The private sector companies
involved in the solar home systems have indicated the need for
potential users to have a greater level of awareness in order
to develop the market and make use of the ESD credit line. They
believe that such information is more credible when it is disseminated
from independent agencies rather than from the private companies
marketing the equipment.
Local partner: Energy Conservation Fund
Expected Outputs: Three outputs can be
expected as a direct result of this activity:
a) implementation of a large public awareness
campaign for renewable energy;
b) increased public awareness and participation
in the ESD project; and
(c) greater applications for and up-take
of renewable energy systems.
INSTITUTIONAL FRAMEWORK AND PROJECT IMPLEMENTATION
15. The Ministry for Irrigation Power and Energy will
be the executing agency with a Project Management Unit (PMU) within
MOIPE or CEB (under the auspices of MOIPE). Given the large number
of stakeholders involved in this project, a Project Advisory Committee
has been established to ensure adequate supervision of and participation
in project activities as well as to ensure coordination with the
ESD project. Project implementation will be managed as follows:
Ceylon Electricity Board (under the auspices of
the Ministry of Irrigation, Power and Energy) for Activities 1.1
and 1.2 (Wind monitoring and mini hydro resource identification)
Alternative Energy Division of the Ministry of Science
and Technology (for Activity 1.3 Biomass assessment, Activity
2.1 - Renewable Energy Certification with NERD, Activity 2.2-
private sector mini-hydro capacity building, with NERD),
Energy Conservation Fund (under the auspices of
the Ministry of Irrigation Power and Energy) for Activity 3.3
(Renewable Energy technology promotion) and Activity 3.2 Energy
Efficiency and Renewable Energy in the education sector).
A Project Advisory Committee (PAC) would be drawn
the large number of stakeholders involved in the project. It
will include those ministries, agencies, and financial institutions
most directly involved in the ESD project to ensure adequate coordination
between the activities (those agencies playing a key role in the
ESD project are marked with an asterick(*)). Its membership
will be drawn from:
Ministry of Power, Irrigation and Energy (Chair)
Alternative Energy Division of the Ministry of
Science and Technology
Ministry of Transport Environment and Women's
Affairs
Ministry of Agriculture (Forestry Planning Unit)
Ministry of Finance*
Ceylon Electricity Board*
Energy Conservation Fund
Sri Lanka Energy Manager's Association (SLEMA)
NERD
The Sri Lanka NGO Energy Forum and other NGO's
ITDG Sri Lanka
The University of Moratuwa
16. At the August 1995 Global Environment Facility Operations
Committee meeting (GEFOP) it was agreed that the UNDP would work
closely with the World Bank and Government of Sri Lanka (GOSL)
to develop a Technical Assistance project that would complement
the Energy Services Delivery (ESD) project in Sri Lanka to be
partly funded by GEF and partly by UNDP (IPF), the GOSL and/or
bilateral agencies. In light of the above a UNDP consultant joined
an IDA team mission in Sri Lanka to identify components of the
proposed TA project for possible UNDP/GEF funding. The proposed
institutional framework thus takes into consideration the framework
of the ESD project.
17. Technical assistance (TA) to support the ESD project directly
is already being proposed in the IDA/GEF proposal in two main
areas:
(i). TA to the CEB's pre-Electrification Unit (PEU)
to support private sector and NGO developers of renewable energy
electricity service delivery schemes. The PEU will undertake feasibility
studies, design reviews, testing and developing standards
(ii). TA to the CEB's Demand Side Management (DSM) Unit
for Load Research and in particular initially the development
of a DSM Action Plan and DSM Load Research Programme Implementation
plan
18. As part of the joint programming initiative in Sri Lanka,
six elements of the UNDP initiative were meant to strengthen directly
the World Bank ESD project, namely, Activities 1.3, 2.1, 2.2,
3.1, 3.2 and 3.3. Activity 1.3 will identify future biomass
power installations which can be funded under the ESD project.
Activities 2.1 and 2.2 should help secure the design of and standards
for technologies involved in small hydro and other renewable energy
investments. Activities 3.1, 3.2 and 3.3 are intended to strengthen
the capabilities of Sri Lankan energy managers, architects and
engineers and the public at large to avail themselves of the opportunities
under the ESD project as well as increasing the pool of skilled
Sri Lankans familiar with the new building codes and renewable
energy. The remaining two elements of the project, Activity 1.1
and 1.2 are intended to the foundation for future renewable energy
investments by providing more information about renewable resources.
19. It is not intended that all the objectives of the 12UNDP/Sri
Lanka Renewable Energy project flow into the World Bank/Sri Lanka/ESD
project. This is because the scope of the UNDP/Renewable Energy
project is wider than the World Bank/ESD project, providing a
supportive environment for development and dissemination of renewable
energy technologies. Since the bulk of the Sri Lanka/World Bank/ESD
project is provision of credit line to be administered by financial
units, institutional strengthening for dissemination of renewable
energy technologies through, for example, enlightened private
sector energy managers, is expected to go a long way in establishing
financial stability of the ESD credit line.
20. There are numerous participating agencies and stake holders
in the Sri Lanka/UNDP Renewable Energy project. This reflects
the varied range of activities the project is expected to cover
in its attempt to create an overall environment for development
and dissemination of renewable energy technologies in Sri Lanka.
The World Bank/ESD project, on the other hand, has a single major
partner agency i.e., the Ministry of Finance, through which it
can access development banks and other administrative units. A
co-ordinating mechanism is therefore expected to be set up to
ensure operational complementarities between the two project activities.
CONSULTATIVE PROCESS
21. This project proposal was developed under a joint
UNDP-World Bank mission in November 1995. Discussions were held
with MOIPE, Ministry of Science and Technology, Ministry of Transport
Environment and Women's Affairs, Ceylon Electricity Board, SLEMA,
Energy Conservation Fund, Urban Development Authority, University
of Morituwa, CISIR, NERD, SL Standards Institute, PV Industry
(Exide Batteries and Power and Light) and NGO's (ITDG Sri Lanka
and Solanka Associates). The proposal was also drafted in close
co-operation with UNDP and World Bank representatives in Sri Lanka.
Earlier drafts of the proposal were provided to the Sri Lankan
participants for review.
NGO LIAISON
22. There is an NGO Energy Forum operating in Sri Lanka.
Discussions were held with the Secretariat (ITDG Sri Lanka), with
the principal micro hydro NGO (ITDG Sri Lanka) and one of the
principal photovoltaic NGO's (Solanka). Their suggestion have
been incorporated into the design of the current project, and
several NGO's will be involved in project implementation.
MONITORING AND EVALUATION
23. Tripartite reviews will take place according to UNDP/GEF
rules each year of the project. In addition, GEF will pay for
additional technical consultants to attend the tripartite reviews
and ensure adequate attention to project success. In addition,
the monitoring of each individual activity will be supported as
part of that activity.
SUSTAINABILITY
24. The project includes significant capacity building
components and involves the key renewable energy and energy efficiency
agencies working together. It is intended to create a more sustainable
environment for renewable energy dissemination in Sri Lanka.
Once the curricula are designed under Objective 3, they will be
incorporated into the ongoing training and education programmes.
RATIONALE FOR GEF SUPPORT
25. This project is fully consistent with GEF objectives
and has been prepared under the evolving guidelines for Climate
Change Long-Term Operational Programme 2: Promoting the Adoption
of Renewable Energy through Removing Barriers and Reducing Implementation
Costs. The project will enable and assist in the development
of wind, hydro and biomass technologies for grid connected power,
PV for non-electrified areas and improve the capacity for implementing
the use of low carbon energy sources as well as improve the efficiency
in energy use.
INCREMENTAL COSTS
26. In the absence of this TA project, the development
of wind, mini-hydro, PV and biomass technologies would develop
more slowly in Sri Lanka and the disbursements under the ESD project
would also be much slower. The incremental cost summary is presented
in Annex 1.
PROJECT COSTS
27. The overall project cost is estimated as US$2.114 million
summarised by component below:
Total Cost UNDP & Others GoSL
Cost GEF
US$000 US$000 US$000 US$000
Activity 1.1 Wind Monitoring 380 70 30 280
Activity 1.2 Mini Hydro Assessment 330 70 30
230
Activity 1.3 Dendro-thermal Power Assessment 300 70
30 200
Activity 2.1 Certification of Ren. Energy Equip. 250
-0- 30 220
Activity 2.2 Mini-Hydro Industrial Support 260 45
15 200
Activity 3.1 Energy Manager's Energy Eff. Training 140
125 15 -0-
Activity 3.2 R.E. and Energy Eff. in Education 330 20
45 265
Activity 3.3 R.E. Promotion Campaign 60 -0-
5 55
Subtotal 2,050 400 200 1,450
Monitoring/Evaluation 20 -0- -0- 20
Support Costs (3%) 44 -0- -0-
44
TOTAL 2,114 400 200 1,514
The basis of the costing is presented in Table
1.
PROJECT FINANCING
28. The Government of Sri Lanka (GoSL) will agree to co-financing
of US$400,000 from either UNDP's IPF or the contribution of other
donors. The GOSL itself will makes its own contribution of $200,000
in support of salaries of staff and other in-kind contributions.
(See Table 1)
29. The GEF contribution sought is thus US$1.514m.
RISK ISSUES
30. The principal risk to the proposed project is that
the capacity of the implementing institutions may not be sufficient
to undertake or manage the proposed components of the project.
This risk is highlighted with respect to the implementing institutions
as follows:
(a) The Ceylon Electricity Board (CEB) is already the
key implementing organisation for the IDA/GEF Technical Assistance
component of the ESD project. The boundaries of the various components
of the IDA/GEF and UNDP/GEF project may become confused and there
will be significant demands made upon the CEB by the ESD project,
thus slowing the implementation of both projects;
(b) The Alternative Energy Division of the Ministry of
Science and Technology has recently had new senior staff appointed.
The success of this project will depend upon their capabilities
as programme managers; and
(c) The Energy Conservation Fund has not been a key player
in the Renewable Energy and Energy Efficiency activities in Sri
Lanka until recently and again has had a change of staff in recent
months. Such rapid changes of staff, if they continue, will undermine
the continuity needed for successful project completion.
Table 1. Component Cost Summary
Activity |
Project Staff US $ '000 |
SubcontractsConsultants US$' 000 |
Equipment + US$ '000 |
Other US$ '000 |
COMPONENT COST US$ '000 |
1.1 Wind Monitoring |
60
|
75
|
150 |
95
|
380 |
1.2 Small Hydro Assessment |
60
|
75
|
105 |
90
|
330 |
1.3 Biomass Assessment |
60
|
75
|
75
|
90
|
300 |
2.1 Certification of R.E. Equipment |
60
|
40
|
100
|
50
|
250 |
2.2 Hydro Industry Strengthen. |
30
|
75
|
50
|
105 |
260 |
3.1 Strengthening Private Sector Energy Efficiency |
30
|
25
|
65
|
20
|
140 |
3.2 Energy Efficiency and R.E Education |
90 |
100 |
70 |
70 |
330 |
3.3 R.E. Promotion Campaign |
10
|
10
|
35
|
5 |
60 |
Subtotal Monitoring and Evaluation Support Costs inc. Executing Agency Costs (3%) |
400** |
475 |
650 |
525 |
2,050 20 44 |
TOTAL |
2,114 |
| Transaction Barrier | Activity | GEF Cost ($000) | UNDP Cost ($000) | GoSL Cost ($000) | Total Cost ($000) | Likely Incremental Cost | How will activity be replicable? |
| Resource Assessments Inadequate to Support Renewable Energy Investments | 1.1 Wind monitoring 1.2. Small Hydro Assessment 1.3 Biomass Assessment | 280 230 200 | 70 70 70 | 30 30 30 | 380 330 300 | Monitoring Costs are Positive-- Follow-on investments will be negative or nearly so | With detailed information bases for wind, biomass, and small hydro, individuals, communities and firms can both make investment decisions and obtain financing |
| Limited Technological Options, Experience and Infrastructure | 2.1 Certification of R.E. Equipment 2.2 Support to Small Hydro Ind. | 220 200 | --0-- 45 | 30 15 | 250 260 | Standards: positive inc. cost for consumer confidence; Industry strengthen: positive, leading to neg inc. cost invest. | Standards strengthen confidence & willingness to invest; Technological assist increase options open in Sri Lanka |
| Shortage of Information in Hands of Professionals and the General Public | 3.1 Private Sector Energy Manager Trng. 3.2 Training for Energy Eff and R.E. 3.3 RE Public Promotion Campaign | -0- 265 55 | 125 20 | 15 45 5 | 140 330 60 | Energy managers and professionals need better training to manage and utilize improved energy efficiency and R.E.; Public needs information to be able to avail themselves of ESD programme | After project, training programmes will be folded into existing curricula; Information on ESD project and Energy Efficiency Fund will be revised and updated |
Missing from this proposal are two key items: market assessment and the creation of business infrastructure. A careful assessment of the various market segments is needed to encourage, if the potential market warrants it, private sector interest and investment; and to prioritize activities. As these activities will be largely creating a new industry in Sri Lanka, it may be necessary to also support the creation of a viable national industry for much of the work. This might include matchmaking with financial entities, business incubators, business training (not specifically renewables), and others. NREL has considerable expertise in many of these areas; please let me know if we can be of assistance.
Annex 3
LETTER OF ENDORSEMENT
DEPARTMENT OF EXTERNAL RESOURCES Ministry of Finance, Planning, Ethnic Affairs and National Integration The Secretariat, 3rd Floor PO Box 277, Colombo 19 February 1996
Resident Representative UNDP Office Colombo, Sri Lanka
Dear Sir:
SRI LANKA RENEWABLE ENERGY & CAPACITY BUILDING PROJECT
This refers to your letter dated 14th February 1996 on the above subject.
We are pleased to inform you that we are in agreement with the project proposal. Further, we would like to inform you that the programme identified under the project are of high priority areas of the Power & Energy Sector in Sir Lanka and also this project will be complementary to the proposed Energy Services Delivery Project of the World Bank.
I shall be grateful if you would kindly obtain the GEF financial facilities for the proposed project.
Yours faithfully,
N. Madanayake, Director for DG/ERD
cc: 1. S/Irrigation, Power & Energy 2. S./Science 7 Technology 3. DG/National Planning Dept.