CEB On A Coal Spree
By Camelia Nathaniel
It is highly strange that at a time when much of the world is now switching to renewable and other 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 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 plant at
Trincomalee will be carried over to interior of the land during the North East monsoon winds. Even during the inter-monsoon periods, the local winds across the coast will spread the pollutants over the land. Thus, the North Western, North Central and Eastern Provinces will be coveredwith fly ash during most parts of the year, charged Dr Ratnasiri.
“The enhancement of the concentration of particulates at ground level could be determined by carrying out dispersion modelling and local expertise is available to carry out this task. Regrettably, CEB has failed to get this exercise done. An enhancement of particulates in air will increase the risk of people exposed being subject to respiratory ailments, particularly the elderly and children. The government will have to spend billions of rupees more for the treatment of these people, but this cost has been ignored when working out the so called “least cost” options. For people in these provinces who are already suffering from kidney disease, it is nothing but falling from the frying pan to the fire,” he said.
“Sri Lanka has gazetted the Ambient Air Quality (AAQ) Standards and it is essential that these standards are not violated. The LTGE Plan has not addressed the issue of how the ambient air quality will deteriorate with the installation of so many coal plants.” The Plan, though, has a chapter on environmental implications, in which it mentions only the rate at which various polluting gases are released under different scenarios but has not worked out how they would affect the ambient air quality and, in turn, the environment and the health of the population.
Damage to human health
According to Dr Ratnasiri, the Plan is claimed to be an exercise carried out to determine the least cost options to generate electricity to meet the growing demand for it. “What has been included is the cost to the CEB only, but what should have been included are the costs both to the CEB and the government. The damage caused to the environment as well as to human health has not been considered in the Plan, this too is a cost. It is estimated that over 4,500 tonnes of coal ash will be collected a day from all the 16 plants. Their safe disposal will cost an enormous amount. In addition to this direct cost, there are hidden costs caused by the leaching of heavy metals such as mercury, cadmium, arsenic and also radioactive substances from the ash dumps into the water table. None of these issues has been considered in the Plan,” he said.
Meanwhile, R Anil Cabraal, Director, KMRI Lanka (Pvt) Ltd and Board Member, Energy Forum of Sri Lanka told The Sunday Leader that, if you look at it purely on a financial basis, 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 mainly 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 in 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 avoid similar 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 done in 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 this may foretell a much larger problem when coal generation share is much higher. “Already, the expansion plan assumption 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 green light is given will we proceed,” he said.
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 import 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 well,” 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 long run. However, our next option is petroleum and that is a much higher cost than coal, as we have economically harnessed all available 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.”
“Coal is the most viable option”
- Additional General Manager CEB
M C Wickremasekera
“Prices of all commodities will increase in the long run. However, our next option is petroleum and that is much higher than coal, as we have economically harnessed all available 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.”
“Billions more will have to be spent on health issues”
- Dr Janaka Ratnasiri
“An enhancement of particulates in the air will increase the risk of people exposed being subject to respiratory ailments, particularly the elderly and children. The government will have to spend billions of rupees for the treatment of these people, but this cost has been ignored when working out the so called ‘least cost’ options. For people in these provinces, who are already suffering from kidney disease, it is nothing but falling from the frying pan to the fire.”
“The CEB takes no personal or corporate consequence in making wrong investment decisions.”
- Dr Amal Cabraal
“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 a more efficient and responsive organisation.”
The high cost of health and environment damage
According to a publication of the International Energy Agency on Environmental and Health Impacts of Electricity Generation (IEA, 2002), one GWh of electricity generation by a CPP typically releases 117 g of mercury, 110 g of nickel, 114 g of chromium, 220 g of lead, 323 g of zinc, 76 g of arsenic, 29 g of cobalt and 5 g of cadmium.
The 900 MW Puttalam Plants and the 1000 MW of Trincomalee Plants, when in full operation, will generate, annually, 6,300 GWh and 7,000 GWh of electricity, respectively.
Therefore, these two plants will jointly release, annually, 1.6 tonnes of mercury, 1.5 tonnes of nickel, 1.5 tonnes of chromium, 2.9 tonnes of lead, 4.3 tonnes of zinc, 1.0 tonnes of arsenic, 0.4 tonnes of cobalt and 0.07 tonnes of cadmium to the soil, all of which are health hazards.
The impact of releasing these quantities of heavy metals to the environment needs to be studied and reported.
“Hence, it is important that in computing the cost of generation of electricity from fossil fuels, the cost of health damage and environmental damage caused by emissions and effluents be also included into the cost factor. This would at least double the cost of electricity from coal,”
- Dr Janaka Ratnasiri.