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 BUILDING
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).
4. 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.
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. 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.
7. Under the auspices of the Ministry of Irrigation Power and Energy, the Ceylon Electricity Board is a key player in the Renewable Energy and Energy Efficiency sector.
8. 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 OBJECTIVES9. 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 2, Promoting the Adoption of Renewable Energy by Removing Barriers and Reducing Implementation Costs.
10. 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.
11. 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.
12. 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.
The activities under these objectives are listed as follows:
13. 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.
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:
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. Transaction barriers: In order to formulate a national energy policy/plan which fully takes into consideration a low green house gas production renewable energy such as small hydro power, the resource has to be identified taking into consideration any ecological impacts in sensitive areas. 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:
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 green house 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:
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.
Objectives: to ensure adequate control on the performance and quality of renewable energy equipment entering the market in Sri Lanka to prevent damage to the reputation of renewable energy from 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.
Transaction Barriers: User acceptance of a new technology. This component will assist in gaining user confidence.
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:
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 contrast to stand-alone micro hydro), this component seeks to develop the industry and increase skill levels through international exchange of staff and experiences.
Local partners: Private Sector industry with support from NERD
Expected Output: The expected outputs from this component are twofold, namely:
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 and executed in a manner similar to 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:
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. As 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:
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:
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). 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 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
14. 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.
15. 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
16. 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.
17. 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.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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.
23. 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.
24. 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.
25. The overall project cost is estimated as US$2.114 million summarised by component below:
| Activity | Total Cost US$000 |
UNDP & Others US$000 |
GoSL Cost US$000 |
GEF US$000 |
|---|---|---|---|---|
| Activity 1.1 Wind Monitoring | 380 | 70 | 30 | 280 |
| Activity1.2 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.
26. 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)
27. The GEF contribution sought is thus US$1.514m.
28. 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:
Activity Project SubcontractsCo Equipment + Other COMPONENT
Staff nsultants COST
US $ '000 US$' 000 US$ '000 US$ '000 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. 60 40 100 50 250
Equipment
2.2 Hydro Industry 30 75 50 105 260
Strengthen.
3.1 Strengthening Private 30 25 65 20 140
Sector Energy Efficiency
3.2 Energy Efficiency and 90 100 70 70 330
R.E Education
3.3 R.E. Promotion 10 10 35 5 60
Campaign
Subtotal 400** 475 650 525 2,050
Monitoring and Evaluation 20
Support Costs inc.
Executing Agency Costs 44
(3%)
TOTAL 2,114
** The GoSL will finance 50% of Staff Costs.
1. Broad Developmental GoalsSri Lanka is attempting to fulfill its energy needs for a largely rural population which currently uses mostly woodfuel and some kerosene for lighting. The bulk of the population has no access to electricity.
2. Baseline: Under the baseline, two courses of action could be envisioned. The first is that the current situation, with the rural population dependent upon traditional fuels supplemented by kerosene would continue to be the rule for the foreseeable future. While this might be considered to be likely, it is not clear that it is wholly environmentally sustainable, given the heavy dependence upon woodfuel. The second option sees a much heavier role for electrification drawing upon conventional fuels, large-scale hydropower and a very limited use of renewables. This second option is a more ambitious, development-oriented scenario, but it is not clear that it is financially viable. The actual baseline, without this project and the companion ESD project, is likely to fall somewhere in-between.
3. Global Environmental Objective: The global environmental objective being pursued in this project is the reduction of GHG's from the energy sector in accordance with the goals of the climate change convention.
4. GEF Alternatives The GEF alternative includes the activities described in the project brief, namely, increased renewable energy assessment, improved development of renewable energy technology capabilities, and increased information and training for both professionals working in the field and the general public. In the absence of the project, it is not clear that these activities would take place in a systematic and comprehensive manner without GEF support.
5. System Boundary For the sake of this discussion, the Sri Lanka energy system constitutes the boundary.
6. Additional Domestic Benefits: There will be considerable domestic benefits associated with the information, technological improvement and training components of this project. However, most of the costs are not immediately recoverable. Co-financing to cover these 'baseline costs' and benefits has been raised from both the UNDP/Others and other financiers and the GoSL.
In terms of additional domestic benefits, there will be a decrease in pollution from any fossil-fuel fired plants which are avoided or delayed. There will also be the potential for professionals trained in energy management to filter out of the renewable energy sector to other sectors of the economy. A third area of domestic benefits may come from any reduced pressure or rationalized pressure on Sri Lanka's forest resources.
7. Costs: The cost of the project activities are take to be approximately US$2.05 million. There are no hard and fast accounting rules that have been applied to estimate these figures as the baseline is not readily quantifiable. Nevertheless, baseline funding of US$600,000 has been committed. In addition, since Activity 3.1, Energy Manager's training can be considered an energy efficiency activity and therefore falling under GEF CC Programme 1, its entire costs are being met from the baseline or co-funding contribution so as not to confuse GEF's programmatic evaluation. In a similar manner, since Activity 3.3, Renewable Energy Promotion Campaign would not be undertaken without the need to support the ESD project, its costs are considered to be fully incremental.
8. Incremental Cost MatrixThe matrix is applied to the three transactions barriers described in Annex I-1.
9. Agreement: The GoSL has agreed with the financing arrangements presented in this document.
Transaction Barrier Activity GEF Cost UNDP GoSL Total Likely Incremental How will activity
($000) Cost Cost Cost Cost be replicable?
($000) ($000) ($000)
Resource Assessments 1.1 Wind With detailed
Inadequate to monitoring 280 70 30 380 information bases
Support Renewable Monitoring Costs for wind, biomass,
Energy Investments 1.2. Small Hydro are Positive-- and small hydro,
Assessment 230 70 30 330 individuals,
Follow-on communities and
1.3 Biomass investments will be firms can both make
Assessment 200 70 30 300 negative or nearly investment
so decisions and
obtain financing
Limited 2.1 Standards: positive Standards
Technological Certification of 220 --0-- 30 250 inc. cost for strengthen
Options, Experience R.E. Equipment consumer confidence &
and Infrastructure confidence; willingness to
2.2 Support to 200 45 15 260 Industry invest;
Small Hydro Ind. strengthen: Technological
positive, leading assist increase
to neg inc. cost options open in Sri
invest. Lanka
Shortage of 3.1 Private Energy managers and After project,
Information in Hands Sector Energy -0- 125 15 140 professionals need training programmes
of Professionals and Manager Trng. better training to will be folded into
the General Public manage and utilize existing curricula;
3.2 Training for improved energy
Energy Eff and 265 20 45 330 efficiency and Information on ESD
R.E. R.E.; Public needs project and Energy
information to be Efficiency Fund
3.3 RE Public able to avail will be revised and
Promotion 55 5 60 themselves of ESD updated
Campaign programme
By: Sam Baldwin, National Renewable Energy Laboratory (NREL)
Per the fax dated Thursday, Jan. 4, to review the proposal Sri Lanka: Capacity building and Resource Assessments for Renewable Energy and Energy Efficiency.
1. Overall, the project seems to be appropriately focused, with high priority needs identified and reasonable approaches to meeting these needs outlined.
2. This project directly addresses concerns of the Climate Change Convention and national responses.
3. The general approach of the project is appropriate, with changes noted below.
4. Project objections are valid, well focused, and achievable, with changes noted below.
5. Although probably not appropriate in this document, additional information and analysis of potential renewable and energy efficiency markets may be needed.
6. The activities outlined are appropriate.
7. Funding levels for this round of activities is adequate.
8. The time frames listed are probably appropriate, although in general these programs tend to move more slowly than desired.
9. Additional Comments on each section follow:
National Wind Resource
Assessment: Only grid-connected wind farms and isolated stand-alone systems
are listed under "objectives." Potentially as important for Sri Lanka are wind
systems for wind-diesel hybrid systems for village minigrids. Wind-electric
pumpers may also be as good or better than standard wind mechanical pumpers.
Wind resource assessment is a key area for investment to prompt initial wind company interest, but it should be coupled with appropriate government supports, potentially including financial mechanisms to lower the barrier posed by the high capital cost per KWH generated for wind systems. Appropriate financial mechanisms can spur much of the needed wind resource assessment by private developers.
Note: The wind "description" was mostly missing from the text faxed to me.
Dendrothermal Power and Commercial Biomass: This is, as noted in the text, a very important area of work. As written, however, there seems to be some confusion. Under justification, the proposal notes that biomass is the principal energy resource of Sri Lanka. This is presumably for household cooking and will itself directly "reduce future needs for fossil fuel power generation" as written. The various relationships and specific focus of this activity need to be clarified and expanded here.
Renewable Energy Equipment Certification: These activities are going on widely and I am currently having discussions with the World Bank IENDP to standardize, for example, World Bank Procurement specifications for certain renewable systems. NREL is also working with several countries to train staff and help establish facilities for equipment testing and certification. It will be important that this component of the study be done in conjunction with the many other activities in this field to avoid duplication.
Strengthening Private Sector Energy Efficiency: Training is an important component of increasing the market penetration by efficient equipment, particulary for systems integration. Another, often more important effort that is not mentioned here is the establishment and validation of efficiency standards for manufactured equipment such as refrigerators, lights, motors, etc. The United States has established a variety of standards for different types of equipment, and it is recommended that U.S., European, and other standards be reviewed and appropriately modified and incorporated into the Sri Lankan context.
Renewable Energy Promotion: These activities should be centered on existing renewable energy efforts.
Energy in Education: As above, much has been done in this area and should be made use of. Along with training or perhaps in conjunction with training, model building designs should be developed that demonstrate the benefits and low cost of passive solar buildings. One of the more successful US programs has been to hold design competitions with small prizes and relatively broad criteria for winning so that a large number of architects/buildings receive prizes sufficient to cover most of the additional design work. This encourages architects to learn about renewables, applies the results to real world buildings, and can lead to model buildings with little cost to the government.
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.
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.