More $ for SriLanka’s Hydro firms

Sri Lanka’s mini-hydro power firms will get a higher feed-in tariffs for their output based on newly published tariffs for 2015, Asia Securities, an equities research house has said.

When thermal generation costs rise, the avoided cost formula also rises.

Asia Securities said the price to buy power has been raised by 2.5 percent in the ‘wet season’ to 15.2 percent and the dry season rate increased to 16.75 rupees.

Many of Sri Lanka’s mini-hydro firms are paid on an ‘avoided-cost’ formula based on the expenses of Ceylon Electricity Board, the grid company and not on any costs incurred by the hydro firms themselves which critics say is a demonstration of the political clout of the ‘green energy’ lobby.

In the dry season, when the CEB itself is hit by higher thermal generation costs, it has to pay more to buy from mini-hydro producers.

The bulk of the energy is produced during the wet season.

Meanwhile Asia Securities said arrears are likely to be paid for 2015.

“Power generation in 2016 will also be paid based on the new rate until the rates for 2016 are published and will be adjusted later,” Asia Securities said in a note to clients.

Rates for 2016 are like to decline with lower fuel prices, the report said.