2. Energy today and trends What are the priorities? Meeting the energy needs of tomorrow

3. Source: World Bank Databank

4. Source: SEA, 2011 Energy Balance

5. Source: CEYPETCO Source: SEA

6. Peak MW demand expected to more than double by 2025 CEB expects energy demand to increase at ~6.5% per annum and they plan to meet it principally by coal power Source: SEA

7. Oil based generation expected to decline to 7% of total generation by 2020 from 50% in 2011 Coal generation share to increase to over 50% by 2020 and to 70% by 2025 Computed from: Historical data and CEB (2011), Generation Expansion Plan 2011-2025

8. Volatile prices –Petroleum and coal price –Dendro fuel Resource uncertainties for hydro, wind, solar Currency depreciation National and international policies International crises Source: www.indexmundi.com. Coal cost forecast from UK, Department of Energy and Climate Change, October 2012

9. Key sectors Risk and uncertainty Technological Policy

10. Transport Electricity supply and demand Petroleum supply

11. Why is the most efficient form of transport, least used? –Why not benefit from shifting more goods and passenger transport to rail? –Why is capacity utilization of such a valuable national asset low? –Adopt open access policy to permit others to access to rail lines? Increase efficiency in mobility and use of less fuel intensive modes such as: –Increase road transport fuel efficiency –Reduce congestion –Adopt “transport substitutes” (e.g., ICT sector and non-motorised transport)

12. Support next major lighting transition to LED lighting Day-lighting for offices/factories Adopt and promote appliance efficiency standards and labelling Support industrial/commercial efficiency improvements –Focus on 1500 industrial/commercial customers accounting for 80% of their sector’s energy use

13. Coal power dominance could pose price risks Important that energy planners undertake risk assessments over and above traditional engineering sensitivity analyses Sources: PUCSL 2012/13 NCRE Tariff Order. Coal fuel cost from UK/DECC forecasts adjusted using PUCSL Puttalam coal power plant cost parameters, national inflation and LKR depreciation

14. Invest in supply technologies with costs not correlated with oil/coal power costs Pumped storage to use coal power more efficiently and to increase value of intermittent renewable energy Renewable energy development needs –Improved governance and reduced pre-investment delays –Credit line to offer lower cost debt financing –SEA support to access Government-owned unused marginal lands for fuelwood growing

15. Use a portion of ~1.7 million hectares of scrub and abandoned agricultural lands to grow fuelwood 1000 MW of biomass power will need about 250-350,000 hectares of such lands But, despite declaring Gliricida as a 4 th plantation crop in 2005, little has been done SEA could access such lands under the authority granted it and make lands available for fuelwood development Part IV (12) of the SEA Act gives it authority to promote/develop renewable resources: Minister can declare an area with renewable resources as an Energy Development Area. SEA is then "responsible for conserving and managing all renewable energy resources within a Development Area and take all necessary measures to promote and develop such energy resources…”

16. Refinery upgrade Oil and gas exploration

17. IEA (2011) Technology Road Map: Smart Grids

18. Sri Lanka is in advantageous position of higher energy productivity today But faces high energy costs and could run risk of energy supply disruptions or further price shocks Focus could be on five areas: 1.Transport sector interventions 2.Refinery upgrade and oil/gas exploration 3.Broader energy efficiency interventions 4.Increase diversity of electricity supply 5.Build the electric utility of the future - The Smart Grid