ANALYSES OF SELECTED ENERGY POLICY OPTIONS TO IMPROVE ENERGY SECURITY:

THE CASE OF SRI LANKA

Presented by

G. K. C. Opathella

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Thesis Committee: Prof. Ram M. Shrestha (Chairperson)

Prof. S. Kumar (Member)

Dr. N. Mithulananthan (Member)

14th May 2008

Outline

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• Background

• Objectives and Methodology

• What can be expected in future energy system?

• Conclusions

Background-Why Energy Security?

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Source: Energy Conservation Fund, 2005

• Share of petroleum is increasing (43% in 2005)• Only three main primary energy sources for many years• Few feasible hydro power projects to be developed• Petroleum bill was 1.2 billion US$ (6% of GDP) in 2004 and 2.5

billion in 2007 (7.7% of GDP)• Expected average economic growth rate is 7.4% annually

Branches of Energy Security

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Objectives• Overall Objective

• Finding policy solutions to improve long term energy security

• Specific Objectives• Developing a long term energy planning model for Sri

Lanka• Identifying the effects of energy supply reduction targets• Analyzing the performance of renewable portfolio

standard policy in order to improve long term energy security

• Analyzing the effects of carbon tax policy for the improvement of energy security

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How can we approach? (Methodology)

• Overall Methodology

• Reference Energy System

• Reduction Targets and Policies

• Energy Security Indices6

Primary Energy Demand

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What can we expect in future?

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Without any policy intervention, Sri Lanka is

highly dependent on energy imports. But

correct policies can create considerable difference

Diversification of energy sources can be further Improved with correct

policies such as renewable portfolio

standard

What can we expect in future?

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Diversification of energy suppliers would improve in future and appropriate

policies can help to improve it further

A drop of economic vulnerability is

expected. Import reduction targets and

RPS policy would reduce it further

Conclusions• Total primary energy reduction targets fail to improve all aspects of energy security

except overall energy intensity and per capita consumption

• Having 80% of energy import reduction target (discussed in EI80), it is possible to improve all the aspects of energy security with 9% increase of total system cost

• Case, RPS25 shows the best performance compared to base case and all RPS cases

• Energy import dependency and vulnerability aspects are improved due to carbon tax. But higher tax levels (higher than level mentioned in CT(60-120)) would not add any extra benefits in terms of energy security.

• Doubling the biomass consumption both in industry and electricity generation sectors is recommended in order to achieve 80% energy import reduction target.

• Apart from the biomass, more than 5% of total primary energy should be supplied by wind electricity generation by 2025 in order to achieve better energy security

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THANK YOU

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Resource Refining & Conversion Transportation Electricity Generation Transmission & Distribution Demand Sector

Hydro

Coal Import

Gasoline Oil Import

Diesel Import

Kerosene Oil Import

Jet Fuel Import

Fuel Oil Import

LPG Import

Solar

Utilization Device

Figure 6, Figure 7, Figure 8, Figure 9

Figure 11

Agriculture Sector

Residential Sector

Gasoline

Wind

Biomass

Solar PV Plant

CCGT

Existing Small Hydro Plants

Wind Power Plant 1

Figure 4

Enduse Demands

Figure 5

Figure 10

Industry Sector

Commercial Sector

Transport Sector

Crude Oil Imports

Jet Fuel

LPG

Kerosene

Fuel Oil

Diesel

Naphtha

Diesel Engine

CCGT

Diesel Engine

GT

Existing Hydro Plants

Small Hydro Plants 1

Small Hydro Plants 2

Hydro Plants Ginganga

Hydro Plants Moragolla

Hydro Plants Uma Oya

Hydro Plant Brodland

Pulverized Coal Power Plant

IGCC Power Plant with CCS

Atmospheric PFBC Power Plant

Advanced PFBC Power Plant

PFBC Power Plant with CCS

Conventional Coal Power Plant 1

IGCC Power Plant

Conventional Coal Power Plant 2

Wind Power Plant 2

Biomass Plant

CCGTLNG Imports

LNG

Seed Oil

Ethanol

Hydrogen Plant

Reference Energy System Sri Lanka

Target and Policy Cases

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Overall Methodology

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Long term energy planning model

Model with renewable portfolio standard policy

Model with energy supply reduction targets

Scenario results Scenario results

Special changes

Run the model

Energy security indices

Estimations

Comparison of energy security improvements

Energy and economic data

Model formulation

Energy security indices

Model with carbon tax policy

Scenario results

Conclusions and recommendations for the improvement energy security and further research opportunities

Energy security indices

Results of the sensitivity analysis

Forecasted demand data

Indices• Net Energy Import Ratio (NIER)

NIER = Net Energy Imports

Domestic Supply + Net Energy Imports• Diversity Index (Shannon-Wienier Index)

Where; Si is the share of primary energy of sources i

• Diversification of Primary Energy Demand (DoPED)

• Vulnerability = Expenditure on energy import

Total GDP• Herfindhal Hirschman Index (HHI)

Where; K is the share of primary energy of supplier i

• Energy Intensity(EI), Per capita primary energy consumption(PCPEC), Per capita final energy consumption(PCFEC), Per capita emission (PCE) form energy and demand sectors

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i

ii SLnSD

TPED

OtherBiomassHydroLNGOilCoalDoPED

222222

i

iKHHI 2

Results

• Energy Security in 2035

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Without Any Policy

Primary energy demand reduction

target

Energy import reduction target

Renewable portfolio standard

Carbon tax

Dependency (%) 85 92 62 80 52

Source Diversification

(SWI)1.36 1.19 1.41 1.43 1.36

Supplier Diversification

(HHI)4067 4799 4094 3885 4193

Vulnerability (%) 4.5 5.1 4.3 4.5 4.1

Results of Total Primary Energy Reduction Target Cases

• Under higher reduction targets petroleum consumption is increased. Coal and biomass consumptions are decreased. This is due to high efficiency of petroleum consuming technologies compared to other technologies.

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Percentage Change in Total Undiscounted CostTPEC95 1TPEC90 2TPEC85 4TPEC80 10

Under the energy import reduction targets biomass wind energy supplies are increased. Coal consumption is decreased. Coal is the most inefficient importing energy. Therefore, it drops compared to the base case

Results of Energy Import Reduction Target Cases

Percentage Change in Total Undiscounted CostEI90 7EI80 9EI70 11EI60 13

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Results of RPS Cases

• More wind and biomass power generations are expected under the RPS policy. Demand for coal is decreased. Due to the promotion of renewable energy coal based electricity generation is partly switched to renewable based electricity generation

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Percentage Change in Total Undiscounted CostRPS10 1RPS15 3RPS20 5RPS25 7

Results of Carbon Tax Cases

• Coal has the highest emission factor. Therefore, under the carbon tax policy coal consumption is decreased. Both biomass and wind energy supplies are increased. In higher tax cases biomass supply would reach to maximum level at the end of the planning period

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Percentage Change in Total Undiscounted CostCT(20-40) 10CT(40-80) 18CT(60-120) 25CT(80-160) 31