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    1

    THE BALANCE OF POWER:In Search of Plan B

    Purasisi Jinadasa

    CAL Research

    April 2013

    see page 41 for important disclaimer

  • 7/28/2019 The BalancThe Balance of Power: In Search of Plan B -17 Apr 2013e of Power-In Search of Plan__ B- 17 Apr 2013

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    Contents

    Executive Summary: The balance of power

    I. Strong shift to coal-fired power not enough

    II. A 2013 price hike of 25-30% necessary tobuy time

    III. Oil & Water: Raindrops arent enough

    Appendix 1: Sobering Stats

    2

    Page

    3

    11

    21

    36

    28

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    EXECUTIVE SUMMARY:THE BALANCE OF POWER

    3

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    In Search of Plan B

    High cost diesel/fuel oil and inefficient gas comprise 1420MW of power capacity that needsto be phased out

    As a stop gap, prices in 2013 must rise 25-30% to compensate for the inefficient thermal

    power output

    Adding coal-fired power partly provides an affordable electricity generating option (c.LKR8.3/KWh in 2013E)

    If GDP grows 6% in 2013, Sri Lankas oil import bill may reach USD 6.7bn, of which USD

    1.3bn is for electricity

    Hydro has limited potential to further improve the energy balance unless record rainfalloccurs

    Plan B: larger scale, cost-effective capacity additions,plus CPC/CEB reforms

    4

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    High cost diesel/fuel oil and inefficient gas comprise

    1420MW of power capacity that needs to be phased out

    5

    The powerministry

    indicates that

    c.42% ofavailable

    generation

    capacity comes

    from higher cost

    thermal sources

    (gas and diesel)

    * Cost/KWh are estimates

    by PUCSL for 2013 and

    costs reflect peak/off-peak

    energy production

    allocation

    Installed Capacity

    -

    5

    10

    15

    20

    25

    30

    35

    40

    45

    50

    0% 20% 40% 60% 80% 100%

    Cost/KWh(LKR

    )

    DIESEL/FUEL

    RENEWABLE

    COAL

    215MW

    GASTURBINE

    305MW

    300MW

    1205MW

    1383MW

    HYDRO

    Renewable includes mini-hydro

    Source: Sri Lanka Sustainable Energy Authority, Ministry of Power and Energy, PUCSL and CAL Research

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    -

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    35,000

    40,000

    Thermal Coal Hydro

    Cost/MWh(L

    KR

    Total Cost/MWh Total Revenue/MWh

    As a stop gap, prices in 2013 must rise 25-30% to

    compensate for the inefficient thermal power output

    6Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    The average sales price of a KWh in 2011 was

    LKR 13.6. Based on the 2012E energy mix, the

    avg. sales price needs to increase to c.LKR 18(+c.30%) for energy production to break-even

    * Hydro production has no cost. Refer Appendix (slide

    38) for a detailed cost break-down

    * Cost incorporates peak/off-peak energy production allocation

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    Adding coal-fired power partly provides an affordable

    electricity generating option (c.LKR 8.3/KWh in 2013E)

    7

    1,038

    5,786

    1,590

    2,492

    -

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    8,000

    9,000

    GW

    h

    Utilized Capacity Unutilized Capacity

    Puttlam Coal Phase I (2011)

    300MW Power Plant

    Puttlam Coal Phase II (2014E)

    Additional 300MW

    * By 2016E, the capacity

    factor at both coal plants

    is expected to be c.70%

    c.15%

    c.36%

    12,409

    16,208

    2013E 2016E

    Contribution by Coal Total Generation

    Both coal plants are expected to run

    at a c.70% capacity factor once fullyoperational. By 2016E, coal may

    comprise c.35%+ of energygenerated. The Public Utilities

    Commission of Sri Lanka (PUCSL)

    estimates power generated by coal

    to be LKR 8.3/KWh in 2013

    Source: Sri Lanka Sustainable Energy Authority, Ministry of Power and Energy, PUCSL and CAL Research

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    If GDP grows 6% in 2013, Sri Lankas oil import bill may

    reach USD 6.7bn*, of which USD 1.3bn is for electricity

    8Source: Sri Lanka Sustainable Energy Authority and CAL Research

    * Includes a c.USD 180mn saving due to increased coal power generation

    1,799

    1,218

    694 931

    (855) (701)

    (2,000)

    (1,000)

    -

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    8,000

    2011 2012E 2013E Gov't 2013 7.5% GDP

    Target

    USDmillion

    s

    Total Oil Import Bill (USD mn) Addition to Oil Import Bill (USD mn)

    CPC Loss (USD mn)

    CALs 6% GDP

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    -

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    2008 2009 2010 2011 2012E 2013E Plus 25%

    Rainfall

    Plus 45%

    Rainfall

    Contribtuion to Power from Hydro

    Average rainfall catchment (mm)-RHS

    Hydro has limited potential to further improve the

    energy balance unless record rainfall occurs

    9

    Record rainfall

    in 2010 resulted

    in a c.53%hydro

    contribution.

    Rainfall may

    have to

    increase by45% from the

    10-year average

    ofc.3500mm(base case

    2013E) for a

    c.60% hydro

    contribution

    Source: Sri Lanka Sustainable Energy Authority, CBSL and CAL Research

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    Plan B: larger scale, cost-effective capacity

    additions, plus CPC/CEB reforms

    The country is likely to have commercial gasdeposits onshore and offshore, but natural gasinfrastructure investment minimums are high

    Imported LNG could be a major contributor, butscale and sovereign guarantees are factors

    Biomass holds great potential, but securing long-term affordable supply can prove vexing

    Hydro appears mostly tapped; wind and solarremain too expensive near term

    10

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    II. STRONG SHIFT TO COAL-FIREDPOWER NOT ENOUGH

    11

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    Strong shift to coal-fired power not

    enough

    In 2011, the energy source mix resulted in a cost/KWh ofc.LKR 15 (vs. an avg. sales price of LKR13.6)

    The story worsens in 2013 as PUCSL estimates c.50%+ of energy to be provided by diesel/fuel oil

    In 2013E, PUCSL expects IPPs to provide c.35% at an average combined c.LKR 21 cost/KWh

    Making the blended2013 cost/KWh c.LKR 17

    By 2016E, the Govt expects c.36% of energy to be sourced from coal-fired plants, up from 15% in

    2013E

    The 2016E energy mix may result in an avg. cost/KWh of LKR 10.5, down LKR 6.5 (38%) from

    2013E

    However, a totalcost ofc.LKR 14.3/KWh would still be 5% above the average selling price of LKR

    13.6/KWh

    The additional 360MW coal-fired capacity may cost c.USD 800mn by 2016

    12

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    In 2011, the energy source mix resulted in a cost/KWh

    ofc.LKR 15* (vs. an avg. sales price of LKR 13.6)

    13Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    * Cost does not include transmission, distribution and debt payment (c.LKR 3.8/KWh in 2013E) and

    average cost incorporates peak/off-peak energy production allocation

    26

    34

    4

    0

    5

    10

    15

    20

    25

    30

    35

    40

    -

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    Thermal (Diesel/Fuel) Gas Turbine Hydro, Coal and Renewables

    Cost/K

    h(LK

    R)

    GW

    h

    Power Generated (GWh) Cost/KWh (LKR)-RHS

    Avg. cost of production: c.LKR 15/KWh

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    The story worsens in 2013 as PUCSL estimates c.50%+of energy to be produced via high cost diesel/fuel oil

    14Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    CAL expects totalenergy generated

    to reach c.13,000GWh in 2013,

    with PUCSL

    expecting energy

    demand to reach

    10,950 GWh. The

    PUCSL estimates

    c.50%+ of energygenerated to

    come from

    diesel/fuel power

    plants34%

    70%

    27%

    64%

    4%

    0

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    16,000

    18,000

    Hydro Coal Renewable Diesel Gas

    G

    Wh

    Utilization (GWh) Excess Capacity (GWh)

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    In 2013E, PUCSL expects IPPs to provide c.35% of totalpower at an average combined c.LKR 21 cost/KWh

    15Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    * Cost does not include

    transmission, distribution

    or debt payment (which

    will bring non-IPP cost toc.LKR 16)

    Contribution to Power Generated

    A larger proportion

    of CEB power

    comes from hydro,

    thereby reducing

    generation costs

    (peak hours

    supplied by lower

    cost sources)

    * Cost incorporates peak/off-peak energy production allocation

    -

    5.0

    10.0

    15.0

    20.0

    25.0

    0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

    Cost/KWh(LK

    R)

    IPP

    CEB*

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    Making the blended 2013 cost/KWh c.LKR 17

    16Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    -

    5

    10

    15

    20

    25

    30

    35

    40

    45

    0% 20% 40% 60% 80% 100%

    Cost/K

    WhtoGeneratePower(L

    KR)

    HYDRO COAL RENW DIESEL/FUEL GAS TURBINE

    Current avg. CEB selling price:

    LKR13.6/KWh

    Proposed avg. CEB selling price:

    LKR20.1/KWh

    Contribution to Power Generated

    In 2013E, the

    PUCSL

    estimates a

    majority of

    contribution to

    meet demand to

    come from

    diesel/fuel

    sources at an

    average cost of

    c.LKR 22/KWh

    Cost does not includetransmission, distribution

    or debt payment (an

    additional c.LKR 3.8/KWh)

    * Cost incorporates peak/off-peak energy production allocation

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    By 2016E, the Govt expects c.36% of energy to besourced from coal-fired plants, up from 15% in 2013E

    17Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    Thermal

    (Gas)

    1%

    Thermal(Diesel/Fuel)

    51%

    Coal

    15%

    Renewable

    4%

    CEB Hydro

    29%

    2013E Total Energy Generated c.13k GWh

    Thermal

    (Gas)

    2%

    Thermal

    (Diesel/Fuel)

    21%

    Coal

    36%

    Renewable

    9%

    CEB Hydro

    32%

    2016E Total Energy Generated c.16k GWh

    The govt expects energy

    generated to grow by c.24% by2016E

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    The 2016E energy mix may result in an avg. cost/KWh

    of LKR 10.51, down LKR 6.5 (38%) from 2013E

    18Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    39%

    70%

    38%

    47%

    18%

    0

    5,000

    10,000

    15,000

    20,000

    25,000

    Hydro Coal Renewable Diesel Gas

    GW

    h

    Utilization (GWh) Excess Capacity (GWh)

    LKR 0/KWh LKR 8.3/KWh LKR 19/KWh LKR 22/KWh LKR 46/KWh Total energygenerated is

    expected to reach

    c.16,000 GWh,while generation

    capacity is

    expected to bec.34,600 GWh.Coal is expected

    to provide c.36%of energy

    generated. The

    avg. cost/KWh

    may be reducedto c.LKR 10.5from current

    c.LKR 17

    1Cost does not include distribution, transmission and other expenses

    (c.LKR3.8/ KWh in 2013E) and are based on 2013E

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    However, a total cost ofc.LKR 14.3/KWh1 would still be5% above the average selling price of LKR 13.6/KWh

    19Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    Sri Lanka can stillbenefit from new,

    cheaper energy

    sources. At a

    c.36%contribution from

    coal, totalcost/KWh still

    falls short of the

    current selling

    price/KWh of LKR

    13.6.

    1Cost includes distribution, transmission and other expenses of c.LKR3.8/ KWh (2013E)

    Additional costs from

    distribution, transmission

    and debt repayment

    10.5

    3.8

    -

    2

    4

    6

    8

    10

    12

    14

    16

    Cost/KWh(LKR)

    Cost to Generate a KWh Additional Cost/KWh

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    The additional 360MW coal-fired capacity may cost

    c.USD 800mn by 2016

    20Source: Ministry of Power and Energy, Bloomberg and CAL Research

    By 2016E, the coalpower plant is

    expected to

    generate c.5800GWh, which

    indicates a capex

    on coal powerexpansion of

    c.USD 808mn overthe next 3 years at

    USD 256k/MWh of

    new capacity

    * Costs are calculated based on total estimated project costs as published by the Power Ministry

    -

    50,000

    100,000

    150,000

    200,000

    250,000

    300,000

    COAL HYDRO RENW THERMAL

    USD/MWh

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    II. A 2013 PRICE HIKE OF 25-30%NECESSARY TO BUY TIME

    21

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    A 2013 price hike of 25-30% necessary to

    buy time

    In March, PUCSL proposed a 26% blended tariff increase to LKR20.1, which now awaits legislative action

    On the 2012E energy mix, the avg. selling price needs a c.30%

    increase for energy producers to break even

    In 2013E, high cost thermal energy (44% sales) predominates over

    hydro (37%) and coal (15%)

    A c.15% contribution from coal would require c.70% capacity

    utilization at the 300MW coal plant...

    which may reduce the required price increase to break even to

    only c.25%

    22

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    In March, the PUCSL proposed a 26% blended tariff

    increase to LKR 20.1, which now awaits legislative action

    23Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    Tariff Category

    Estimated Revenue at Existing

    Tariff for 2013 (LKR mn)

    Estimated Revenue at

    Proposed Tariff (LKR mn)

    Estimated Cost of

    Generation for 2013

    (LKR mn)

    Estimated Subsidy/

    (Surplus) at Proposed Tariff

    (LKR mn)

    Domestic 50,700 84,987 86,715 1,728

    Religious 420 420 1,375 955

    General Purpose 64,791 69,923 55,163 (14,760)

    Hotel Purpose 3,928 4,632 4,948 316

    Industrial 54,000 60,170 76,879 16,709

    Street Lighting 0 0 3,043 3,043

    Total 173,839 220,132 228,151 7,991

    Total/KWh (LKR) 15.9 20.1 20.8* 0.7

    * Cost includes transmission, distribution and debt payment (c.LKR 3.8/KWh in 2013E)

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    On the 2012E energy mix, the avg. selling price needs a

    c.30% increase for energy producers to break even

    24Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    2012EGross Generation

    (GWh)

    Generation

    Cost/MWh (LKR)

    Avg. Sales

    Price/MWh (LKR)

    Profit/(Shortfall)(LKR)

    Price Adjustment

    Required/MWh(LKR)

    hermal 5,819 33,900 13,600 (68,500,000) 22,100

    Hydro 4,362 - 13,600 59,500,000 -

    Coal 1,535 8,300 13,600 8,200,000 -

    Price Adjustment

    Required 17,800*

    CAL has assumed coal to form c.12% of the energy mix in 2012E (c.9% of the energy mix in 2011)

    The above energy mix is estimated to have contributed to c.94% of energy produced in 2012E

    Cost incorporates peak/off-peak energy production allocation

    * Price adjustment does not include distribution, transmission and other costs (c.LKR 3.8/KWh in 2013E)

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    In 2013E, high cost thermal energy (44% sales)

    predominates over hydro (37%) and coal (15%)

    25Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    * An additional 421GWh of

    hydro production is includedfor 2013E, due to the

    introduction of a 150MW hydro

    plant

    * Cost does not include transmission, distribution and debt payment (c.LKR 3.8 in 2013E)

    HYDRO 37% -

    LKR 0/KWh

    OTHER 4% - LKR

    18/KWh

    COAL 15% - LKR8.3/KWh

    THERMAL 44% -

    LKR 23/KWh

    -

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    Energy Generation Mix 2013E

    G

    Wh

    Thermal Other Coal Hydro

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    A c.15% contribution from coal would require c.70%1capacity utilization at the 300MW coal plant...

    26Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    The 300MW coalpower plant may

    produce c.2,600GWh of power if at

    full capacity. CAL

    assumes a capacity

    factor ofc.70% in

    2013E, which wouldtranslate into

    c.600k tons of coalrequired, resulting

    in coal providing

    c.15% of the energy

    mix

    1The PUCSL has estimated a

    c.70% capacity factor for the

    coal plant in 2013

    c.60%

    c.70%

    -

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    2012E 2013E

    GW

    h

    Utilization Excess Capacity

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    which may reduce the required price increase to

    break even to only c.25%

    27Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    CAL has assumed coal to form c.15% of the energy mix in 2013E (c.9% of the energy mix in 2011)

    Cost incorporates peak/off-peak energy production allocation

    2013EGross Generation

    (GWh)

    Generation

    Cost/MWh (LKR)

    Avg. Sales

    Price/MWh (LKR)

    Profit/(Shortfall)

    (LKR)

    Price AdjustmentRequired/MWh

    (LKR)

    Thermal 5,800 33,900 13,600 (75,000,000) 21,000

    Hydro 4,800 - 13,600 65,000,000 13,600

    Coal 1,900 8,300 13,600 10,200,000 13,600

    Price Adjustment

    Required 17,000

    Price adjustment does not include distribution, transmission and other costs (c.LKR 3.8/ KWh in 2013E)

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    III. OIL & WATER: RAINDROPSARENT ENOUGH

    28

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    Oil & Water: Raindrops arent enough

    In 2012, overc.30% of Sri Lankas import bill was for petroleumproducts

    However, only c.20% of Sri Lanka petroleum imports go towards powergeneration

    Even when hydro comprised c.53% of power generated in 2010(highest rainfall in past 10 years)

    savings from petroleum imports for power generation amounted tojust c.USD 146mn

    A 60% (vs. 37% expected) hydro contribution might result in a c.USD660mn savings in 2013E

    CALs 2013E includes a c.USD 180mn savings due to greater coal-firedpower and normal 3500mm rainfall

    29

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    In 2012, overc.30% of Sri Lankas import billwas for petroleum products

    30Source: Sri Lanka Sustainable Energy Authority, CBSL and CAL Research

    As a result of

    sanctions on

    Iranian oil

    exports, the

    overall cost

    of oil imports

    in 2012 rose

    to c.30% of

    the totalimport bill

    75% 78% 76% 75%68%

    25% 22% 24% 25%32%

    2008 2009 2010 2011 2012E

    Rest Oil's portion of import bill

    10.2 13.5 20.3 19.1Import

    Bill USD(bn)

    14.1

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    However, only c.20% of Sri Lanka petroleumimports go towards power generation

    31Source: Sri Lanka Sustainable Energy Authority and CAL Research

    Majority of

    petroleum

    imports are

    required to driveeconomic growth

    and not power

    plants. As real

    GDP grows, the

    amount of fuel

    needed by the

    private sector will

    increase

    3,426 3,4224,252

    5,5796,469

    7,501

    1,320 1,326

    1,021

    1,385

    1,606

    1,862

    -

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    7,000

    8,000

    9,000

    10,000

    2008 2009 2010 2011 2012E 2013E

    MillionsLitres

    Oil Imports for other (Litres) Oil Imports for Power (Litres)

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    Even when hydro comprised c.53% of power generatedin 2010 (highest rainfall in past ten years)

    32Source: Sri Lanka Sustainable Energy Authority and CAL Research

    Over the past 10years, the

    average

    contribution

    from Hydro has

    been c.40% andthermal has

    been c.57% tototal power

    generated

    * Renewables include

    wind and mini-hydro

    -

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    4,000

    4,500

    5,000

    -

    2,000

    4,000

    6,000

    8,000

    10,000

    12,000

    14,000

    2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012E

    GWh

    Hydro (GWh) Thermal (GWh)Renewables (GWh) Coal (GWh)Average rainfall catchment (mm)-RHS

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    savings from petroleum imports for power

    generation amounted to just USD 146mn

    33Source: Sri Lanka Sustainable Energy Authority and CAL Research

    The avg. price per

    barrel of oil increased

    by 26% in 2010, partly

    offsetting the savings

    from the volume

    decline

    491,161

    146,416

    (21,128)

    (100,000)

    -

    100,000

    200,000

    300,000

    400,000

    500,000

    600,000

    700,000

    USDThousan

    ds

    Cost at 2009 prices

    Savings due to

    volume decline

    Additional

    cost in 2010 due to

    oil price increase

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    A 60% (vs. 37% expected) hydro contribution might

    result in a c.USD 660mn savings in 2013E

    34Source: Sri Lanka Sustainable Energy Authority and CAL Research

    Even with a 40%+ increase in rainfall from our base case of 3500mm, savings

    would amount to only c.USD 660mn (c.10% of the 2012 and c.11% of CALsexpected 2013 petroleum import bill)

    CAL has assumed petroleum price/barrel for Sri Lanka to be USD 117 in 2013E

    CAL expects energy generation by sources other than thermal oil and hydro to amount to c.20% in our 2013E base case (of

    which c.15% is from coal)

    2010 2011 2012E2013E Base*+25%

    Rainfall+45%

    Rainfall

    Rainfall (mm) 4,333 3,217 3,493 3,500 4,375 5,735

    Fuel for power

    generation (thsd ltrs) 1,021,360 1,385,000 1,414,174 1,622,389 1,287,422 766,884

    Savings due to volumedecline (USD) 146,416,336 (219,477,611) (20,869,888) (159,862,971) 257,180,277 656,838,682

    % Hydro Contribution

    to Power 53% 35% 35% 37% 46% 60%

    * Base case: 3500mm rainfall is the average rainfall for the past 10 years

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    CALs 2013E includes a c.USD 180mn savings due togreater coal-fired power and normal rainfall of 3500mm

    35Source: Sri Lanka Sustainable Energy Authority and CAL Research

    CALs 2013E includes a c.USD 180mn savings from the decline in fuel used due to

    an increase in coal generated power. CAL assumes c.15% of energy needs in 2013to be provided by coal

    CAL has assumed petroleum price/barrel for Sri Lanka to be USD 117 in 2013E

    CAL expects energy generation by sources other than thermal oil and hydro to amount to c.20% in our 2013E base case (of

    which c.15% from coal)

    2011 2012E 2013E

    Power from Coal (GWh) 1,028 1,535 1,918

    Coal Used (MT) 435,502 479,347 599,184

    Fuel Saved (ltrs mn) 277 192 240

    USD Savings (mn) 163 147 176

    * The PUCSL has estimated a c.70% capacity factor for the coal plant in 2013

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    APPENDIX 1: SOBERING STATS

    36

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    Appendix 1: Sobering Stats

    2013 Jan-Jun PUCSL estimates c.LKR 20/KWh blendedcost

    Energy losses in transmission and distribution have

    averaged a high 18% since 2006

    Historical coal prices and futures suggest actual 2013

    supply costs could be below PUCSLs USD 140/MT est.

    37

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    2013 Jan-Jun PUCSL estimates LKR20/KWh blended cost

    38Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    Plant (Cost/KWh)-LKR January February March April May June

    CEB Hydro Mainly in the Central Province - - - - - -

    GTSM Kolonnawa (Colombo District) 69.2 66.6

    DSP Sapugaskanda (Gampaha District) 19.1 19.5 19.1 25.1 25.0 25.1DSPX Sapugaskanda (Gampaha District) 17.7 18.0 17.7 23.5 23.4 23.5

    DAPL Sapugaskanda (Gampaha District) 15.1 15.1 15.1 26.3 26.2 26.2

    CCKP Wellampitiya (Colombo District) 24.9 25.2 25.7 24.3 26.1 31.2

    CAES Wellampitiya (Colombo District) 25.9 26.0 25.9 26.1 26.6 25.9

    DCPL A Barge in Colombo Port (Colombo District) 16.9 16.9 16.9 24.5 24.5 24.5

    DPUT Puttlam (Puttlam District) 17.0 17.1 17.0 21.3 21.3 21.3

    DEMB Embilipitiya (Ratnapura District) 17.4 17.5 17.4 23.5 23.4 23.5

    CCKW Wattala (Gampaha District) 18.7 18.7 18.7 24.3 24.3 24.4

    CPUT Puttlam (Puttlam District) 8.3 8.3 8.3 8.3 8.3 8.3

    RENW Small plants across the island 16.7 18.6 18.6 18.4 17.0 18.2

    GT7 Kolonnawa (Colombo District) - 39.0 39.0 - - -

    DCHU Jaffna (Jaffna District) 27.5 27.6 27.5 27.5 27.5 27.5

    DAGG Jaffna (Jaffna District) 22.4 29.5 33.0 33.0 33.0 33.0

    DNOR Jaffna (Jaffna District) 19.2 19.3 19.2 19.2 19.2 19.2

    DNCHU Jaffna (Jaffna District) 15.2 15.2 15.2 21.0 21.0 21.0

    Monthly Energy Cost (LKR mn) 13,697 12,934 14,334 14,100 14,688 15,463

    Cost/KWh-Thermal 20.0 21.0 20.9 24.1 24.4 25.4

    Cost/KWh-RENW 16.7 18.6 18.6 18.4 17.0 18.2

    Cost/KWh-Gas Turbines - 41.4 42.0 - - -

    Cost/Kwh-Hydro - - - - - -

    Cost/KWh-Combined 13.2 13.4 13.3 14.1 13.7 14.7

    Capacity Generation Cost 2.43

    Transmission, Distribution & Debt Cost/KWh 3.81

    Total Cost/KWh 6-mos 20.0

    Capacity generation and transmission, distribution and debt costs are for the whole year (2013).Cost/KWh for generation only is LKR 16.2 for the 6-mos

    Cost/KWh is based on expected generation by the specified plant for the specified month

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    Energy losses in transmission and distribution have

    averaged a high 18% since 2006

    39Source: Sri Lanka Sustainable Energy Authority, PUCSL and CAL Research

    7,000

    8,000

    9,000

    10,000

    11,000

    12,000

    13,000

    2006 2007 2008 2009 2010 2011 2012E

    GWh

    Gross Generation (GWh) Power Sold (GWh)

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    Historical coal prices and futures suggest actual 2013

    supply costs could be below PUCLs c.USD 140/MT est.

    40Source: IndexMundi, NYMEX, CAL Research

    40

    50

    60

    70

    80

    90

    100

    110

    120

    130

    Jan-12

    Feb-12

    Mar-12

    Apr-12

    May-12

    Jun-12

    Jul-12

    Aug-12

    Sep-12

    Oct-12

    Nov-12

    Dec-12

    Jan-13

    Feb-13

    Mar-13

    Apr-13

    May-13

    Jun-13

    Jul-13

    Aug-13

    Sep-13

    Oct-13

    Nov-13

    Dec-13

    Jan-14

    Feb-14

    Mar-14

    Apr-14

    May-14

    Jun-14

    Jul-14

    Aug-14

    Sep-14

    Oct-14

    Nov-14

    Dec-14

    U

    SD/Ton

    For 2013E, the PUCSLs estimated coal price: c.USD 140/MT (including freight)

    Australian Thermal Coal (FOB)

    Indonesian Coal Prices (Sub-bituminous; FOB)

    Central Appalachian Coal (FOB)

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    Disclaimer

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    41

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    Email: [email protected]

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