| PROJECT APPROVAL PROCESS for On-grid Renewable Energy Projects. Updated 31st March 2009 |
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| Forms and formats downloaded from this web page may be used to apply for projects. The printed version of "On-Grid Renewable Energy Development: A Guide to the Project Approval Process" is also available for sale. Please contact the Renewable Energy Division, Sri Lanka Sustainable Energy Authority, 3G-4A, BMICH, Baudhdhaloka Mawatha, Colombo 7. Phone 011 269 7430 |
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| INTRODUCTION |
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Sri Lanka Sustainable Energy Authority (SLSEA) was established in 2007 under the Act No. 35 of 2007 to facilitate renewable energy development for both on-grid and off-grid applications, and to streamline the registration, resource allocation and approval process. This guidebook explains the process and procedures to be followed by parties intending to develop on-grid renewable energy projects of all types and capacities. For off-grid projects, a separate guidebook will be published in due course.
For on-grid renewable energy projects in an Energy Development Area as declared under the SEA Act (see Gazette No 1538/22 of 26th February 2008), the approval process described in the Guide is mandatory.
Guidelines given are applicable to all projects presently operational as well as projects in various stages of development. This approval procedure has been established under Regulations published in the Gazette. |
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| Policy, Strategies and Targets |
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| The National Energy Policy of Sri Lanka emphasises the Government’s policy of ensuring energy security and promoting the development on indigenous resources see Sri Lanka Energy Policy 2006. Promoting the development of economically viable non-conventional renewable energy sources is a key strategy under the national energy policy. The Government has established a target of meeting 10% of electricity served in the national grid, from non-conventional renewable energy sources. |
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| Status of Development |
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| In year 2007, Sri Lanka produced 40.2% of the total electricity requirements from renewable energy sources (large hydro: 36.7%, non-conventional renewables 3.5%). By end 2007, Sri Lanka had 16 large hydroelectric power plants of total capacity 1205 MW and one wind power plant of 3 MW, all owned and operated by Ceylon Electricity Board. Through a process of facilitation of private investments that commenced in 1996, by end 2007, Sri Lanka had 63 non-conventional renewable energy power plants (each less than 10 MW) of a total capacity of 114 MW, owned and operated by the private sector. |
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| For whom is the Guide |
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| This Guidebook provides information to present investors and operators of existing renewable energy projects, investors who are in the process of developing renewable energy projects, and those intending to develop and invest on such projects. The guidebook is equally applicable to past and future renewable energy projects of Ceylon Electricity Board. Furthermore, this guidebook would serve as a reference to institutions that would be reviewing applications from developers in the process of issuing permits and approvals. |
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| APPROVAL AND RESOURCE ALLOCATION BY SEA |
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| Transition Provisions for Existing Projects |
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| (a) |
Renewable Energy Projects Operational as of 1st October 2007 |
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If a renewable energy project is presently built and operational in any of the declared resource areas stated in the Gazette No 1538/22 of 26th February 2008 or any subsequent similar declarations, the project requires to obtain a Permit from SEA. Projects operational by 1st October 2007, the day from which the SEA Act was gazetted, should make an application to SEA on Form R3. It is illegal to operate any renewable energy project in a renewable energy development area without a Permit issued by SEA. The requirement of a Permit is applicable irrespective of the installed capacity of the power plant or the ownership status of the project. |
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| (b) |
Renewable Energy Projects Under Construction or at various stages of approval/design/financing as of 1st October 2007 |
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Through newspaper notices, SEA invited Applicants who claim exclusivity to a renewable energy source, to register with SEA by 21st April 2008. All renewable energy projects so registered, which are either under construction or in the process of being developed on the basis of a valid letter of intent issued by Ceylon Electricity Board (CEB) issued before 1st October 2007, have been invited to apply for Provisional Approval from SEA on Form R2. The Provisional Approval issued by SEA will be valid for a period of six months, extendable for a maximum total period of one year. During the validity of the Provisional Approval, the Applicant requires to fulfil all the requirements stated in the Provisional Approval. |
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| Projects with an active small power purchase agreement as of 1st October 2007 have been invited to apply for a Permit. |
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| APPLICATIONS FOR NEW PROJECTS |
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| Approved Types of Projects |
| New applications will be entertained only for the following types of renewable energy projects. |
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| (a) |
Hydro |
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Power plants converting the potential energy of water |
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| (b) |
Wind |
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Power plants converting the energy in a moving mass of air |
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| (c) |
Biomass(grown) |
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Power plant using biomass, grown in a sustainable manner, either by the power plant company or through a system of out-growers, without depending on the yield of natural forests and home gardens, agricultural or other waste material |
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| (d) |
Waste |
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Power plants using agricultural waste (such as rice husk), industrial waste (such as saw dust and wood off-cuts), municipal solid waste and waste heat from another energy conversion process |
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| (e) |
Wave |
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wer plants converting the energy in sea waves |
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| Types of Projects not included in the Approved List |
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| Types of projects not included in the approved list may be submitted by the Applicants or other interested parties during a review of Policy and Tariffs for Small Power Producers, announced by the Ministry of Power and Energy. |
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| HOW TO APPLY |
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| Step 1 - Application for Resource Verification (Form R1) |
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Resource Verification Fee Rs 2500 (Rs 125,000 for Projects larger than 10 MW)
Any person (an individual or a company) may apply for resource verification of a renewable energy project anytime, irrespective of whether the person holds any rights to the resource or land rights.
It is required to apply for resource verification of a renewable energy project. In this first application where an Applicant may not have conducted adequate studies to supply all the information required under the Act, the form R1 requests only the basic information about the project
The Processing time required by SEA to inform an Applicant submitting a complete form R1 is one week.
Assessment of Application for Resource Verification will follow the procedure given below. |
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| Resource Allocation Number Issued |
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| SEA will assess the information provided in form R1 and if, |
| (a) |
There is no operational power plant in the same location or using the same resource area, or, |
| (b) |
SEA has not issued a Registration Number to another Applicant for the same site or the resource area, or, |
| (c) |
SEA or the Government of Sri Lanka has no plans of its own to develop the site through a different mechanism. |
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SEA would issue a Resource Allocation Number of the style Rxxxx-xx.
If the application is for a Project with an installed capacity greater than 10 MW, SEA will seek a policy directive from the Ministry of Power and Energy, before issuing the Resource Allocation. |
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| Standby Resource Allocation Numbers and the Waiting List |
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| (a) |
If no operational power plant exists but there is an active Permit issued by SEA, or |
| (b) |
If there is an active Provisional Approval issued by SEA, or |
| (c) |
If a Resource Allocation Number, has already been issued by SEA |
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| in favour of another Applicant for the same site or resource, the new Applicant will be issued with a Standby Resource Allocation Number of the style Qxxxx-xx and there will be no further action on his application. The Standby Resource Allocation Number will uniquely identify the position of the Applicant in the waiting list for the site, to be later upgraded to a Resource Allocation Number, in case the holder of the Energy Permit or the Provisional Approval or the Resource Allocation Number, fails to fulfil conditions stipulated in such documents. |
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| Refusal to Allocate the Resource |
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| If the site has an operational power plant or if it is located within the resource area of any other existing or future power plant or development facility planned by SEA or other organisation, the Applicant will be so informed and there will be no further action on his application for resourceverification. No registration number of any form will be issued. |
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| Once the Resource Allocation is issued ...... |
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Once the resource allocation is issued, the Applicant would be required to submit a pre-feasibility study report for the proposed project, within a period of three months. The list of contents required in a pre-feasibility study report will be provided by SEA, for each type of renewable energy.
The pre-feasibility study should be conducted by a consultant accredited by SEA. The list of Accredited Consultants is published by SEA, and would be provided to each Applicant with a Resource Allocation. The selection of the consultant for a particular project from among the accredited consultants and the fees payable are entirely at the discretion of the Applicant.
If the consultant preferred by the Applicant is not on the accredited list, he/she may apply for accreditation any time (see form R4), and SEA will issue the accreditation to him/her if the requirements for accreditation are fulfilled.
The Applicant would then apply for Provisional Approval. |
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| Step 2 - Application for Provisional Approval (Form R2) |
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Prescribed Fee Rs 10,000 (Rs 500,000 for projects larger than 10 MW)
Applicants for Provisional Approval would be required to submit the certified report of a pre-feasibility study conducted by the accredited consultant. The prescribed fee payable to SEA for the application for Provisional Approval paid by an Applicant is Rs 10,000 (Rs 500,000 for projects larger than 10 MW)
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| The Pre-feasibility Study |
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| The pre-feasibility study report to be attached to the application, should cover the main topics given in the list of contents relevant to the type of the renewable energy project. Any additional information that would reinforce the project analysis from technical and financial points of view, and the technical and financial capability of the Applicant to develop the project, would be most welcome. |
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| The pre-feasibility study report should contain: |
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| (a) |
Summary of the Pre-feasibility Study (Format F2) |
| (b) |
Certification by the Accredited Consultant (Format F3) |
| (c) |
Study report based on the list of contents (Format F1) |
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| The processing time of an application for provisional approval by SEA will be a maximum of two months. |
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| Once the Provisional Approval is issued ..... |
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The Provisional Approval will be valid for a period of six months, and it can be extended to a maximum of a further six months. At the end of twelve months from the date of first issue, the Provisional Approval will stand cancelled, and SEA would issue the Resource Allocation to the next person holding a standby resource allocation for the site.
Within the six month period (maximum twelve months), the Applicant should obtain the Letter of Intent to purchase electricity from the purchaser (currently CEB), all the permits, land rights and letters of consent from equity partners and lenders, to satisfy SEA that the Applicant is capable of proceeding with the project through financing, construction and commissioning. |
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| The Numbering System |
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The resource allocation number (R) and the standby resource allocation number (Q) will be site specific, and it will be a serial number. eg The resource allocation number for the site referenced by the serial number 483 will be of the style R1483-01. If there is a subsequent application for the same site, it will be issued with a standby resource allocation number of the style Q1483-02. However, if this same Q number is upgraded to a R number, it will be of the style R1483-02.
The provisional approval number will be from a new series of numbers, which has no relevance to the R or Q numbers. They will be of the style PA3231-01, and in case this PA has to be cancelled, the new PA for the same site shall be of the style PA3231-02.
If the provisional approval matures into a Permit, the numbering will be from a new series of the style EP8241-01. In case this energy permit for the site is cancelled and re-issued to another developer, it will be of the style EP8241-02. |
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| Some of the permits/approvals to be obtained once the provisional approval is issued are the following; |
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| (a) |
Electricity Generating License from the Appropriate Regulatory Authority |
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Letter of Intent to purchase electricity from the appropriate power purchaser |
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Environmental approval |
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Letters of consent from equity partners and lenders |
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Any other institutions, agencies and persons listed in the Provisional Approval or as required in accordance with requirements |
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| Step 3 - Application for the Energy Permit (Form R3) |
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For Projects larger than 10 MW, the royalty is Rs 1,000,000/- at the time of issuing the Permit, and 0.10 LKR/kWh generated payable at the end of every year.
All the requirements stated in the provisional approval should be fulfilled and submitted with the application for the permit.
The Permit is valid for a period of twenty years from the date of commercial operation of the project. A period of two years is allowed to the Developer for construction, from the date of the permit.
At the end of the twenty year period, the permit is extendable for a maximum period of twenty years, provided the relevant power purchase agreements are extendable based on the conditions stipulated in such agreements or other guidelines effective at that time.
A power purchase agreement should be signed for the sale of electricity to the grid, within one month from the date of the Permit. |
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| AGREEMENTS & TARIFFS FOR NON-CONVENTIONAL PROJECTS LESS THAN 10MW |
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| For projects up to 10 MW |
| SEA and CEB offer a Standardised Power Purchase Agreement (SPPA) for renewable energy projects of the approved types, with an installed capacity up to 10 MW. The SPPA is standardised and non-negotiable, and is valid for twenty years from the commercial operation date. Projects eligible for the SPPA are also eligible to be paid under the Small Power Purchase Tariff (SPPT). |
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| For projects larger than 10 MW |
| There is no standardised agreement or standardised tariffs for the sale of electricity from renewable energy projects exceeding 10 MW. Such agreements should be separately negotiated between the Developer and the Power Purchaser. |
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| Small Power Purchase Tariff |
| For renewable energy projects up to 10 MW, the standardised tariffs would apply. The tariff for projects that would enter into an SPPA is published at any given time. There will be a tariff review process conducted by the Ministry of Power and Energy, where the following will be considered |
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Types of projects to be offered the standardised tariffs (whether any new types of projects have matured to an adequate level to be included in the tariff schedule) |
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Tariffs to be offered to developers entering into an SPPA in the coming year |
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| APPLICATION FORMS, APPROVAL FORMATS AND TARIFF |
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| Flowchart of the Resource Allocation and Approval Process |
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| Application for Resource Verification |
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| Pre-feasibility Study |
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| Provisional Approval |
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| Permit |
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| Agreements & Tariffs for non-conventional projects less than 10MW |
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