Sri Lanka's Power Grid Reliability: Ripple Effects of the Russia-Ukraine Conflict and Energy Dynamics

Does Sri Lanka's power grid suffer from critical instability? Or does the country rely on imported oil by more than 15%, as reported?

In the wake of the 2022 energy crisis, Sri Lanka found itself at a crossroads, grappling with an unprecedented power grid instability and an acute dependency on imported oil.

This article delves into the heart of the crisis, sparked by geopolitical tensions and exacerbated by existing vulnerabilities in the nation's energy infrastructure.

Through an analysis grounded in the events following the Russia-Ukraine conflict, I uncover the cascading effects that led to widespread blackouts and economic turmoil. This piece not only seeks to unravel the complexities behind Sri Lanka's energy dilemma but also proposes actionable strategies aimed at enhancing grid reliability and resilience.

Dedicated to my best friend in China, Amantha, who shared the story of his homeland, this exploration is a testament to the power of energy in shaping the fate of nations and underscores the urgent need for sustainable solutions in the face of global uncertainties.

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It is interesting to analyze how the scarcity of an energy source managed to completely collapse the country in just a few months, forcing its citizens to resort to cooking with wood and fire in the midst of 2022. From a society that lived comfortably, emerged the most significant energy and economic crisis in decades.

Analyzing these events not only makes me recognize the importance and power of energy but also helps me understand:

1. The grid sensitivity,
2. The far-reaching the consequences and the time it takes;
3. How people reacts and understands it;
4. Responses from: the government in charge, neighboring countries with vested interests, and international intervention.

All of the above occurs in a contemporary context, making it somehow comparable (for me) and enabling the incorporation of lessons learned into the energy management of developing countries.

Framework: Sri Lanka in Perspective

General Information

First, located in the south of India, the island nation with a small land area comparable to West Virginia in the U.S. or the state of Nuevo León in Mexico, serves as a key player in Asian trade routes. 100% dependent on imported oil from Russia for transportation and with a moderately productive economy based on tourism, agriculture, and textiles.

As a Buddhist-state country, with a Democratic Socialist Republic government, the capital city Colombo, serves as the economic and cultural center. While its GDP per capita ranked at #105 (with Mexico being #69 and Ecuador being #107).

Sri Lanka, with a history marked by Portuguese, Dutch, and British occupations, bears a rich cultural heritage and diverse traditions, influencing its mindset, behavior, and architecture. Formerly a British colony until gaining independence in 1948 (just in the past century), it transitioned to a republic in the 1970s.

This nation faced a dark period in the 70s and 80s, marked by a 26-year civil war initiated by university students and concluding in 2009 (less than 2 decades ago). With important events such as the "Easter Sunday Attack" in 2019 - the terrorist bombings at Christian facilities - this nation has always been characterized as a non-violent, resilient & organized society, which of course has influenced the response to the energy crisis and scarcity faced.

Sri Lanka's ties with India are culturally and economically linked, and China's involvement focuses on infrastructure and economic collaboration, though it raises strategic concerns. Corruption has highly impacted governance and public perception. And the COVID-19 response faced hurdles in healthcare and the economy.

Evolution of Sri Lanka’s economic and energy crisis: Timeline

Sri Lanka experienced severe collapses in the power grid, leaving the population without access to electricity and telecommunications with power cuts of up to 13 hours daily for months.

(Before the War) August - December 2021:

As COVID-19 contingencies eased, Sri Lanka attempted to revive tourism. However, 5-hour power cuts started happening regularly during the night.

February - March 2022:

• A severe petrol shortage led to skyrocketing fuel prices. Public transport, including tuk-tuks and buses, became unreliable, complicating mobility.
• To manage fuel distribution and reduce tensions at filling stations, the military was deployed, and a QR code-based rationing system, "National Fuel Pass," was introduced, penalizing excess fuel holding.
• Escalating power cuts, reaching up to 13 hours a day, were a consequence of thermal power plants halting operations. People turned to traditional cooking methods like wood and fire.
• Early March saw the beginning of nationwide protests, starting with small candlelight vigils and growing in attendance and spread. At the same time, large queues for filling gas cylinders stopped, since it was almost impossible to refill it.

April 2022:

• Political instability intensified as the ruling coalition lost its majority, and the Sri Lankan rupee had plunged to a record low to become the worst performing currency in the world. The shortage of fuel led to a depletion of reserves, insufficient for even a month's imports, causing widespread shortages.
• The government responded to the crisis by blocking social media and declaring a state of emergency. Backup generators, crucial for critical services like telecommunications, began to fail. More than 2-3 sims for each phone and a good VPN were needed to communicate.
• Large peaceful protests emerged, particularly at "Gota-Go" Village in Colombo, symbolizing resistance and lasting nearly three months, with makeshift facilities providing everything from medical care to libraries and spaces for debates.
• Tensions escalated as the government attempted to disperse protests using force, leading to significant violence and damage.

May 2022:

• Prime Minister Mahinda Rajapaksa resigned following violent protests, marking a significant government collapse within a year.

?Did everything failed faster than expected? Let's analyze.

Power Grid Overview

With an installed capacity of 4,809 MWe and a net electricity generation of 15,845 GWh, according to the Annual Performance Report "?????? ???????" (Ministry of Energy and Power, 2023), out of the total electricity generated in 2022, 48% of electricity was generated from thermal energy sources (33% coal and 15% oil). The share of renewable energy in the 2022 generation mix was 52% (34% major Hydro, and 15% Other Renewable Energies (ORE)).

In Sri Lanka, large-hydro is the main technology of generation since decades ago but the country has also faced scarcity of water and droughts. Combined with more than 60 years old turbine facilities, it made it impossible to meet the electricity demand during the economic crisis.

When discussing hydro technology, it's crucial to consider seasonal variations and the availability of water resources throughout the year. In this case, given the near impossibility of analyzing the drop in generation during these months, it's highly likely that the annual generation results for 2022 could be significantly detached from the reality experienced during the early months of the crisis.

Despite observing a varied share among the primary generation technologies (hydro, oil, and coal), less than four years ago (2019), there was an almost equal distribution among these technologies. This represents a possible altered reality of oil reduction and its impact on balancing generation with demand. In Figure 3, the matrix share of the past four years in Sri Lanka is displayed, providing a broader perspective on how its energy planning has evolved.

Power Generation and Transmission infrascructure

In 2011, the country inaugurated its first coal power plant (500 MW), as part of a joint venture with India. In 2014, the second addition to the project (400 MW) was completed and financed by China, resulting in Sri Lanka having a single coal power plant (900 MW). Coal quickly became an essential part of Sri Lanka's post-war energy production, contributing to the diversification of its energy mix. Despite having had national coal reserves (now depleted), Sri Lanka imports coal from South Africa, Russia, and Indonesia.

Sri Lanka's electrical grid consists of a single interconnected system on the island, featuring just over 25 power plants (primarily major hydro and the only coal power plant) and 63 substations. Under public ownership, it underwent a recent upgrade of its control center in 2015—a concerningly late modernization that previously did not account for all existing substations and infrastructure essential for the supply and control of electric generation. Figure 4 shows the actual interconnected infrastructure of the country. Making it visually possible to evaluate the distances and focused areas.

In Figure 5, I found it useful to visualize the annual generation behavior (GWh) of the top 3 technologies, comparing it with presidential terms and relevant events over the years.

With marked fluctuations and shifts among the primary energy sources (dotted white boxes), significant increases (red boxes), and decreases (yellow boxes), as well as critical changes (purple boxes); it is noticeable that in the years 1996 and 2000, there was a rapid increase in the share of oil, a loss of hydro share in the same years, and the most critical periods were between 2011 to 2014, during the government of Mahinda Rajapaksa.

Below, a comparison of the generation loss using the 2022 data against the previous years. The load balance experienced a net reduction of 4%, critically impacting the stability of the grid (despite of analyzing monthly in hydro technology).

Oil Dependance

As said before, Sri Lanka's economy heavily relies on oil imports for energy generation and transportation. The country faces challenges in reducing its oil dependence and transitioning to sustainable energy sources. Below, critical statements to analyze at midst of the crisis.

• Oil price surged by 90% during crisis months, reaching $114 USD/barrel. (Months before establishing the Russian Oil CAP top price $60 USD/barrel)
• Lack of hedging contracts or fixed-price agreements exposes vulnerability in Sri Lanka's energy supply strategy (something that can be comparable to the SPOT market in Mexico (maybe)).

Figure 7 represents the increasing prices of the barreel and the final CAP (cost) defined after the Rusia-Ukraine Conflict.

The (unexistant) power market

As expected to a (relatively) small and new grid, Sri Lanka does not have an open power market as now operated y most of the countries, the absence of a structured electricity market have significant implications for the energy sector. Unlike countries with a deregulated market, there is no mechanism for the pass-through of generation costs or the absorption of price fluctuations via market instruments. Thus, the inability to offset taxes, similar to the Special Tax on Production and Services (IEPS) in Mexico, leaves no buffer against the soaring energy costs. Private entities cannot amortize central costs as done in countries with established markets, leading to a direct financial impact without any fiscal cushioning. Probably maturing an open regulated power market would provide the damping factor needed for future scenarios.

Grid Stability: Balancing Generation and Demand in real time. Before modifying the generation, we can dissconnect the substations, isn't it?

It's worth remembering that at all times of the day, there must be an almost even balance between the electrical supply generated at the moment and the consumption or demand by users. During blackouts, these are part of the mechanisms and contingency plans for the operators of the electrical system.

When this balance is lost, frequency destabilization occurs, leading to power outages, termed as 'load shedding.' Technically speaking, what happened is that these planned power cuts involve disconnecting feeders from substations. In Sri Lanka's case, forced demand reduction was deemed necessary to avoid the high cost of energy procurement, resulting in widespread outages. During the crisis, it is highly likely that, faced with high oil prices for electricity generation, it became more economically feasible for the control room to forcibly reduce demand (through regional blackouts) to align with the current electrical supply in real time.

Frecuency Regulation, how can we control a blackout and protect the machines?

Frequency regulation becomes one of the key aspects to monitor during the balancing of electrical supply and demand.

Wait, let me explain what is this: we can compare it to maintaining a steady pace in a relay race where the speed of the runners (electricity flow) must match the baton handover points (demand) to avoid tripping or slowing down.

As stipulated in Mexico's Grid Code, frequency regulation is crucial to prevent load shedding and to protect equipment from significant damage. The frequency range should not deviate by more than 5% from the nominal frequency, nearly 57 hertz, indicating a severe system impact when breached. Sri Lanka's contingency plan, as well as in power systems worlwide include 3 main methods to control in real time this frecuency regulation during blackouts:

1. Automatic Voltage Regulation (AVR) - First of all, science based method: This inertia mechanism transforms mechanical to electrical energy, inherent in asynchronous generators. For instance, abruptly stopping a high-speed rotating motor leads to energy accumulation, the same phenomenon happened in physical rotors and rotating generators.
2. Automatic Generation Control (AGC) - The second method involves power electronics and the software in the power plants, where the AGC can modulate parameters such as the amount of steam in turbines, blade pitch, and the opening angle of inverters. In hydro systems, it adjusts wicket gate opening and blade pitch. Allowing for more than just a natural response, enabling active valve regulation.
3. In extreme cases and the third control method is where the system or plant operators can directly control generator power output, adapting to the immediate needs of the grid.

It most likely to had happened all of these three methods during the crisis, making possible the long lasting blackouts in the country.

Now, going back to the main incognita: Does Sri Lanka's power grid suffer from critical instability? Or does the country rely on imported oil by more than 15%, as reported?

Short anwser: probably both.

Considering that at only 4% of the generation was affected during 2022 and the consequences led to prolonged power outages of more than 10 hours, I question the explanation for the energy collapse. Thus, two statements come to my mind: the first one related to the resilience of the power grid in Sri Lanka, as well as the narrow margin for load balancing and contingency plans for supply continuity and inertia. Conversely, I could consider that the information provided regarding the generation loss in 2022 differs from reality, thinking that the country might have a much greater dependence on imported oil in the total generation.

Several factors such as fuel shortage, infrastructure issues, dependency of external sources, political instability and insufficient investment in capacity, can contribute to prolonged power cuts in an electrical grid for consecutive months. It's essential to note that these issues are often interconnected and may require comprehensive measures to effectively address challenges in the electrical grid. but undoubtedly, having a robust grid infrastructure and well-developed contingency plans can mitigate the consequences of a 15% loss in generation for sure.

Important to mention that, until now, there are no plans for energy storage or for an underwater interconnection with the continent, which I consider highly important for the energy resilience of the nation.

As was mentioned by the Sri Lankan energy authority, the current major challenges to the country’s energy sector (Dasanayaka, C., 2021) were the high cost of energy/electricity and the transport sector’s 100% dependency on the imported fossil fuel oil.

Enhancing Grid Reliability: Proposed Measures

To fortify the grid's reliability, several strategies are suggested:

1. Interconnection with India's Robust Grid: Leveraging India's stable and diverse electricity supply could provide Sri Lanka with an essential backup and reduce the reliance on volatile energy sources.
2. Development of Microgrids: Implementing localized energy solutions through microgrids can offer resilience and sustainability, particularly in remote or vulnerable regions.
3. Investment in Energy Storage: Adopting storage technologies, such as batteries or flywheels, can mitigate the intermittency of renewable sources and ensure a consistent power supply during peak demands or generation dips.
4. Diversification of Energy Technologies: Exploring and integrating a broader range of renewable energy technologies will decrease dependency on imports and foster a more balanced and sustainable energy mix.

By systematically addressing the infrastructure weaknesses and resource dependencies highlighted through this analysis and the supporting figures, Sri Lanka can pave the way toward a more stable, efficient, and resilient energy future.

Finally, let's talk about, how was this solved?

International Intervention

The crisis reached a tipping point when Sri Lanka, unable to handle the situation independently, sought international assistance. According to the World Bank, official reserves dropped from US$7.6 billion in 2019 to less than US$400 million (excluding a currency swap equivalent to US$1.5 billion with China) in June 2022.

Not to mention its significant impact on the education and medical sectors, where the absence of electricity affected hospitals' ability to conduct surgeries and provide medicine. Additionally, somehow there was a critical shortage of paper, becoming a precious commodity in schools and offices alike.

In response to the crisis, Sri Lanka joined the International Monetary Fund (IMF) for a loan program up to $3 billion over three years, even as it seeked help from other countries, including neighboring India ($1.9 billion), and China ($3.5 billion), resulting in a complete overhaul of government officials and the acquisition of funds to purchase energy resources from Russia at the higher price, as well as the limitation of non-essential goods to import.

Bloomberg reported that Sri Lanka had a total of $8.6?billion in repayments due in 2022, including both local debt and foreign debt. J.P. Morgan analysts estimate the country's gross debt servicing would amount to $7 billion last year, with current account deficit coming around $3 billion.

By November 2022 the economic condition had significantly improved. The inflation rate had significantly declined. It was reported that "Tourists are coming in slowly, with the country making a billion dollars in the first 10 months of the year. The fuel and gas queues have disappeared. Power cuts have reduced and despite the shrinking of the economy and the job losses, the situation has dramatically improved since the departure of Gotabaya." The inflation rate rapidly declined. The country was declared safe and tourists resumed visiting the country again.

Talking specifically about the new energy policies, the governmet invested in new installed capacity (hydro again).

Lessons for Mexico

Sri Lanka's experience underscores the risks of sole reliance on external sources, emphasizing the importance of power grid resilience.

In Mexico, the Energy Commission (CFE) outlined its 2023-2027 business and infrastructure investment plan, utilizing resources from the current budget, public expenditure programs (PIIDIREGAS), four trusts, and funds from the Ministry of Finance (SHCP).

The plan involves a 311 billion Mexican pesos (MMDP) investment in generation, 142 MMDP in distribution, and just 129 MMDP in transmission over the next seven years. The total for transmission and distribution is 12% lower than that for generation. However, the National Electric System (SEN) is currently not prepared for the interconnection of additional generation projects, showcasing an uneven infrastructure growth and posing a significant problem.

As far as I know, greater investments in generation lead to benefits at short term, unlikely in the Transmission and Distribution grid, which are considered investments by parts or potential zones and usually have longer ROI and benefits at a longer term. In the governmet, which ones would they choose?

Comparatively, when examining territory and economic development, Mexico urgently requires a more robust infrastructure plan. If Sri Lanka's consequences were brutal, similar scenarios in Mexico would be devastating.

A comprehensive approach involving robust energy planning, diversified energy mix, integration of smart grid technologies, and overall power grid fortification is imperative and, despite some improvements, the crucial lessons learned from this crisis, especially for energy-dependent countries like Mexico, underscore the need to address vulnerabilities and prevent potential future scenarios.

Short time responses from the people and government, anger from the population, little amount of real time information given by the Electricity Board, full blackouts in hospitals and schools, other social aspects affected such as food, education and even white paper, vested interests of neighbouring countries, ideal socialists scenarios happening during the protest, among others, are some of the main reasons I considered worth analazing the Sri Lankan case. Electricity and Fuels are even more important than we can imagine.

Anyway, I still wonder: Facing a 4% impact on net generation during Sri Lanka's energy crisis, at what point can we truly rely on this data when the power grid is grappling with such severe consequences?

In light of the intricate challenges faced by Sri Lanka during the 2022 energy crisis, this analysis underscores the critical importance of a robust, diversified, and resilient power grid. The crisis revealed not just the vulnerabilities inherent in an over-reliance on imported oil and outdated infrastructure but also the potential for systemic collapse in the absence of strategic foresight and adaptability in energy planning.

Moving forward, it is imperative for policymakers, both within Sri Lanka and in countries facing similar vulnerabilities, to embrace a multifaceted approach to energy security. This includes not only diversifying energy sources and enhancing grid infrastructure but also integrating innovative technologies such as microgrids and energy storage solutions. Furthermore, the development of a regulated, open power market could provide the necessary flexibility and financial stability to weather future crises.

The lessons learned from Sri Lanka's experience are a clare call for a proactive rather than reactive approach to energy management. As we navigate the complexities of global energy dynamics and geopolitical uncertainties, the pursuit of sustainability, efficiency, and resilience in our power systems is more than a policy choice—it's an imperative for national security and economic stability.

As we reflect on the crisis and its ramifications, let us commit to the ongoing dialogue and collaborative action needed to ensure that the power grids that light our world are not only capable of meeting today's demands but are also prepared for the challenges of tomorrow.

References

Ministry of Power and Energy. (2023). Government of Sri Lanka. Annual Report 2022. Retrieved on February 2nd 2024 (online) from: https://103.1.179.75/power/wp-content/uploads/2023/06/Annual-Report-2022-English.pdf

International Energy Agency. (2022). Sri Lanka. Countries. Retrieved on January 29th 2024 (online) from:https://www.iea.org/countries/sri-lanka

The World Bank. (2022). The World Bank in Sri Lanka. Retrieved on January 30th 2024 (online) from: https://www.worldbank.org/en/country/srilanka/overview#:~:text=The%20economy%20contracted%20by%204.8,beyond%20the%20first%20six%20months.

Dasanayaka, C. et al. (2021). Investigating the effects of renewable energy utilization towards the economic growth of Sri Lanka: A structural equation modelling approach. Retrieved on February 5th 2024 from ScienceDirect ELSEVIER.

Siriwardhana, S. et al. (2022). Evolution of post-disaster reconstruction policy framework in Sri Lanka: A longitudinal case study. Retrieved on February 5th 2024 from ScienceDirect ELSEVIER.

Samarakoon, L. (2023). What broke the pearl of the Indian ocean? The causes of the Sri Lankan economic crisis and its policy implications. Retrieved on February 5th 2024 from ScienceDirect ELSEVIER.

Photo Gallery of the Gota-Go Protest

Thanks for reading.

Sustainable Development Engineer, Stephanie Matta.