charindra chandrasena  00:06
Hi Dana.

Dhananath Fernando  00:06
Hi Jari. Hi

charindra chandrasena  00:07
Riyadh.

Speaker 1  00:08
Hi Chari.

charindra chandrasena  00:09
So we are we are back together. Yes, the Trinity. Yes.

Speaker 1  00:17
You're a meeting.

charindra chandrasena  00:18
But yeah, so lot going on in Sri Lanka, both on the political and the economic front. But also in cricket. Also in cricket, yes. So so we we we are planning to do something on cricket, but but we'll save that for right either when we advance through the group stages or but

Speaker 1  00:41
I will put it on news for you. I think on last Thursday, I think President was at a particular cricket club because the team was practising, and I think he called the team and called he called the team for to have a tea, and you know I think he gave a little bit of prep talk. Yeah, pre-proc don't know. I mean, I'm just I'm just wondering if he actually watched Invictus or something like that. Watched what Invictus the Invictus. Yes. So yeah,

charindra chandrasena  01:08
local Mandela. I don't know. I mean, but no. But I I heard that he had gone and spoken. I don't know. I mean, obviously he's not going to give cricket knowledge to them. No. I think this was more of a the nation is behind you, so you know. Yeah, just just don't embarrass us. Yes, you know any further kind of vibe, but yeah. So whatever they did, whatever he did worked in the first match. We don't know whether it will work in the second match, and then you know on it goes. But yeah, so we save the cricket for later. For today, we actually wanted to talk about energy. Yeah, which is ironically what our cricketers also lack. Yes. So, but yeah, energy in terms of electricity generation. Ouch! Yes, I don't care. Honestly,

Speaker 1  02:01
but

charindra chandrasena  02:02
kind of yeah. So, in terms of the national economy and and power generation in particular, the government has put out a plan which is talking about a 70% renewable energy capacity by 2030. That means of the national energy requirement, 70% will be met through renewables by 2030, and by 2040, 100% or more will be met by through renewables, which which also could mean that he would have export capability as well. Right, if those targets are met. Firstly, just give me your thoughts on these targets. Are they realistic or are they fanciful, ambitious? What are they?

Speaker 1  03:03
So shall I start? Yeah. Yeah. Right. Okay. So the thing is, it's like this. Any target depends on. For example, most of the most of the targets that you take on, let's say, on these are these these are the these are the this is the place where we want to go. It a lot of things actually depends on the financial plan. One thing good about the battery tech and the new tech that is coming into energy is the cost is reducing alarm. I mean, there's a huge cost reduction every year. One thing is you have to be very thankful to the Chinese because you know mass production of solar panels, mass production of batteries, mass production of anything related to the industry. So because of that, you see a huge cost reduction every year. Now, for example, if you look at people who have put solar panels, let's say 10 years ago, and the guys who are putting solar panels now, there's a huge reduction in the cost. I'm talking about, by the way, the UST cost, right? Because we know Sri Lanka, we have the case of currency, CBA currency depreciation. So I don't want to bring that into this. So I'm just looking at dollar terms, dollar to dollar, or right. So if you look at that, that is the case. So going forward, and other other thing is with on the cost factor is the infrastructure that goes into renewable production is relatively less. And one thing is you don't have consumption cost because normally when you do infrastructure, let's say you're putting a coal power plant up. One thing the coal power plant is very expensive to build. Second, this thing is you have to feed coal, which is the running expense. Solar plants is it's it's only for example you take a solar power plant. I think maintenance is minimum, and there's a there's a particular lifespan, 10 years, 15 years depends on the tech that you go into. It's the initial capital that is high. It's the initial capital cost. So because of that, if you do a cost analysis, actually on the long term it's cheaper, no question about it. The only problem what I see with renewable energy is there are issues on, for example. And on demand, when you need like a surge and all that, then it becomes issue, right? But apart from that, I think the targets what they are doing, and if they do it in a very systematic way, it's achievable. And one thing you don't forget because I think now solar production is about I think it's about 15% now, right? I'm talking about roof solar, not industrial solar. So roof solar is basically government is not investing; it's all private investments, right? So, and it's growing at a it's growing at a massive rate, right? Where more and more people are getting into it because the costs have come down, because nobody's going to go and take a loan, and you know invest on a roof solar, and

charindra chandrasena  05:42
again for that also we have China to thank. We

Speaker 1  05:44
have to, and we have China to thank also. For example, the electric cars that are coming in. So the current mentality is, you know, I'm going to build a roof solar, even on a loan, get a car on a loan. Then virtually my running cost of fuel cost for the month is zero, right? So it's a win-win situation if you look it that way, but of course there are other complications that come with it. For example, like if you take solar in in particular, where you need to store it when there is when there is no sunlight. So that is additional expense. But then again, the cost of batteries also come down because if you look at the last battery storage tender that was given out, it was awarded to a company where they gave it beyond. It was cheaper than what they thought, right? Which the ministry thought. So it was a good deal. So that is number one. Second is on the sustainability side, right? It can be done. I mean, if it's not sustainable, people won't buy it. But the only problem that I think, then I think we'll talk more about this is our distribution network that needs a major overhaul because you can't know. For example, there is a case where the ministry tells you on a poor day or on a Sunday they tell you to shut your solar down. I mean, you are not mandated to do it, but they make a very kind request because the reason is there's no consumption, so I think Sri Lanka's demand for consumption also has kind of flattened the curve. Yeah. Yeah. So before

charindra chandrasena  07:10
going into that, Riyadh, I want to get Dana's view on on on the big bigger picture.

Speaker 1  07:15
Yeah.

charindra chandrasena  07:16
Right. In terms of now you said technically this is a realistic plan.

Speaker 1  07:23
Yes,

charindra chandrasena  07:24
but I want to get into the numbers also.

Speaker 1  07:26
Yeah,

charindra chandrasena  07:27
do we have the dollar reserves that are required to implement this plan and to really, you know, achieve it in the long run by 2030 70% renewable, which means not seasonally 70%

Dhananath Fernando  07:42
Correct.

charindra chandrasena  07:43
70% means 70% constant.

Dhananath Fernando  07:46
It

charindra chandrasena  07:46
has to be no. They haven't specified it, but I think it has to be constant. So it can't be during the monsoon. It goes to 70% and the others can't be like that. So for that, do we have

Dhananath Fernando  08:00
the? Yeah. So, Charlie, the simple answer is definitely the government really do not have the resources to bring it to 70% renewable because these are quite capital-intensive investments. Definitely, government really doesn't have, and I think they have identified that constraint as well, because if you look at the new CB and the new energy bill that they are going to bring out, which we have provided some commentary. First, the CEB bill. Second, there is a new energy policy, which is like a policy document, which we have also provided commentary. And I must comment that the the the new energy policy is actually they have done a very good job. I mean, we had suggestions there. We had certain sections that we really did not agree, but it is written in a you know it was a quite a well thought process

charindra chandrasena  08:52
and a forward thinking one and

Dhananath Fernando  08:53
a forward thinking one. So definitely the government really do know. I mean we can't do it in our reserves and all that. The private investment has to be there. But you made a very, very, I mean, interesting observation. The 70% because all rainishari, there are certain seasons we eat above 70% Probably, let's see whether we can insert that graph when we run the show. Yeah, there are certain periods when you have like you know good rainy. Now, now

charindra chandrasena  09:18
what that graph will show you is that in certain times it's well over 70% Absolutely. But for the most part during the year it's between 40 and 50% 50% and

Dhananath Fernando  09:28
that's also mainly coming from hydro. Yes, hydro and solar. So yes, if you are going for 70% above and 2040, 100% it's the demand is. I mean, we have to do a lot of investment, but don't forget, we are only considering this energy as at now because we need to electrify our vehicle free, so the demand is growing, and some industries now they will need more and more green energy because if you look at exports for European Union and all that, they bring. More and more green energy requirement, so the demand is going to go up for green energy. So what we are talking about the 70% between 40 to 50% is at the current setup, and this is going to go up rapidly. Yeah, mean the

charindra chandrasena  10:14
demand will go up. Demand will go up, and therefore, what 70% means will be in absolute terms much higher.

Dhananath Fernando  10:20
Absolutely, and even the energy policy presentation, we actually did some basic calculations. Also, like you know, what's the total electricity in a green energy requirement? This is this is the

charindra chandrasena  10:31
presentation made by Advocata to the Energy Ministry. Energy

Dhananath Fernando  10:36
Ministry. Yasmin should probably we should get Yasmin to separate. We speak about it. Right. But even when we this was

charindra chandrasena  10:42
this year last this year this year like

Dhananath Fernando  10:43
like few weeks ago right we really didn't do any you know we didn't publish it yet because it's a kind of a close to a conversation right we provided the feedback quite openly so if we were to we have about almost about 109 131,000 cars in Sri Lanka. Let's say if the average mileage is 35 kilometres a day, for us to electrify that entire fleet, we need about 340 gigawatt hours. 340 gigawatt hours. Let's say the three wheelers that requires about another 1,000 gigawatt hours. Sorry, I I I I beg your pardon. For two wheelers, we have about 5,000,002 wheelers. If we were to electrify, it requires about 1000 gigawatt hours for two wheelers. For three wheelers, we have about one point 2,000,003 wheelers. It requires about another 1.3 1300 gigawatt hours. So altogether, we need about 2,700 gigawatt hours to electrify our vehicle fleet itself. I'm not saying this is not going to happen on like a Sunday evening. This will take a little bit of time, but that's the demand that we are looking at because moving forward for the industries, they require green energy. So definitely, the government need to open it for investment. And as Riyad said, it is mainly going to depend on the storage capacity. And again, I am not an electrical engineer because there has to be a from the little that I know, there has to be a you call the the the load base right, like the the base base, the base load. Yeah,

Speaker 1  12:20
yeah. So, so normally what happens is like coal, nuclear, coal, nuclear, or even diesel is basically provides the base load. So the base load is there's a particular amount. Now, for example, the coal power plant. That's why you know we have cover cuts when the coal power plant when it trips because what happens is the base load is gone, right? So then they have to kick in all other generators and all that, but which are currently sleeping, they have to wake them up and get the base load going through fossil fuels. Now the issue in Sri Lanka is the base load. Now in other countries, now for example in France, the base load actually runs on nuclear. France is the only country in the world where 50% of the power generation is nuke, and their nuclear technology is world class because France is one country where they never had a nuclear incident. I mean, America they had the what you call the three mile or whatever you call yeah, and

charindra chandrasena  13:08
Germany when when Angela Merkel came in, yeah, they moved to this whole you know yeah green green energy and all of that. Yeah, so they shut down a lot of the coal power. Yeah, yeah, nuclear

Speaker 1  13:20
and some of the coal power. Coal power plants. Yeah. So the thing is, you either need. I mean, the easiest is either coal or nuclear. So in Sri Lanka, we have been very fortunate in the last three years or four years, I would say, where the base load has been run coal plus from we have been very fortunate with drains. So the hydro has been running lock stock manner. So because of that, we have been very fortunate, right? But the problem is with hydro is suddenly you get a drought and that happens. Correct. Let's say next year I'm wishing it won't. But if a drought comes, then hydro can't deliver because then they sanction the water and they prioritise the water for farming, because if because you can't take another heat pump because hydro is very important for two things, one thing is the providing the base load for the the the network, the CEB network, and the other one is for farming because a lot of the farms and all that they need water to grow. Yeah. So when it comes to a drought, they prioritise for growing. So they hold the water back. Then where do we run the base load? So we have we have Norachule. Norachole is okay is okay to run, but the thing is, is not actually enough. So then seasonally, if there's a drought or there's a shortfall, then we'll wake up all these diesels which are sleeping, right? I mean, there are some private companies also who are there, but the problem is when you wake those guys up, what happens is your expenses goes through the roof because they charge premium, right? So that's where the problem is. So currently, with battery tech coming in in a big way and solar coming in a big way, you might be able to balance that off in the next. We are looking at a but a window, so about a four-year window. Yeah, right. It's. I mean, this year is still new. Yeah, it's four years. And

Dhananath Fernando  15:03
also, yeah, what you said, and like the for for for us to expand on the renewable, you cannot really improve only through generation. You have to also upgrade your connectivity grid.

Speaker 1  15:15
Yeah,

Dhananath Fernando  15:15
that requires a massive investment because now the problem is, or Sundays, the reason that you have to keep it off is because your grid really cannot sustain the generation. Yeah. So so

charindra chandrasena  15:26
so that's the thing. It's like sometimes it can be like the like put in the cart before the horse, right? Yeah. Where you increase the generation without having the infrastructure ready.

Speaker 1  15:38
Yeah. And

charindra chandrasena  15:39
then what's the point of that?

Speaker 1  15:41
Yeah, because because the problem with generations, if you generate, you need to use it somewhere. Yeah, electricity works. Because if you don't use it, what happens even in your house or anything, your factory? If you are running on a generator and suddenly you don't use it, it trips. Yeah. So that's why we have this problem where you know there's a tripping issue. Yeah. Yeah. It it happens in Oracle and all other. And when you trip, then a coal power plant, you can just start it like a diesel. You have to where there's a process you need to go through. So that's a completely different area. I'm not an electrical engineer, right? None of us are. So the thing is, I'm not going to go into the technical detail. I'm just saying from the layman's point of view how we understand it. But the thing is, but the problem is that, but there is some new tech also coming in. Now, for example, nuclear tech is something that we don't want to touch. I mean, we want to touch coal in the north. But then again, I just read the saying that in Japan they are made a new mini nuclear reactor. Apparently, it's very very safe, where it can be put onto a kind of a small container, maybe a 40 foot container box, and you can take it to anywhere and you can run. So even nuclear, even Japan, and

charindra chandrasena  16:41
Japan has a phobia for the past 15 years or so since Fukushima. Yeah, exactly. They have a phobia, but see, they have that phobia, but it took them only 15 years to sort of you know step into that area again and Japan.

Speaker 1  16:57
Since we are talking nuclear, I mean Japan is the only country that got new in the history of land. Yeah, yeah. Their phobia should be much bigger, right? So they are the only two countries that got new technically, right? So the thing is, even after that, you know how how quickly they rebuild the country. So Japanese are completely different. It's a different kettle of fish with them. So, but the thing is, I mean, lot of the research and all that that's going into Japan, they'll figure a way out. But the thing is, for us, what's safe is because nuclear in Sri Lanka, I think, even for the government, it's not taken as an option. Yeah,

charindra chandrasena  17:30
because they are scared because you know something goes wrong, and then you know it's going to. I mean, I think I think that's a bridge too far right now in terms of you know public acceptance and all of that, because I mean, even getting public endorsement for wind power has been difficult, right? Yeah. So then you know, nuclear is a whole different kettle of fish.

Speaker 1  17:52
Correct.

charindra chandrasena  17:53
But coming back to solar, right? And because we are like focusing on that heavily, another problem with solar is also land, right?

Speaker 1  18:04
Yeah.

charindra chandrasena  18:05
So Sri Lanka, being such a small country now, everybody talks about okay. So the world's renewable champion is hands down China. There's not even competition, but actually

Speaker 1  18:16
on solar per capita, per capita.

charindra chandrasena  18:20
I'm not talking per capita. Yeah,

Speaker 1  18:21
per capita, Sri Lankan is actually above China.

charindra chandrasena  18:23
Yeah, per capita. When you compare China and India with any other country, it's going to look bad. No, no, no,

Speaker 1  18:28
no. What I'm saying is, like, for example,

Dhananath Fernando  18:30
even the per capita consumption of green energy. Yeah,

Speaker 1  18:32
the production of production of green energy. Sri Lankan is actually above China per capita.

charindra chandrasena  18:38
Production of green energy. Yeah,

Speaker 1  18:39
because the reason is we have so much of roof solar. I mean, also

Dhananath Fernando  18:42
the it's a crazy point. The Chinese also the population. Yeah, no, no, no. Anything per

charindra chandrasena  18:47
capita is going to look like much. But the

Speaker 1  18:48
thing is, but I mean, you don't compare apples. Apple is no. Yeah, exactly. If you if you if you check the investment that goes in for generating per, I mean, let's say per kilowatt on roof, on roof energy. I mean, roof solar energy. China is hands down much cheaper than Sri Lanka because it's more affordable there. Because Sri Lanka, you know, you you have to bring it down from China. You'd buy it from China, bring it down here, pay taxes, pay the local these things and all that, and then put it on. What I'm saying is so on the investment side, ah, Sri Lankans have been very progressive in that way.

charindra chandrasena  19:19
Fair enough, enough. But what I'm saying is, you compare per capita Sri Lanka with China or India or anything, right? It's not going to look good. And

Dhananath Fernando  19:28
also maybe because of the other reason is now China and India, the geographic location, because we are near to the equator and in China, while the land must so as India. Yeah, we have a lot of sunshine here. That's a that's a yeah very important point. Yeah,

charindra chandrasena  19:41
I mean they have snow. The closest we've come to snow, I think, was recently when Doreli went to three degrees. But that was a big scene here. That was a big scene. Yeah, I was I was hoping for zero and beyond. But

Dhananath Fernando  19:57
you were coming to the land issue. Yes, so land issue.

charindra chandrasena  20:00
Okay, so then there are two options. Sorry, three options. So then there's ground-based solar, which is what what is popular. Everybody knows, which is what a lot of countries have put in deserts. Okay, then you have this mini you know generation from the rooftop solar. And then you have hydro-based, right? Water-based. In Sri Lanka, I think water-based is part of the mix. Yeah. Okay. Let's leave out the rooftop for a bit and tell me. And I think you guys have done some work on land availability when it comes to agriculture. Yeah. So it is this purpose is going to be at at odds with the agricultural purpose. Awesome. Because where does the land come from? It's a small 65,000 square kilometre area. So okay. What is how do we solve the land problem?

Dhananath Fernando  20:56
Yeah. This is sorry completely a new can of worms because land issue. I will tell you a personal story. In fact, you remember there was a competitive bidding earlier. There wasn't a competitive bidding process for the solar projects, and then there was a competitive bidding process brought in, and then they were going to again reverse. In fact, I myself and Murthusa we met the the then energy minister, and we said like look, you know the saying that the the importance of the competitive bidding process and the reason we brought out was also the and then the minister's concern was look you can bring the competitive bidding process but the land issue is a mess so that's why they said I can't go for competitive bidding I am prioritising side of the the the this rooftop solar and whatever that can be done because you cannot. His concern was people are coming and bidding at very low rates for solar projects, and then they come and say that I cannot find the land, right? He said I cannot solve this process for land issues, right? So our suggestion was okay. You solve the land problem because there is a genuine problem because then you can, you know, you can allow the markets to work. But again, solving this land issue is not an easy, easy problem because 80% of the land is owned by the government, and as we have spoken, it's not digitised, and our deed system is a complete mess, so it's very difficult because also the land owned by like so many authorities. Like there's one land which is under archaeological, there's one land under under the environment conservation. So there's lot of and some under religious institutions, quite a messy. You really cannot do this heavy investment.

Speaker 1  22:41
Sorry for interrupting. For example, Kashikov operation is one of the biggest landlords.

Dhananath Fernando  22:45
And then railway

Speaker 1  22:46
cooperation is another big landlord. Yeah, yeah. And

Dhananath Fernando  22:49
then, like, even if you find like an obscure land to get the grid connectivity, then you have to get approval from so many other authorities, like the provincial council. The you know, there's this. You know, again, because your grid may be coming from somewhere, which is coming under falling under multiple institutions. So it has been a kind of a mess. It's very difficult, and the challenge is sorry. Since you ask, this is responding to the first question. There's this concept called wheeling. There's concept called electricity wheeling. Wheeling is you need. Let's say you have a land in Kandy. I have a IT workstation in Colombo. I need not to go through the CBO, whoever the government authority. You have a land. You say, Dana, I will put up solar in my land, right? No one, it's no one's business. I have my land.

charindra chandrasena  23:39
Meaning, I own the land. I

Dhananath Fernando  23:40
own the land exactly, and you put the solar thing, and I come to agreement directly with you. At what rate that I am buying electricity from you? There's nothing to be done with CEB. But the problem is how are we going to transmit? Transmission is you can you know you you basically connect it to the grid, and both of us pay a transmission fee. Whoever the transmitter agreement is between you and I. The advantage. Let's say I run. I mean, I let's say I do software or something, and let's say I have an advantage working with the European Union, saying, okay, my entire IT operation is based on green energy, and this is the agreement, and I can bid with you with a competitive rate, saying, "Look, Chari, I can you know get a better rate. I can win this business if you sell the electricity at this rate. And for you, its advantage is because your land has nothing to do now because you you are in base in Colombo, nobody's there. You just need to mount up solar and just come to an agreement, you know. So, and it can be advantageous because for you, I can offer a better rate because I may be earning in euros. So, so this wheeling concept is a direct function of the availability of land because lot of underutilised land can be converted into whatever solar or wind or whatever the option. If you have the. Wheeling option, but wheeling can come only when there's grid upgrade, and also when you provide the land, sort the land issues is where you can basically you know work this around. So actually, in the new energy policy credit to the government, that wheeling option has been considered.

charindra chandrasena  25:17
Right. Okay.

Dhananath Fernando  25:18
So in the new electricity, the first time. It's the first time. I mean, I'm not sure it's the first time, but it has been there even in the previous app. So that's why we were we were saying that even for grid expansion, we need to have the private investors involved because this grid expansion is quite needed to wheeling to wheeling private because only you know send like there are so many people going you know the electricity grid and whatever that I don't know. Like the functionality has to be compatible with that. So yes, land issue is critical. That's that's why we say it's a factor market reform that you need because electricity is going to change our destiny when it comes to you know on exports and everything because now the exports are no longer about the prices and quality, they ask for about the renewable energy or the green energy component. For that, we have to prepare not only for manufacturing, also for services, IT hubs, and everyone talks about making Sri Lanka like what do you call these artificial intelligence and all that, which are quite energy intensive. You know, you you have to have a lot of green energy. So land, this greedy expansion, these all are now combined. If you are looking for export exports, and importantly, we have been speaking about this merchandise exports. So one type of merchandise exports is actually electricity because electricity falls under a merchandise export because merchandise export doesn't really mean like it's like you know, it's like a good that something tangible because as long as you can measure the unit, it falls under merchandise export. So actually, one source of exports could be electricity. But for that, you know, it's another kind of worms that you do connect the grid with India and ability to export and all that. So this is quite a quite a you know quite a critical note that we are discussing today because it's connected to exports, it's connected with land, connected with trade and everything. Yeah, if if

Speaker 1  27:12
it goes to plan by 2040 45, we should be exporting then. Correct. So, but I don't. I mean, I I feel like there are a lot of issues. I feel like this is one of those plans that's going to be delayed by five years. I hope I'm wrong, okay? But I but no one thing, Charlie. I'll tell you something. One thing, even though the government does anything now, for example, if you look at this whole segment of Rusola, that was done despite by the private sector. Private means actually private individuals, right? So that is a sector that is just keep on growing, because I remember one energy professional. There was a forum which I went about two months ago. He said that the the the the growth that they expected, and what actually happened, I think it was either 3x or 4x. So right, so that is growing, and now especially with you know electric cars coming big into the market, more people are considering it. It's practical. I mean, people go with what's the best deal for themselves. So I think the private investments, for example, things like roof solar. Another thing is roof solar is very efficient way of using land because you are building on existing infrastructure, right? And and the infrastructure, the the solar. What is the? If you look at the electrical circuit system on the grid, it's it's basically those are the same people who consume it. But I'm I'm wondering there whether okay, so we get a substantial number of roofs. No, no, no, no, no, sir. I know we are trying to go. But the thing is, if you look at the roof, so a guy who already has roof store, what's his next step? Next step is going to be something like the Tesla. What do you call the? What do you call that? The the wall, the battery wall, or no? The no, for example, Tesla. They made a they made a they made a battery storage system. Right? It's not coming to my mind at this moment. Right? So that's going to be the next thing where you can store your own energy inside your house.

Dhananath Fernando  29:05
Yeah, it's

Speaker 1  29:05
called a wall battery or something like that. You know, Tesla made it, right? So obviously now what I hear is the Chinese are also doing it. So the price of that will come down because the price of battery tech is coming down. So if you look at battery storage, we are only looking at industrial storage. When we initially looked at the solar generation, we only looked at industrial generation. But nobody is thinking about, for example, let's say some guy, he has a roof solar. He has already put it in. It's going into the national grid. He might actually put a. I think it's called a power wall, right? Where he basically there's a huge battery. There's a battery ball that's attached to the house, so whatever he's generating, it's going into the battery, and whatever excess is only going to the grid. Which means, you know, he's even if there's a blackout, he's not dependent on the grid. So that is going to be the next step. I feel when it comes to battery tech, where people will start putting this battery. Fancy battery systems into their house where they will be having so that's what I'm saying so we are we are currently only I think I think currently yeah idea the complete market dynamics how things are changed

charindra chandrasena  30:11
no I I like the idea of this democratising energy generation like that you know where everybody is in their own way self sufficient yeah in energy. I mean, that's a that's a radical vision. Yeah. But you know, if we can get somewhere close to that, yeah.

Dhananath Fernando  30:27
I think we are moving there, Charlie. I mean, whether we like it or not, because I think the impulse of having the having your connectivity to the main grid is in case of a power cut or something during night, if you really cannot have the storage, you get connectivity. But with improving more and more battery power, lot of people are going to basically, you know, generate your unless there's like a massive climate change happening and snows and all that, we will really lose our sunlight and all that.

Speaker 1  30:54
That won't happen. Yeah.

Dhananath Fernando  30:55
So otherwise, people will like having solar. No. What

charindra chandrasena  30:58
what happens since you brought up climate change? What what people are? I saw President Trump recently. America had this cyclone storm,

Speaker 1  31:10
yeah, and

charindra chandrasena  31:10
it was really bad one, even by their standards. And then Trump is sending a message out asking what happened to global warming. Okay. Now, what happens with global warming is not exactly the the literal meaning of global warming. Yeah. Global warming, climate change is about how everything is taken to an extreme. So you have worse droughts and you have worse like cyclones and storms.

Dhananath Fernando  31:41
Yeah.

charindra chandrasena  31:41
So in Sri Lanka, while we will have worse like rain and rainy seasons, the droughts will also give out like you know, and it will longer also.

Speaker 1  31:53
Correct, correct. So

charindra chandrasena  31:53
that way, I think in terms of solar generation. Yeah.

Speaker 1  31:56
So so that's in charge. What I said is now. For example, let's say you have to roll on down. No, the problem is the storage. No. Sorry. Let's say if each individual they get these power walls or whatever, but Tesla has developed. Obviously, Chinese knockoff version will come if you like it or not. That's how it works. So when that comes, you're power dependent because you're power independent. Sorry, because the reason is even if there is a power cut, you still have power into your house, and in the morning the solar will charge will charge your batteries. So one good thing that it does is it actually puts the pressure down. If you even if people go to the next stage of getting their own battery system into their house, it takes the enjoy, it takes the strain and the stress out of the grid because Sri Lanka did to update it, I think how much it was about 5 billion

Dhananath Fernando  32:44
multiple numbers. Yeah, about 40.

Speaker 1  32:47
I mean, different numbers come up, but but it's

Dhananath Fernando  32:52
expensive about like it's not a it's

Speaker 1  32:55
not a you know shape. Right, so it's a big amount, right? So that if it's going into where we can at least extend or prolong the or at least we can do minimum updates just to keep the grid alive, then it's a big thing because then what happens is you know what one electrical engineer what he said does you know that's going to bring the strain down because the network can't take now for example one of the states in the world, if you take worldwide, that uses a lot of electrical vehicles is actually California. What they are saying is, if California is 100% people are going to go on electric vehicles, it's going to basically fry the the network. But in the US, it's not happening. Is people are having these Tesla walls and all that in their house. So whatever goes, they they charge it, and the car is charged off the solar battery, and through the solar battery, which is installed in the house, which charges in return covers the house and charges the car. So then, basically, what happens is they become independent and not dependent on the system, which is a good thing. But only thing is, I think some time back someone told me that the CV didn't want people to have battery systems in their houses and all that. For that reason, I don't know the technical reason. I mean, sometimes it might be a social reason also because the significant. Yes, I I wanted to save the I wanted to save the controversial element for last. Best for last. Best for last. Worst for

charindra chandrasena  34:21
us, what is CB's role in this renewable energy plan? Because for the longest time, I have felt, and a lot of people have also, I think, that they are standing in the

Speaker 1  34:37
way. Yeah.

charindra chandrasena  34:38
Okay. There is talk of a diesel mafia. There's talk of whatever mafia, other mafia. Your thoughts, obviously representing Advocata, maybe. But what are your thoughts? What are advocata's thoughts on the CB's role in this? And and you don't necessarily have to go into words like mafia, but just you know, is there. Is there a is there an anti-competitive practices going on?

Dhananath Fernando  35:06
Absolutely. Yes. I mean, the

Speaker 1  35:07
monopoly, so that's obviously

Dhananath Fernando  35:10
anti-competitive, and yeah, I mean this is not the no.

charindra chandrasena  35:13
When I say anti-I'm talking internally also, yes, it's a monopoly, but in terms of product diversification also. No,

Dhananath Fernando  35:19
absolutely. Yeah, Definitely, because yes, because the the we saw the slowness on the moving to the renewable side on one side. Renewable is I'm not saying renewable renewable. You know the energy prices haven't been competitive now. You because renewable or whatever you are what you are looking at is generating the energy in the quality cheapest form of way is what you are doing. So there has been lot of blockages, and then there is no competitive process for lot of projects on on one side. The other thing is, I think in Sri Lanka, I mean, the people who have made money in Sri Lanka, there are two ways that they have made money. One is either you sell something at an exorbitant rate to the government, which is not worth that amount, or you are buying something from the government at a cheap, dirt cheap rate compared to the real value, right? So this electricity is. Of course, we

charindra chandrasena  36:16
don't mean everybody, but everybody generally. Okay, yeah.

Dhananath Fernando  36:19
And energy has been one main area that how people have been making money. No offence to that. I mean, people have to make money, and that's what Advocata stands. So create wealth, but not on the anti-competitive nature. And CEB, what they did is overall keeping everything aside, they basically made it less anti. I mean, less competitive overall. Didn't open up, I'll take I'll try to explain it, Chari on the other side, with taking CPC as an example. Now petroleum cooperation. Now let's say we are going to we are talking about like moving to 70 100% renewable energy in in 10 years time, 1015 years time, less than

charindra chandrasena  37:00
1514, now. Like

Dhananath Fernando  37:02
we are talking about more and more electrical vehicles coming in. So what is going to happen for these filling stations running under CPC? I mean, are they going to come and like put also electricity because you know people will not go and pump fuel from the you know including the private players who are in the market. There will be like a hybrid component that you need full, but of course, the more and more electrifying it, you need to bring that component down, right? So you are going to say that okay, we need CPC to also coming and having charging stations. Does it make sense? Same thing is going to happen for CEB. So they are trying to be relevant in this context. So that's why I feel they are trying to keep a monopoly because their entire business model is based on the monopoly nature that they are in. But you really cannot keep it for a long time. I mean, after 100 years or 200 years, this is going to go away. That's the reality because when the markets were so, there has been a lot of anti-competitive. I mean, when it comes to coal, when it comes to purchasing electricity, when it comes to selling, there has been so much of stuff. But again, there are also issues on their side as well. It's not like always they have been like you know not issues. I mean, for the payments and all that, I understand there have been lot of issues. For till recently, lot of renewables guys haven't been paid for about I think for 18 months or something. I mean, how can you run a business when you're not paid for 18 months? So there has been a lot of delays. So definitely that this has to reform. I think the unbundling process and all that is is in the process to to recover that. So definitely CB. I think no longer there is CEB now because now there are be multiple institutions now with the new act. So there is no like single CEB. There is Genco. There is Disco.

Speaker 1  38:52
Yeah. Yeah. Exactly. So so just to take on what Dana said, now the CEB technically if they like it or not, like when people start putting battery storages into their houses, right? What's going to happen is actually the monopoly status of the CEB starts to come down because the reason is it's not a company that's doing it. You are putting individually. You are being independent of the CEB much as possible, which means CEB significant comes down, right? And the battery tech is something that is improving day by day because there are massive companies. For example, Tesla, then BYD because BYD actually started as a battery company, then they turn into a car company, right? Tesla, then if you take Toshiba in Japan, right? Then some of the universities like University of Tokyo, then so there are some big universities and like big companies which are day in day out they actually experimenting, doing research how to improve bratty tech, right? So batty tech is going to stay there if you like it or not. Only problem I see in batty tech is there are particular materials and minerals that have to be. Generally, mined. For example, what comes to my mind is cobalt, yeah, zinc, lithium, yeah, lithium. Those things have to be mined, and mining that is one thing. It's a little bit dangerous because these are all heavy metals. So, other side I see of battery tech is okay. These batteries, after a while, you have to basically you know replace them. Then what do you do with the existing batteries that are already used, right? They have to be recycled. So I think the next big jump that's going to come is the recycle. How they are going to recycle the the raw materials of the batteries? How the batteries are going to be recycled? I think that's going to be the next big industry, right? So normally in humanities they find a solution at some point, right? People say, "Oh no, this is the end of the world. No, it's not going to be. It's going to be different because already some people are saying there are there's more new tech that's going to come, which is less dependent on particular materials, right? So that is you know we have to we have to wait and see. So but this renewable thing, I think it's a it's a it's it's an ongoing thing. I think there's no stopping it. If people think that you know you know fossil fuels are going to rule, it's it's

charindra chandrasena  41:13
just a matter of time.

Speaker 1  41:14
Yeah, I just hope the time is sooner rather than yeah. And and and just no no sorry for interrupting. Another really good thing about this with the EVs with the tech is even the vehicles which were running fossil fuel. Now the fossil fuel companies who made they are called what you call internal combustion engines always called as ICE. Okay, but ICE in Sri Lanka has many meanings. Exactly in the US also. Yeah, US also. So. ice engines, ISO internal engines, they are making now even companies like Toyota, specialising Toyota and Mercedes and BMW and all that. They also invest in very heavily, heavy to make fossil fuels even more efficient. So because end of the day, the how a tech becomes successful or not is it's basically on your pocket. People will always go for something that's cheaper on the long run, cheaper, efficient, and more convenient. So if let's say BMW, Mercedes, or Toyota, any can be any car company, they make something where you put a full tank of diesel or whatever, because there's a lot of research going into diesel now, right? Diesel type diesel energy density of diesel is more than petrol, right? So there's a lot of research that's going in. I think Masri's is leading the way, and right, I think so. But yeah, so what's going to happen is if that gets to a point where you pump a full tank, and you can do 3000 miles, then you know that becomes the new. He becomes a new boss in town. Yeah. So that's the thing. So this is an ongoing thing. We can't say this is going to be no. But no matter what happens, what do you call renewable energy is is here to stay and here to grow. Yeah, here to grow. And and renewable energy is going to push the what you call the fossil fuels also to become more efficient, to become cheaper to produce and more environmentally friendly.

Dhananath Fernando  43:05
So, Jari, two two quick points. Yeah. One is if you if you recall on I'll come to Riyadh's point on mining, but before that, on the CEB, the question you asked about the monopoly. Do you recall? Have you ever experienced a situation that your electricity is being disconnected because you haven't paid the bill. Earlier, if you recall, there is a separate van comes from the CEB. Yeah, that's a red notice. Red notice, and if you forgot, like you know, basically hum and you know there are some cabling things. I remember long time ago, my mother has like I think it was in the middle of a cricket match, and they came and like disconnected the inquisitive house. So shameful and so painful, right? So now it's no longer the case. I don't know. In my area, it's a Lego, so you get an SMS alert like you know to pay, and it's all through a software system. They disconnect it through software. They reconnect it through software, right? And it's just a matter of payment. And I realised very recently we had an incident of one of the the rented properties. This disconnection, like the moment that you transfer money, you have to call and tell them that you disconnected, and they check and they connect it on the computer. But the problem that I found out was, depending on the banks now, it can take time. For an example, when you transfer money from bank X, yeah, banking system, they said you go to the supermarket and deposit. You know,

Speaker 1  44:34
it's immediate. It's immediate, right?

Dhananath Fernando  44:35
So I think that's a separate. But things have changed drastically, right? On connection. Now imagine how many jobs that they have been like cut down because earlier like someone coming in a vehicle and there's like also I mean I mean disconnecting electricity is a massive issue. No like you know kids are studying or something. There's be you know severe you know severe conflict between the two parties.

Speaker 1  44:57
But but then sorry to be singing but. Real stories more than the disconnection is the guy who comes every month to read. Absolutely, it's a it's a different job. Now that's no

Dhananath Fernando  45:07
longer there on the Lego areas. I think it's it's coming as

Speaker 1  45:11
that's number one. They put digital media. So

Dhananath Fernando  45:14
you understand the monopoly and how things have changed, but it still it changed in a monopolistic environment to an extent. If you do basically, if you bring more technology and more people, OD is good, right? So it drastically changes. Number one, number two, what Riyadh said. I read a Harvard study. Now, just don't get too impressed that I know about because I'm just splitting out what I read on a Harvard study on this renewable. What Riyadh said was right because it is more on the mining side. What they have estimated from 2021 to 2004, if I remember right, the mining has to increase by about three to seven times if you are serious about this renewable energy transmission because it's all about. You mean

charindra chandrasena  45:53
globally?

Dhananath Fernando  45:54
Globally. Yeah. But

charindra chandrasena  45:55
for me, I mean, I'm thinking for Sri Lanka, is that a big problem? Because we'll be importing it from China. No, but the thing is,

Speaker 1  46:03
the cost will go up because the thing is the global mining is controlled by there are only about 10 countries. So I'll just go through the list. So it's I think China is one, Congo is one, Indonesia, South Africa, South Africa, Australia, Russia, and there are about another three countries. So basically, all the mining happens for not one material. All the material happens between those countries. So the problem is, you know, there isn't like a unlimited supply of it, right? And as Zana said, the the cost of mining just the the more you dig, the cost just keeps going up like nothing.

Dhananath Fernando  46:38
Correct. And also the energy that is required for also for mining. Mining. That's the second thing. So no, the this is the economic implication. You are right. Like we are definitely going to import that. Yeah. But the cost of it may change, and that's you know that's that's number one. Number two is what they say is okay. There are three things that we can do when it comes to the green energy. One is there's a process of decarbonizing. So those the products that is required for decarbonizing. Whether we are going to join that supply chain, that is producing solar, producing battery, or like you know providing parts and components for these battery technology and all that. That's one area which I don't see since we don't have mining. Whether we can join, that's a different thing. Second thing is converting grey products to green products. For an example, steel. Steel is quite energy intensive, which lot of like you know we had to use lot of non-green energy, and the tech now converting now having steel from a green technology versus non-green are completely two different things. It's like a vehicle, you know. Vehicle moves. The functionality of the vehicle is the same. You have the same steering wheel. You have the same signal lights. You have the same air condition. But from moving the vehicle from an ice engine to a green engine are completely two different technologies. But the end user feels pretty much the same. I mean, same in the sense you are going from

Speaker 1  48:01
point A to B. Exactly, you are going from point A to B. Yeah,

Dhananath Fernando  48:04
but the technology has changed. So one option is now when when this technology change from so many other industries, from steel to from aluminium to from vehicles to everything, the technology is completely drastically changing. And the green energy, the challenge is while people think it's cheap, actually it is not cheap given the factors like the story. Of course, as Riya said, is drastically coming down. But the transportation of green energy is the tricky thing. So a lot of manufacturing has to be relocated to where the green energy is being produced, right? So if we are serious about with the solar, nanan sorry the wind power, nana and all that, there is a potential to attract those industries because you have to have the industries closer to where the green energy is produced because transportation is difficult.

Speaker 1  48:57
Yeah.

Dhananath Fernando  48:58
So that thing is there, and third is the know-how because to do that, it's like you know if you look at the garage guys that where we go to repair the engines and all that. Now they are going to drastically change, right? Because no more, no longer the ice engines may come for repair. It's the the batteries, right? So likewise, there has to be a lot of know-how has to come in to basically transfer transfer from to the green energy. So those are the three economic indicators that we have to look at because I don't think we can go in the first one. It is has to be the second one to do that. Cherry, the reforms that we spoke about at the policy level.

charindra chandrasena  49:38
Just just remind so that our viewers don't get confused. What we mean by the first one is decarbonization. So

Dhananath Fernando  49:44
connecting to the decarbonizing products that is producing solar, battery, and all. Yeah.

charindra chandrasena  49:50
Second is third one

Dhananath Fernando  49:51
is moving the grey products to green products.

charindra chandrasena  49:55
That's the second one. No.

Dhananath Fernando  49:56
That's the second one. Yes. The third one is export of the. Know how. So those are the three areas that we have to look at on a global scale. Yeah. So that's where I think where our real bids are going to be. Yeah. And

Speaker 1  50:10
there's another little thing thing on transport because there was a there was a experiment done by a popular YouTube four wheel drive channel in Australia where they bought three in Australia they call pickups Utes a Ute right so they bought three pickups and they basically did a toy to see how much so I think one was BYD and there were another two another two brands that were there so when they did the when they did the experiment and they had a old old Toyota pickup or something diesel going with them, so ultimately when they did the calculation to see which has been the most. So these are hybrids, diesel. Sorry, fuel plus battery, where you can charge like the plug-in hybrids. So to see the old diesel actually did better on fuel consumption, right? So that's what I'm saying because this a lot of people have currently kind of discounted that because the technology on diesel is actually it's going to it's going to it's going to give it's going to give EVs a real run for its money, right? Because diesel technology is like improving massively, and generally the Europeans, particularly the Germans, right, and and the Jap and the Japanese, generally they are pretty good at this diesel game. Where the Americans are not that good because American diesels are mostly big trucks, like you know Kenworths and all that Max and Kenworths. But apart from that, the small diesel engine of getting very high mileage. Now, for example, if you take even a a German vehicle from 2000, normally the the vehicle will do about 50 miles per gallon, because yeah.

charindra chandrasena  51:45
But that environmental factor, no, no. So the so the

Speaker 1  51:48
new diesels are going through new kind of you know filters and there's a filteration process and plus they are also getting into a hybrid tech. So going forward, diesel is an area that on the fossil fuel. I think that's one area which probably might have some hope, and probably the other one is what Toyota is working on, is on the hell you call that hydrogen.

Dhananath Fernando  52:12
Okay,

Speaker 1  52:13
yeah. So hydrogen is green. So Toyota is investing a lot in hydrogen, and what they're saying is some there was there was a programme, but they said is some of the Japanese and German companies, I think they are collaborating also, that they are going to put new generation of ice that's going to come out, right? Internal combustion engines that are going to come out with a different tech. They are saying so. It's end of the day, it's a number of kilojoules or whatever energy you can extract from that one litre. So what they are saying is it's going to be a monumental jump, so that's the story. So, so this game is an ongoing game. You know, nobody can say he's going to win, but no question about it. When it comes to normal household and you know transportation and all that, renewables are going to. They are here to stay. There's no question. The future is renewable. Okay, absolutely. So we are. Can I?

Dhananath Fernando  52:58
Are we? We are. We are out of

charindra chandrasena  53:00
time unless you want to make a quick point.

Dhananath Fernando  53:02
No, two quick points, Chari. One is now the the importance of it is because we have been all having grand plans on export diversification, export industry. Now this is a critical component on exports because no and foreign investment, no investor will come if he cannot provide the green energy because they really cannot export to those markets. Number one, number two is on your point on the on the climate change, because our our air conditioning penetration is very low compared to to the region, because now of course we have rain, but of course we have very high temperature during the drought period. Yeah. So that means we are

charindra chandrasena  53:39
heading into a very warm period now. Absolutely. So

Dhananath Fernando  53:42
the the the we have to have more and more air condition units to bring the temperature down. So that will also add more demand on the energy front during the daytime. So we have to keep all that in mind when we are thinking about this energy transmission and the market forces are actually in operation in this in this process.

charindra chandrasena  54:05
Right, great. So we also have a message, no, Dana. Absolutely. So I'll but we'll make it quick today. Very

Dhananath Fernando  54:13
short. You can become an Advocata insider. It's just 12,000 rupees a year, 1000 rupees a month. The content that we provide like this is completely free of charge, and that's thanks to Advocata Insiders. What we try to do is to create a community who stand for reforms, and we are independent think tanks. So to maintain our independence think tank, independence, you can support us as becoming an Advocata Insider. It's just 1000 rupees a month. So become an inside.

charindra chandrasena  54:40
All right, great. So very, very interesting and diverse conversation we had today. Even though it was all energy, energy is a huge area, right?

Speaker 1  54:51
It's a huge thing.

charindra chandrasena  54:52
So thank you, Riyad. Thank you, Dara. As always, lovely having you guys, and thanks for the insightful, you know. Conversation. We will see you back, or I will see you next week. And thank you to everyone for listening. Do send in your feedback, good or bad. We are, you know, receptive. We want to hear what you think, and that will help us go on the same path or improve. Okay. Thank you.


Transcribed by https://otter.ai