ECONOMIC FEASIBILITY OF GROWING GURICIDIA UNDER COCONUTS AS AN ENERGY SOURCE FOR DEN ORO THERMAL POWER PLANTS; AN EX-ANTE APPRAISASL

Abstract

Growth of the demand for electricity intimately follows the growth of theeconomy of Sri Lanka. Since the hydro resources. the major source of electricityare insufficient to meet the growing demand for electricity, alternative powersources have to be employed. Gliricidia proves to be a promising source ofbiomass energy. Firms generating dendro-thermal power express theirwillingness to establish dendro-thermal power plants at the Coconut ResearchInstitute of Sri Lanka on build-operate and transfer (BOT) basis, and to purchaseGliricidia dry wood delivered at the power plant at Rs. 1250/MT. This studyexamines whether the farmers can supply Gliricidia at the above price with areasonable margin for them. The break-even price of a MT of dry wood deliveredat the power plant located 10 km from the coconut estate was computedemploying discounted cash now method. This was Rs.977, implying a margin ofsome 28(10 for growers. The analysis further demonstrated that the break-evenprice was more sensiti ve to variations in wood yield than the variations intransporting distances. The ex-ante appraisal concludes that the raising ofGliricidia under coconuts as an energy source for dendro-therrnal power plants isan economically viable proposition. However, other socio-economic factorsinlluencing the adoption of new technologies may be worth investigating.