Securing Sri Lanka’s renewable energy future: Plan of action

 Wednesday, 9 April 2025 00:22
www.ft.lk
By Anil Cabraal, PhD

King Parakramabahu the Great’s 12th-century decree, “Not even a little water that comes from the rain must flow into the ocean without being made useful to man,” is equally applicable for sunshine and wind today.

In the Daily FT report of 4 April 2025, renewable energy industry stakeholders highlighted increasing bureaucratic obstacles, inconsistent policies, uncompensated curtailments, lowering solar tariffs and grid inefficiencies hindering renewable energy progress. The article also pointed out governance issues and decisions that undermine existing and new sector investments. They pleaded with the Government to halt this backward slide so that Sri Lanka’s bountiful renewable energy resources and its experienced private sector could be mobilised to benefit the nation.

Sri Lanka has made good progress with Independent Power Producers (IPP) investing in renewable energy generation (Fig. 1). However, the CEB’s growing resistance to renewables, which is against the national interest, is very concerning. The CEB began uncompensated curtailment of renewable energy generation claiming that it is disrupting the power system, beyond the CEB’s ability to manage it. This article delves into the rationale behind the CEB’s decision and offers recommendations inspired by successful experiences in other countries to maximise renewable energy generation. 

 

CEB’s rationale for curtailment

The CEB blamed the island-wide power outage on 9 February 2025, on an imbalance in the national grid due to excess solar production. However, others blamed incorrect transmission protection settings and operating errors at the Victoria hydropower station. While managing intermittent renewable energy can be challenging, the issues of inadequate infrastructure and poor system control cannot be discounted.

The CEB intends to continue curtailing renewable energy generation without compensation during low demand periods, like Sundays. Additionally, 100 kW and larger solar plants will be shut off during the Sinhala and Tamil New Year period regardless of weather or electricity demand, also without compensation. While this might address immediate grid stability concerns, it has significant consequences for the nation, investors and electricity users.  Economic and environmental consequences: Reducing renewable energy production in favour of thermal energy increases fuel imports, straining foreign exchange reserves. Most thermal generation is costlier than renewable energy generation, according to PUCSL data, and leads to increased electricity prices. These impacts harm Sri Lanka’s energy security, the economy, and impede recovery from the financial crisis.

Additionally, replacing renewables with thermal generation raises emissions and jeopardises climate financing and hinders attaining sustainable development goals. It contradicts Sri Lanka’s international commitment to generate 70% of electricity using renewables by 2030.

Investor confidence and policy clarity: Policy uncertainties, and uncompensated curtailments damage investor trust, and discourage future investments. 

Grid infrastructure challenges: Curtailing renewables reduces the urgency for the CEB to modernise grid infrastructure and perpetuates technical challenges and inefficiencies. 

Recommendations from global experiences

To address challenges and more effectively integrate renewable energy, Sri Lanka can learn from other countries. India and Germany compensate renewable energy producers for output curtailment, especially for “must-run” plants like solar and wind, boosting investor confidence. Germany benefits from its regional interconnection, permitting it to optimally balance electricity supply and demand. Australia uses advanced technologies and substantial energy storage to balance electricity supply and demand; and demand response programs encourage use during peak solar generation periods. 

Action plan for Sri Lanka

Sri Lanka needs a modern power grid to integrate renewable energy reliably. A systematic modernisation approach is essential, rather than reactive measures. The Energy Ministry, CEB, PUCSL and SEASL could consider the following to more effectively integrate an increasing share of renewable energy into the power system.

Short-term solutions (0-2 years)

Governance and transparency: Ensure policy consistency, open communication, and maintain accountability to create a stable and predictable investment environment. Additionally, expedite regulatory approvals and offer timely and well-reasoned updates on sector changes to foster trust.

Policy and regulatory support: Adopt forward-looking policies and regulations to prioritise renewable energy and adopt grid stabilising technologies. 

Curtailment compensation: Amend the PPA to mandate compensating renewable energy producers during shutdowns or adjust tariffs to account for anticipated curtailments. 

Demand response programs: Encourage consumers to shift energy usage to high renewable generation periods through time-of-day tariffs.

Enhancement of grid management: Configure grid protection systems correctly to avoid failures and damage. Improve CEB’s monitoring and control capabilities.

Advanced forecasting tools: Use them to predict renewable energy generation and electricity demand patterns for better electricity dispatch planning.

 

Medium-term solutions (2-5 years)

Grid modernisation: Invest in smart grids and energy management systems using real-time data, artificial intelligence, and machine learning.

Distributed generation and storage: Aggressively drive growth of roof top solar with battery storage at commercial, industrial and residential facilities. These systems, coupled with demand response programs, will help to significantly enhance grid stability. 

Grid-scale energy storage: Use battery energy storage systems to store excess renewable energy and release it during high demand. 

Improve grid inertia: Adopt smart inverters, grid forming inverters or synchronous condensers to stabilise grid frequency. 

Flexible generation: Invest in technologies like Flexible AC Transmission Systems and Dynamic Line Rating. They can help balance renewable energy variability and improve power transmission efficiency and reliability without necessarily increasing transmission capacity.

 

Long-term solutions (5 years and more)

Wide area protection networks: These help prevent blackouts by monitoring and responding to disturbances across the power grid in real time.

Large-scale energy storage: Utilise advanced technologies like pumped hydro, green hydrogen, or flow batteries. 

Interconnection with India: Establish cross-border grid interconnection to manage renewable energy excess and variability. 

Research and development: Sri Lanka universities must revise their curriculum to cover advanced power systems, high renewable energy integration, distributed generation, electricity storage, etc. and partner with the CEB and IPPs in R&D.

 

Status today

The Government and the CEB have started some crisis-response work, but a more strategic, holistic approach is needed. Until recently, the USAID-supported Sri Lanka Energy Program collaborated with the CEB to transition Sri Lanka’s power sector into a market-based, secure, and reliable system, optimising the use of renewable energy. This valuable work must continue with another development partner.

An ADB-funded project seeks to enhance Sri Lanka’s grid through improved transmission, distribution, and protection systems. It will feature the country’s first grid-scale battery storage, a renewable energy forecasting centre, SCADA-linked automation, and better real-time data systems. ADB is also financing CEB and PowerGrid India to assess the feasibility of grid interconnection.

JICA supported feasibility studies for the 600 MW Maha Oya Pumped Hydro Plant. Detailed design is in progress. The estimated cost ranges between $ 800-1,000 million, with construction expected to be completed by 2031. Funding discussions are ongoing with international agencies such as JICA, World Bank, and ADB, but no firm commitments have been made. 

The Government has announced 1,358 MW of solar projects and aims to revive the 484 MW Adani Green Energy wind projects. However, promoting these while the CEB curtails such generation sends mixed messages. The CEB must quickly address stability concerns for these projects to proceed.

 

Conclusion

Sri Lanka’s renewable energy sector has potential to enhance economic growth, sustainability, and energy independence. Making the power grid stable, upgrading regulations, updating infrastructure and knowledge, providing fair compensation, restructuring the electricity industry, and maintaining good governance are crucial steps towards an efficient, lower cost, clean, and resilient energy future.

Developers Demanding Compensation for Shutdown: Small Hydro Power Developers Association Urgently Calls for Hon. Minister's and HE President's Intervention

12th April 2025, 10AM, Colombo, Sri Lanka

PRESS RELEASE

[12th April 2025, 10AM, Colombo, Sri Lanka] – The Small Hydro Power Developers Association of Sri Lanka (SHPDA) is outraged by the Ceylon Electricity Board's (CEB) directive to shut down numerous small hydropower plants across the island, effective since yesterday, April 11, 2025, and continuing indefinitely. This decision, made under the guise of "stabilizing the grid" during the festive season, is a severe blow to Sri Lanka's power sector and a direct threat to the nation's energy security.

Reliable, Renewable Energy Source Under Threat !

Small hydropower plants provide a vital service to Sri Lanka's electricity grid. Unlike intermittent sources such as solar and wind, small hydro offers a consistent and reliable energy supply, operating 24/7 and playing a critical role in meeting peak demand, particularly during the night. These plants function as essential spinning reserves, providing crucial stability to the grid and mitigating the fluctuations caused by intermittent power generation.

CEB's Misguided Actions

The CEB's decision to shut down these reliable power sources is a self-inflicted wound, stemming from its failures in grid modernization, its lack of investment in essential technologies like Battery Energy Storage Systems (BESS) and advanced weather forecasting, and its fundamental lack of effective system planning, which prioritizes short-term fixes over long-term, sustainable solutions.

The economic consequences of this shutdown are substantial.

This shutdown has substantial and far-reaching economic consequences: the CEB's order to halt operation of country's 450MW small hydro capacity for app 8 hours per day, results a supply loss of 1.8 million units to the national grid.  It will have to be then procured from costlier thermal power at LKR 50/- or more per unit when CEB pays only LKR 10/- per unit for small hydro. This impose an avoidable daily loss exceeding LKR 70 million, escalating to over LKR 700 million if the shutdown lasts 10 days; these increased costs will inevitably burden the general public with higher electricity tariffs, further straining households and businesses.

Breach of Agreements and Loss of Investor Confidence 

The CEB's unilateral shutdown order constitutes a clear and unlawful breach of existing Power Purchase Agreements (PPAs) with small hydropower developers, as these agreements, which designate renewable energy facilities as "MUST-RUN," lack any provision for such prolonged and arbitrary disconnections; this illegal action severely erodes investor confidence in Sri Lanka's power sector, undermines the financial viability of renewable energy projects, and jeopardizes developers' ability to service bank loans, potentially triggering widespread financial distress within the industry.

A Call for Urgent Action

The SHPDA urgently appeals to the Honorable Minister of Power and Energy to intervene and reverse this destructive decision. We implore the government to:

Immediately rescind the order to shut down small hydropower plants.

Direct the CEB to compensate small hydropower developers for the significant financial losses incurred due to this unlawful and arbitrary shutdown.

Direct the CEB to prioritize grid modernization, including the expedited deployment of Battery Energy Storage Systems (BESS), advanced weather forecasting systems, and a dedicated renewable energy desk, to ensure the effective integration of all renewable energy sources.

Ensure the CEB adheres to the terms of existing Power Purchase Agreements (PPAs) and cease all actions that undermine investor confidence in Sri Lanka's renewable energy sector.

Establish a transparent and collaborative framework for grid management that ensures the fair and equitable treatment of all power generators, recognizing the crucial role of small hydropower as a vital spinning reserve that stabilizes the grid against the intermittency of solar and wind power.

The small hydropower sector is a vital component of Sri Lanka's energy infrastructure and its transition to a sustainable and resilient future. We urge the government to take swift and decisive action to protect this sector and prevent further damage to the nation's economy, environment, and its international standing.

About the Small Hydro Power Developers Association of Sri Lanka

The Small Hydro Power Developers Association of Sri Lanka is an organization representing developers and operators of small hydropower plants across the country. Our members represent a cumulative installed capacity of 450MW and contribute approximately 8% of Sri Lanka's annual electricity demand. We are committed to providing clean, reliable, and sustainable energy to Sri Lanka.

Thusitha Peiris
Hon. President
Small Hydro Power Developers Association

Tariff blow to renewable energy sector: Unit purchase price to be reduced

Sunday, May 11, 2025 
https://www.sundaytimes.lk/

The Cabinet will next week consider a proposal to reduce the tariffs for all renewable energy-based (RE) electricity supply to the national grid.

If approved, the Energy Ministry’s memorandum will allow the Ceylon Electricity Board (CEB) to significantly lower the prices paid for every unit of electricity generated under all new private rooftop solar, mini-hydro, wind, ground-mounted solar, biomass and municipal solid waste contracts. For the first time, a tariff is also proposed for rooftop solar and solar photovoltaics (PV) systems with battery energy storage systems (BESS).

The Cabinet paper has been pending for weeks. Official sources said it would be considered at the next meeting. The changes were previously vehemently opposed by the RE sector.

Contracts signed before these adjustments will continue to be remunerated at previous rates in keeping with the respective agreements. Thus, some rooftop solar producers of up to 500 kilowatts will continue to earn Rs. 37 per unit, while others, who signed on or after July 2024 (when tariffs were last revised), will receive Rs. 27.06.

Once it takes effect, rates for rooftop solar of up to 20 kW will drop to Rs. 19.61 per unit; above 20 kW up to 100 kW to Rs. 17.46 per unit; above 100 and up to 500 kW to Rs. 15.49 per unit; above 500 kW and less than 1 MW to Rs. 15.07 per unit; and 1 MW and above to Rs. 14.46 per unit.

Under the 2009 Sri Lanka Electricity Act, RE-based electricity generation projects of 10 megawatts or less must enter into standardised power purchase agreements (SPPAs). They are periodically revised to reflect “changing economic conditions”, the Cabinet memorandum says, adding that these technology-specific, cost-reflective tariffs are required to be revised annually.

The new rates were decided upon by a 12-member committee with representatives from the Energy, Finance, Planning and Economic Development Ministries; the CEB; Lanka Electricity Company (Pvt) Ltd; the Sustainable Energy Authority; and the Central Bank.

Sri Lanka achieves 72% renewable electricity generation in June 2025

 Colombo, June 29 (Daily Mirror) - For the first time since the early 1990s, Sri Lanka has reached a major milestone in its clean energy transition, with the Ceylon Electricity Board (CEB) reporting that 72% of the country's electricity was generated from renewable sources during June 2025.

This achievement comes during one of the highest-demand months of the year, highlighting the resilience and growing capacity of the nation’s renewable energy infrastructure.

In the early 1990s, Sri Lanka’s electricity generation was nearly 100% hydro-based. However, due to growing energy needs and seasonal variability, the country shifted toward a mixed hydro-thermal system in the following decades. The recent 72% renewable share marks a full-circle return to clean energy dominance in the national grid.

CEB officials credit this progress to continued investments in solar, wind, and small hydro projects, alongside enhanced grid integration and strategic policy direction. The milestone reflects Sri Lanka’s commitment to sustainable energy and reducing its dependence on fossil fuels.

Renewable energy: Cabinet approves new tariffs

https://www.themorning.lk/ 

22 Jun 2025 | – By Maheesha Mudugamuwa

The long-awaited revised tariffs for Renewable Energy (RE) projects, including rooftop solar systems, have been officially approved by the Cabinet of Ministers and came into effect on Monday (16).

The decision, aimed at restructuring the financial framework for electricity supplied to the national grid from renewable sources, was formally communicated through a circular issued by the Ceylon Electricity Board (CEB) on Friday (20).

The Sunday Morning has seen a copy of the circular, numbered 2025/GM/15/DCC, along with a related directive from the Ministry of Energy instructing the immediate enforcement of the new tariffs.

The revised rates cover Rooftop Solar Photovoltaic (RTSPV) systems and a range of other renewable energy technologies, including mini hydro, wind, ground-mounted and floating solar, biomass, and municipal solid waste-to-energy projects.

These tariffs will remain fixed for a period of 20 years once a Power Purchase Agreement (PPA) is signed.

This revision follows a Cabinet decision dated 16 June, and subsequent directives from the Ministry of Energy under reference PE/DEV/03/01. 

The newly issued circular also references previous related circulars 2024/GM/46/DCC (2024/DCC/COM-12) and 2025/GM/08/DCC (2025/DCC/COM-05), indicating the continuity of policy developments in the RTSPV sector.

According to the circular, the new flat tariff rates for RTSPV systems will remain fixed for a period of 20 years from the date of signing a PPA.

The rates are structured based on system capacity as follows: for installations up to 5 kW, the tariff is set at Rs. 20.90 per unit; systems above 5 kW and up to 20 kW will receive Rs. 19.61; and those above 20 kW and up to 100 kW will be paid Rs. 17.46.

For systems ranging from 100 kW to 500 kW, the tariff is Rs. 15.49; systems above 500 kW and up to 1 MW will have a tariff of Rs. 15.07; and for installations of 1 MW and above, a tariff of Rs. 14.46 per unit will be applicable.

The circular stipulates that these revised tariffs will be applicable to all new RTSPV applications where the clearance processing fee is paid on or after 16 June.

It further notes that any RTSPV clearance extension requests submitted from that date onward will also fall under the new tariff scheme. 

Applications for which the processing fee was paid on or before 16 June will continue to be evaluated under the previously applicable tariff structure, provided they are finalised by 31 July.

The circular, signed by Additional General Manager (DD4) and Distribution Coordination Committee Chairman Eng. K.A.I. Kumara and CEB Acting General Manager Eng. W. Edussuriya, has called for strict compliance from all provincial deputy general managers, area chief electrical engineers, area electrical engineers, and provincial commercial engineers.

Simultaneously, The Sunday Morning has also reviewed a letter from the Ministry of Energy (Ref: PE/DEV/03/01 dated 20 June), which conveys Cabinet decisions approving revised tariffs for various renewable energy technologies under Standardised Power Purchase Agreements (SPPAs). 

The directive specifies new flat tariffs for 20 years for several technologies, including mini hydro at Rs. 25.74/kWh, wind at Rs. 23.83/kWh, ground-mounted solar PV at Rs. 17.62/kWh, and floating solar PV at Rs. 24.33/kWh. 

Biomass projects based on dendro and agricultural and industrial waste have been set at Rs. 14.57/kWh, with excess power from agricultural and industrial waste priced at Rs. 10.94/kWh. Notably, municipal solid waste projects are now eligible for Rs. 44.04/kWh – the highest tariff in the revised schedule.

The ministry’s letter references Cabinet decisions 25/0782/825/048 dated 26 May and 16 June  in relation to Cabinet memoranda from 8 May and 6 June. The directive instructs immediate implementation of these rates across all eligible projects.

Both the CEB and Lanka Electricity Company, along with other sector stakeholders, have been directed to comply with the revised tariffs without delay.