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
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