• Govt. extended support to kick-start project at the earliest: Cumaranatunga
• LOI given, up to the private sector entity to proceed with project: CEB

With Sri Lanka in dire need of power supply solutions, a consortium of private sector companies will establish a 150 MW solar plant project in the Hambantota District. 

Sri Lanka, in its pursuit of sustainable energy solutions, has set an ambitious target of achieving 70% of its electricity generation from renewable sources by 2030. To further this goal, a consortium of private sector companies has emerged, with the primary objective of adding 150 MW of solar power to the national grid, aligning with the Long Term Generation Expansion Plan (LTGEP) of the Ceylon Electricity Board (CEB).

Over the past 15 years, Sri Lanka has witnessed a steady growth in electricity demand, averaging around 4.4% per annum. Simultaneously, peak demand has experienced an average annual growth rate of 2.6%. The CEB forecasts an average growth rate of 5.6% in electricity demand over the next decade, with peak demand expected to increase by an average rate of 5.4%.

The heavy reliance on coal and fossil fuels for electricity generation has exposed the CEB to the volatile nature of global crude oil prices impacting its cost structure. Consequently, there is a pressing need to explore more cost-effective alternatives in the energy sector.

Solar power projects in the south

To address this demand, a consortium of private sector companies has been formed, aiming to deliver a cumulative capacity of 150 MW in Sri Lanka’s Southern Province. With an investment of $ 150 million, the funds will be distributed equally among the participating companies to set up individual solar projects, each contributing to the total capacity of 150 MW and generating approximately 282,500 MWh annually.

The 150 MW solar power project in Hambantota, led by a group of companies, demonstrates the commitment of various stakeholders to embrace solar energy.

The following companies will contribute to the project’s capacity: Photowatt Solar PP, Solargen Solar PP, Stallion Energy Solar PP, Photon Valley Solar PP, Geneco Solar PP, Elephant Solar PP, Talna Holdings Solar PP, Leisure Creations Solar PP, Elektrolite Solar PP, Madunagala Agrico Solar PP, Circleline Solar PP, Greenline Solar PP, Zhejiang Ruhunupura Solar Power Company PP, Asian Sun Edition (Pvt) Ltd. PP, Asian Sun Power (Pvt) Ltd. PP, Asian Active Solar (Pvt) Ltd. PP, and Asian Solar Concept (Pvt) Ltd. PP.

“This is the first time such a large renewable energy project from the private sector has received the green light since 2014. This project will see 13 power plants that generate 10 MW and four power plants that will generate 5 MW of power being established to produce a total of 150 MW,” Project Lead Partner Charana Cumaranatunga told The Sunday Morning.  

He added that the Government had extended its support to the group of companies to kick-start the project at the earliest.

“We must credit the Government, especially Minister of Power and Energy Kanchana Wijesekera, who has made it possible for us to go ahead with this plan by clearing certain roadblocks that were previously in the way. Before this, some projects had been pending approval since 2014 due to red tape or bureaucracy. This project has progressed within a period of just over a year. Now, even the CEB is giving its fullest support,” he said. 

CEB involvement 

To ensure the viability of these solar projects, a Power Purchase Agreement (PPA) has been established, guaranteeing that the CEB will purchase 100% of the energy generated for a period of 20 years. Moreover, in a bid to mitigate risks associated with exchange rate fluctuations, the CEB has agreed to bear 80% of the exchange rate depreciation, with the tariff rate being revised annually.

“Going forward with projects such as this will help Sri Lanka in many ways. Renewable energy projects, particularly by the private sector, could attract a lot of Foreign Direct Investments (FDIs) and around 70% of this project is funded through FDIs.”

Cumaranatunga said that the CEB had agreed to compensate for the interconnection cost which would be borne by the private sector group. 

“Usually, the interconnection cost, where the power plant is connected to the grid, is borne by the company that is setting up the power plant. However, the CEB has offered compensation for this by giving us better tariff rates.”

A step forward in renewable energy transition

Further, Cumaranatunga noted that land use had also been reduced due to the advancement in technology.

“Using the latest technology, land optimisation has been maximised. Now we use 50% less land compared to around 10 years ago to build a power plant of the same scale. We hope to begin construction by September 2023 and have it completed by December 2024.”

He added that the group of companies expected to add additional power plants once this project was completed. “We expect the return on investment for this project to be gained within seven years of the plant becoming operational. We also hope to add another 200-250 MW of solar power, after which we will look at wind power projects.”

CEB Chairman N.S. Illangakoon said that the CEB had done its part in ensuring the project would commence successfully. 

“We have given a Letter of Intent (LOI). Now it is up to the private sector entity to go ahead with the project.”

The development of these solar power projects signifies a step forward in Sri Lanka’s renewable energy transition. By diversifying its energy mix and reducing reliance on fossil fuels, the country can enhance energy security, mitigate environmental impacts, and promote sustainable economic growth. This concerted effort towards achieving the renewable energy target of 70% by 2030 showcases Sri Lanka’s commitment to building a greener and more resilient future for its citizens.