Sri Lanka is struggling to find its feet economically and competes with time to improve exports, tourism, and the service industry while building national resilience, before debt repayment commences in 2027-28. As such, there is no room for disruptions as Sri Lanka has to fire on ‘all cylinders’ to keep ahead of the precipice of bankruptcy which is never too far away, especially if the Government fails to uphold strict fiscal discipline regimes which Sri Lanka has agreed to with the International Monetary Fund (IMF) which has given Sri Lanka a lifeline via a $ 2.9 billion Extended Fund Facility.
Given this tight space in which Sri Lanka has to perform well within, the island nation must get its energy security in order, and do so urgently. Earlier this month, Sri Lanka suffered a six-hour-long nationwide power outage. The economic impact of the outage, the latest in a series of unexplained islandwide power outages, is yet to be calculated, or released for public knowledge. The outage has raised critical questions about the condition of the national grid, and the stability of energy security in the country. Ceylon National Chamber of Industries (CNCI) noted that from a manufacturing perspective, given that the recent nationwide power outage was unexpected and lasted for hours, industrialists may have faced significant financial losses, especially considering that certain companies were unable to install backup options or generator capacity that could run for such long hours. Since this power outage took place on a Sunday, not all industries may have been affected and the impact would have been much greater had it been a weekday. “Industries do not receive the exact amount of power they are entitled to. Further, the recent power outage impacted the entire country, indicating that effective preventive maintenance is not being conducted. This raises unanswered questions regarding the conditions of the power grid,” a senior industrialist said. He opined that the adaptation of renewable energy would be beneficial for industrialists, especially considering the cost savings in the long run, if reliable storage and redundancies were put in place.
Sri Lanka has achieved 98% grid connectivity, which is relatively high by South Asian standards, with the electricity in the country being generated primarily through fossil fuel thermal power including coal and fuel oil, with the rest generated by hydropower, and other Non-Conventional Renewable Energy (NCRE) sources, such as solar power and wind power.
Sri Lanka has a national target which aims to generate 70% of its energy from renewable energy sources by 2030 and work towards a near carbon-zero target by 2050. This is partially due to recognising that achieving absolute carbon neutrality that soon was not entirely realistic. It is evident that Sri Lanka needs sound strategies in place to strengthen the country’s energy security. Experts have pointed out that meeting these ambitious targets required key developments, including upgrading transmission lines to increase the grid’s capacity to absorb and distribute energy efficiently, implementing smart grid solutions, and maintaining grid stability. “Sri Lanka has sufficient indigenous energy resources to meet its national demand. However, to maximise this potential, the necessary infrastructure and reliable energy storage systems must be developed,” experts opined. They have pointed out that it is the shared responsibility of the Government, the State-owned Ceylon Electricity Board (CEB), SLSEA, and other stakeholders to establish the necessary infrastructure, particularly the transmission networks needed to integrate renewable energy into the grid. It is evident that both local and international private investors are showing strong interest, with substantial investments being made in renewable energy projects. However, to effectively utilise this influx of renewable energy, significant improvements in grid infrastructure, grid balancing, and storage capacity are essential.
It is reported that a five-year development plan was currently being drafted, with the CEB having recently received a grant from the Asian Development Bank (ADB) to strengthen this infrastructure. Additionally, the World Bank (WB) is said to be in discussions to support the expansion of renewable energy projects. These funding initiatives are crucial, as they strengthen investor confidence and facilitate large-scale renewable energy adoption. However, one of the challenges faced with renewable energy is integrating energy storage systems with renewable energy projects, which will be crucial in maintaining grid stability and ensuring a reliable power supply. It is imperative that the Government understands this, and works to secure such support from local and international sources to enable such.