Sri Lanka’s once-promising Renewable Energy (RE) targets are now facing a serious crisis, largely due to the Government’s decision to abruptly curtail solar power generation, making the nation’s ambitious goal of achieving 70% of electricity from renewable sources by 2030 now appear increasingly unlikely, with solar power expansion brought to a standstill.
The curtailment, enforced by the Ceylon Electricity Board (CEB), has been framed as a response to the ongoing economic downturn and the consequent reduction in electricity demand. Nevertheless, this justification raises uncomfortable questions about the Government’s commitment to its own green energy future.
The economic crisis is being used as an easy excuse for the Government’s failure to manage the transition to renewable energy. While it is true that electricity demand has dropped due to negative economic growth, this downturn should have been anticipated and planned for, not used as a reason to abandon ambitious renewable projects.
Rather than investing in critical infrastructure, such as energy storage systems and grid management, the Government seems content with throwing in the towel on renewable energy when faced with a temporary dip in demand. The result? The Government’s entire renewable energy agenda is now under serious threat, and the country’s ability to achieve its 2030 targets is slipping through the cracks.
Instead of fortifying renewable energy with the necessary infrastructure to weather economic fluctuations, Sri Lanka’s leaders have opted for short-term solutions. The sudden halt in solar power expansion speaks volumes about the lack of foresight in planning for a future powered by clean energy.
Responding to a question on the duration of rooftop solar restrictions and possible compensation for developers, CEB Chairman Dr. Tilak Siyambalapitiya pointed to current electricity demand data as a key indicator. “If you visit the CEB website and check the night peak demand figures, you will see that yesterday’s (18) demand was 2,358 MW. On New Year’s day, 14 April, it was just 1,980 MW, reflecting the expected holiday dip. But on Wednesday, 9 April – a typical working day – the demand was much higher at 2,657 MW.” He indicated that the system was yet to return to normal.
Meanwhile, Energy Ministry Secretary Prof. Udayanga Hemapala said that the CEB was currently working on a compensation plan to address any issues arising from the fluctuations in demand. “The ministry is awaiting further progress on this plan,” he said.
Solar developer woes
Against such a backdrop, developers in the solar power industry have voiced strong concerns about the curtailment and the lack of infrastructure. They allege that the CEB’s lethargic approach to promote energy storage systems, which are essential for storing excess renewable energy, has caused major setbacks.
Developers argue that the CEB’s reluctance to invest in storage technologies – citing cost as the main reason – ignores the long-term need for system stability. Many developers are questioning whether the CEB was ever aware of the potential instability in the electricity system, given that the issue had been predicted in advance.
They further allege that despite knowing about the upcoming challenges, the CEB had failed to act in time. The situation only became critical when the country experienced a nationwide power blackout, highlighting the vulnerability of Sri Lanka’s energy infrastructure.
Even after the blackout, the CEB’s response was lacklustre. Instead of implementing immediate solutions like improving storage capacities or upgrading grid systems, the focus shifted to a hydro-powered pump storage project, which could take over a year to complete. In the meantime, solar power developers were instructed to switch off their systems during public holidays, causing significant losses for those relying on these systems for income.
The curtailment has been particularly problematic for developers who had taken out bank loans to finance their rooftop solar plants. These loans were based on projected income from the power generated by these systems. With the curtailment in place, these solar plants are no longer producing the expected amount of energy, leaving owners unsure of how to meet their financial obligations.
In many cases, Power Purchase Agreements (PPAs) signed with the CEB do not include clauses to address such situations, meaning developers have no clear path to compensation for the lost revenue during the curtailment period.
An ongoing struggle
Speaking to The Sunday Morning, Solar Industries Association (SIA) President Kushan Jayasuriya explained how the CEB’s decision to curtail solar generation initially focused on larger rooftop plants and later expanded to include smaller ones.
“The CEB asked rooftop solar owners to switch off,” he said. “It started with plants above 100 kilowatts and moved to smaller ones as well. Ground-mounted plants were initially targeted because they are easier to switch off remotely, but soon rooftop plants were also included,” he said.
Jayasuriya explained that CEB officials had acknowledged a significant reduction in electricity demand due to the economic crisis. Normally, electricity demand rises with economic growth, but the country has seen little to no growth in recent years. Officials predict that substantial demand increases may not occur until at least 2026 or 2027.
“When daytime demand fell to about 800 megawatts, one of the requests we made was to switch off one of the coal plants, which they did,” Jayasuriya added. “But they can’t shut down the second one, because it would affect the ability to meet peak demand at night.”
The ongoing struggle highlights the broader issue facing Sri Lanka’s renewable energy goals. If the Government is serious about transitioning to 100% renewable energy, it will need to develop the necessary infrastructure, including storage and grid management systems, to support these ambitions.
Jayasuriya stressed that while solar power could be intermittent, combining it with battery storage could provide a reliable energy source that was cost-competitive with diesel-based power. However, the Government’s reluctance to invest in these solutions is hampering the sector’s progress.
Financial toll
The financial toll on solar developers has been significant. Unlike diesel or fuel-based power plants, which receive a capacity charge (payments made for ensuring availability even when not generating power), solar developers do not have such guarantees.
Jayasuriya pointed out that while diesel plants received compensation for having capacity available, solar plants only generated power when the sun was out. As a result, when the system is not stable or energy demand is low, solar developers are left to absorb the financial losses.
“The problem is that we are contributing to the nation by providing low-cost energy, but when the electricity system fails, we are the first ones to be penalised,” Jayasuriya said. “These issues should have been considered by the ministry when it set the target for renewable energy growth, but the necessary infrastructure was not developed to support this transition.”
In Sri Lanka, the financial difficulties faced by the CEB are not new. As a Government entity, the CEB is often subsidised by the Treasury, especially when it cannot meet its costs through tariffs. However, as Jayasuriya notes, this creates a difficult situation for power producers, especially in the renewable energy sector, where the cost of generation is lower and the financial viability of the plants is highly dependent on consistent generation.
Despite these challenges, Jayasuriya pointed out that the CEB had not provided adequate solutions to meet the country’s growing energy needs, particularly as the renewable energy sector continued to expand.
“The current situation cannot continue. If we are to meet our renewable energy goals, the Government must take action to improve the infrastructure and support systems for renewable energy,” he said.