• Major tariff reduction anticipated

The Power and Energy Ministry has taken steps to significantly reduce solar tariffs, with a top Government official familiar with the matter stating that a Cabinet paper has been submitted outlining plans for a major tariff revision.

The official disclosed that the tariffs would undergo a notable reduction from the current rates. 

However, specifics regarding the percentage of the tariff cuts were withheld, citing pending Cabinet decisions on the proposed tariff adjustments.

The existing tariff formula was introduced by the Ceylon Electricity Board (CEB) through Circular No. 2023/GM/36/DCC (DCC Circular: 2023/DCC/COM-12). This circular, issued by the Additional General Manager DD2, who serves as the Chairperson of the Distribution Coordination Committee, was dated 26 June 2023. 

It was introduced by considering the Average Weighted Prime Lending Rate, Treasury Bond Rate, and Average Weighted Fixed Deposit Rate, collectively determining the variable tariff. The tariff was to be recalculated every 3-6 months by the transmission licensee, as per the gazette.

As per the circular, the rates now stand at Rs. 48.89, Rs. 47.79, Rs. 44.17, and Rs. 43.77 for 0-20 kW, 20-100 kW, 100-500 kW, and above 500 kW, respectively. Aggregation schemes are subject to a rate of Rs. 46.46. 

This transformation represents a departure from the prior fixed tariffs of Rs. 37 for systems below 500 kW and Rs. 34.50 for systems above 500 kW.

Against this backdrop, several solar developers have expressed concerns about the proposed reduction in solar tariff rates. They emphasise that the Government should incentivise developers to increase solar investments to meet the targets set for 2030.