Assessment of Sri Lanka’s Power Sector

• New ADB and UNDP report estimates $ 54-56 billion investment necessary
• By 2050 the country’s electricity generation capacity will increase from current 3,700 MW to about 34,000 MW
• Report proposes a gradual phasing out of fossil fuels from the country’s electricity mix.

Reuters reports renewable energysources such as wind and solar will attract two-thirds of all investment in power-generating plants between 2016 and 2040 in spite of persistently cheap coal and gas prices. According to a joint study by the UN Development Programme (UNDP) and the Asian Development Bank (ADB), Sri Lanka can meet its current and future electricity demand through the judicious use of renewable energy by 2050.

According to the report, by 2050 the country’s installed electricity generation capacity needs will increase from the current 3,700 megawatts (MW) to about 34,000 MW. Of this, 15,000 MW will be wind energy and about 16,000 MW will be solar energy. The balance capacity is expected to be met by hydro- and biomass-based power plants. Further to the addition of renewable electricity generating sources, the study has identified the need to introduce an electricity storage solution which should provide instantaneous power of 3,600 MW and an energy storage capacity of 15,000 MWh.

This will ensure the stability of the electricity grid. Acknowledging this need, Sri Lanka saw an increase in the share of renewable energy (RE) in the electricity mix when in 2014 the country met its target of generating at least 10% of its electricity using renewable energy.

Source: Report on SL Power Sector by ADB & UNDP

Sri Lanka as one of the countries disproportionately affected by climate change has agreed to ambitious renewable electricity generation targets by 2050. Sri Lanka is among the 48 countries of the Climate Vulnerable Forum that agreed to make their electricity generation 100 per cent renewable as rapidly as possible and by 2050 at the latest,” the report said.

The assessment indicates that the substitution of imported fossil fuel with renewable energy until 2050 provides direct monetary benefits and will reduce Sri Lanka’s fuel import bill by about $ 18 billion cumulatively. The report also identifies the need for structural changes in the retail tariffs of Sri Lanka to warrant financial sustainability of its operations.

The report estimates that total investments to the tune of $ 54-$ 56 billion will be necessary in the powersector to achieve the 100% electricity generation by renewable energy. Further, it emphasizes the need to develop the ancillary services market in light of these changes in the generation system.

Considering the high costs and technical challenges associated with integrating renewables into the electricity generation mix, especially in terms of ancillary and balancing needs, the report proposes a gradual phasing out of fossil fuels from the country’s electricity mix.