Sri Lanka’s renewable transition hinges on battery storage
Sri Lanka once held a unique position among developing nations with the launch of the Surya Bala Sangramaya programme in 2016. It triggered a wave of rooftop solar installations funded entirely by private citizens and businesses. For the first time, renewable capacity grew without burdening the Treasury. Homeowners and industries financed solar using their own capital or bank borrowing, strengthening national energy resilience.
Within two years, the programme transformed the sector. Solar installations demonstrated that private investment could solve energy shortages. However, the initiative slowed due to tariff changes, export settlement delays, and administrative challenges.
With increasing penetration of solar, Sri Lanka now faces the next challenge: managing evening peak demand. Solar generates energy during the day, but national peaks occur at night. Battery storage is the missing link.
Battery storage is essential
Sri Lanka experiences the ‘duck curve’—high solar generation during midday and sharp demand in the evening. Without battery storage, fossil fuel plants continue to operate at night, particularly diesel and furnace oil.
Battery Energy Storage Systems (BESS) store excess daytime solar and discharge it during peak hours. This reduces fossil fuel dependency, lowers energy production costs, and improves grid stability.
Cost reality of LiFePO battery storage
Government policy assumptions often consider 10-year battery life. However, actual field performance in Sri Lanka shows a usable lifespan closer to 5 years due to daily cycling, temperature exposure, and degradation.
To build a realistic financial model, the battery replacement must be assumed at Year 5. Financial Breakdown: 250 kWp Solar + 1 MWh BESS
Initial turnkey project cost (solar + BESS + BOS + installation): Rs. 75,000,000
Battery replacement cost at Year 5: Rs. 35,000,000
Total cost over 10 years: Rs. 110,000,000
Energy delivered: 1 MWh × 365 days × 10 years = 3,650,000 kWh
Levelized Cost of Energy (LCOE): 110,000,000 / 3,650,000 = Rs. 30.13 per kWh
This is the true cost of stored energy.
Required tariff for investment viability
To attract investors, stored energy must be priced to include capital risk, operations, degradation, and financing cost. The minimum tariff required for profitability and industry scalability is Rs. 60 per kWh.
Diesel/fuel thermal plants operating to meet evening peaks are intrinsically expensive because they consume large quantities of imported fuel at current market prices, suffer lower efficiency and higher per-unit operating costs when used at partial load, and carry start/stop and fixed O&M costs that raise the marginal cost. Using conservative, locally-relevant assumptions (diesel ≈ Rs. 280–320/L and specific fuel consumption 0.25–0.35 L/kWh), the fuel cost alone of diesel generation is roughly Rs. 70–112/kWh. Adding O&M, start/stop penalties, margin and capacity/flexibility premiums puts the true short-run marginal cost in the Rs. 100–140/kWh band. By comparison, delivered stored solar energy priced at Rs. 60/kWh avoids this fuel expense and reduces overall system cost — so it’s not a subsidy but a cheaper alternative for the system and for the CEB. (Sources: PUCSL/CEB generation cost reports, national fuel price data, generator fuel-consumption benchmarks.)
Conclusion
Sri Lanka can deploy over 2,000 MWh of battery storage within 36 months without foreign borrowing—entirely driven by private investors.
All that is required is **clarity and speed in implementation**.
A tariff of Rs. 60 per kWh for stored renewable energy:
Attracts private investment
Eliminates evening peak diesel dependency
Enables Sri Lanka to reach 70 per cent renewable energy by 2030
We succeeded once with rooftop solar. The next evolution—solar plus storage—will determine whether Sri Lanka becomes South Asia’s benchmark for renewable innovation.
(Jeremy Fernando is an Innovator and Patent holder for Energy Storage Systems (ESS))
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