Draft electricity policy is driving investors away
Sri Lanka’s draft National Electricity and Tariff Policy has generated intense debate, particularly following discussions at the Parliamentary Oversight Committee. Some in the industry say the policy is hurried or disconnected from broader energy objectives while others say the pressing issue is not policy direction, but the economic, legal, planning, and delivery assumptions underpinning implementation. This is pushing renewable energy investors to leave the country and invest elsewhere or close shop entirely.
Some industry officials and analysts, after the Committee discussion on Wednesday, were displeased with the way the discussion had progressed, saying it was a one-sided discussion. The country’s Electricity Act has stipulated two consultations – one with the Electricity Regulator, the Public Utilities Commission of Sri Lanka (PUCSL), the national systems operator, the industry, and consumers. The second one stipulates that the energy minister present it for public consultation. The draft electricity policy developed by the Cabinet-appointed Committee on Formulating the National Electricity Policy was presented recently to the Minister of Energy. The six-member committee included Prof. Mohan Munasinghe, Prof. Arulampalam Atputharajah, Prof. Wijeyndra Bandara, Dr. M.M. Gunathilake, and Eng. W.J. L. Shavindranath Fernando and President’s Counsel Milinda Gunathilaka.
At the said discussions, PUCSL had raised questions about the legality, along with some opposition members of Parliament. “The cabinet-appointed committee represented only one-sided views,” Vidura Ralapanawa, an independent energy analyst, told the Sunday Times Business. He also said that the energy regulator was critical of the policy, which tried to override legislation.
Ideally, an Electricity Policy should be aligned with a comprehensive and up-to-date National Energy Policy. Sri Lanka’s existing Energy Policy dates to 2019 and does not fully reflect present-day realities, including structural reforms under the Electricity Act, No. 36 of 2024, declining renewable and storage costs, and evolving grid constraints. “However, the draft Electricity Policy should be understood as a transitional instrument required to operationalise the new Act within statutory timelines. The appropriate remedy is policy harmonisation, not policy abandonment,” Chamil Silva, President – Bioenergy Association of Sri Lanka, Director / Executive Member Federation of Renewable Energy Developers and Managing Director/SolarRay Energy (Pvt) Ltd told the Sunday Times Business.
He added that another issue is the long-term generation planning in Sri Lanka, particularly the Long-Term Generation Expansion Plan (LTGEP), which often relies on outdated technology cost inputs. This has negatively impacted the integration of emerging technologies like Battery Energy Storage Systems (BESS). Recent tenders for BESS have shown prices much lower than those used in planning models, indicating a need for updated assumptions that reflect market realities. The current planning risks underrating the potential of storage-enabled renewable integration, which is critical for lowering reliance on costly thermal generation.
Analysts noted that already there are a few large companies that are shifting away from the country and investing in large projects elsewhere. Mr. Ralapanawa said that this is especially true for ground-mounted solar, wind power and mini hydro projects. “Companies with overseas projects and exposure will further invest in those countries due to this policy inconsistency.” Going forward, he warned, there will hardly be any foreign direct investment in this sector due to these inconsistencies.
Hitad.lk has you covered with quality used or brand new cars for sale that are budget friendly yet reliable! Now is the time to sell your old ride for something more attractive to today's modern automotive market demands. Browse through our selection of affordable options now on Hitad.lk before deciding on what will work best for you!