Renewable energy developers ghosted since last Dec.
Sri Lanka’s renewable energy sector is in crisis due to expensive diesel and heavy fuel dependence, intensified by shortfalls in coal power generation, the industry charged, saying that the National System Operator (NSO) has been forced to keep thermal plants running to meet night demand, leading to rising costs amid rising fuel prices from geopolitical tensions.
As a result, the NSO has prioritised payments for thermal energy, halting payments to renewable energy developers since December 2025, resulting in outstanding dues of approximately Rs. 10 billion as of April 2026.
Therefore, the NSO has been compelled to continuously operate thermal power plants to meet the night peak demand. Due to the recent geopolitical tensions between Iran and the US, fuel prices have escalated significantly, resulting in thermal power generation costs rising to nearly or above Rs. 100 per kWh.
“At the same time, renewable energy generation has been continuously curtailed during Sundays and other mercantile holidays, generally between 9 a.m. and 3 p.m. Therefore, renewable energy developers are facing a double impact — they are not only being denied payments for supplied energy, but they are also losing revenue due to curtailment,” Manjula Perera, Managing Director WindForce PLC, told the Sunday Times Business.
This is the most severe financial crisis the renewable energy industry has faced to date,” Mr. Perera said. Developers are struggling to service loans obtained from financial institutions and are now approaching non-performing loan (NPL) status, he said, adding that since no payments have been received from the NSO since December 2025, many companies are facing severe cash flow difficulties, including the inability to pay employees and procure spare parts required for plant maintenance.
The situation is also severely damaging investor confidence in Sri Lanka’s renewable energy sector. Future investors may be discouraged from entering the industry due to the heightened financial and regulatory risks, Mr. Perera added. The NSO itself is a newly established entity and may face limitations in obtaining commercial financing independently, he told journalists at a media conference on Thursday. “Therefore, urgent Treasury intervention is required to provide the necessary liquidity support and prevent the collapse of the renewable energy sector.”
Through planned scheduled curtailment and nonpayment, the NSO has violated the power purchase agreement, which is a contractual agreement, Kishan Nanayakkara, Managing Director, Resuss Energy and Executive Committee member of Federation of Renewable Energy Developers said. Depending on the Power Purchase Agreement, payment must be made within 30 to 45 days, and this has not been done.”
Although legal action is a remedy under PPAs, it is a long-drawn process, and the industry will die a natural death before any remedy is accorded, he added. NSO needs to solve this professionally with competent people making decisions.
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