By: Staff Writer
December 24, Colombo (LNW): Sri Lanka’s Ceylon Electricity Board (CEB) and its subsidiary, Lanka Electricity Company (LECO), have secured a $230 million loan from the Asian Development Bank (ADB) to enhance renewable energy integration and modernize the nation’s electricity grid.
The project, backed by Treasury guarantees, aims to build a climate-resilient energy infrastructure while addressing challenges posed by intermittent renewable energy sources.
Key Loan Details
The ADB’s $200 million loan under the Power System Strengthening and Renewable Energy Integration Project will focus on improving the reliability of Sri Lanka’s power system. Of this, $150 million is allocated to CEB, and $50 million to LECO.
A further $30 million will be provided in two tranches to support the Moragolla Hydropower Project and other renewable energy initiatives. These agreements, signed on December 19, 2024, involve Sri Lanka’s Ministry of Finance and ADB representatives.
Infrastructure Upgrades and Renewable Integration
The loan will fund the construction of six new grid substations, 132 kV and 220 kV transmission lines, and the augmentation of existing substations. These upgrades align with CEB’s long-term transmission plan for 2025–2027.
To further modernize the grid, Sri Lanka will install its first grid-scale battery energy storage system, a renewable energy center, and advanced automation systems, including SCADA and remote monitoring.
The project also addresses the volatility of renewable energy sources by building a robust grid capable of managing fluctuations.
With over 3,400 km of high-voltage lines and 90 substations already in place, these new investments will reduce transmission losses, minimize power interruptions, and support the government’s goals of achieving 70% renewable electricity generation by 2030 and carbon neutrality by 2050.
Sector Reforms and Economic Impact
ADB’s support for Sri Lanka’s power sector includes reforms to ensure cost-recovery pricing and competitive procurement of renewable energy.
This initiative is vital for transitioning from thermal power, which accounted for 50% of the nation’s electricity in 2023.
The project also aims to reduce power generation costs and improve energy efficiency, directly benefiting Sri Lanka’s 7.5 million electricity consumers.
Social and Gender Inclusion
The project includes programs to enhance institutional capacity, with a focus on digital solutions and renewable energy management. ADB has emphasized career development for female employees, safe electricity practices, and clean energy adoption for women-led businesses. These initiatives are integral to fostering inclusive growth and empowering women in Sri Lanka’s energy sector.
Pathway to Sustainability
Sri Lanka has made significant strides, achieving 100% household electrification by 2016. However, transitioning to renewable energy remains a priority to reduce reliance on fossil fuels and meet climate targets.
The ADB-backed project marks a critical step toward financial sustainability and competitive renewable energy development, reflecting broader goals for a resilient and sustainable Asia-Pacific.
This financing underscores ADB’s commitment to eradicating poverty and promoting long-term economic stability through sustainable infrastructure investments.
