Saturday, June 15, 2024

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Sri Lanka’s renewable energy generation faces the risk of collapse

Sri Lanka’s renewable energy generation is now at stake as these energy developers are currently facing financial constraints owing to non-payment of their dues for the electricity supply by Ceylon Electricity Board(CEB).

Renewable Energy Associations warned that they have no alternative other than halting their operations as they have not received any payment from the CEB since 2021.

Renewable Energy Associations that include Small Hydro, Wind, Solar, and Biomass power developers, and also Solar Industries Association of Sri Lanka,have jointly announced their plight at a press conference held recently.

They noted that the national grid of Sri Lanka risks losing 1250.9 Megawatts (MW) of power generated by renewable energy developers, as the Ceylon Electricity Board (CEB) has not paid for the electricity supplied by them since August 2021.

Office bearers of the respective associations emphasized that at this critical juncture where the country is in a dire economic state, the renewable energy developers are hard-pressed to cease operations as they are unable to meet their critical payment obligations including paying employee salaries, maintenance, and debt obligations.

The net effect of this would not just be that the country would lose this mass of clean energy, but it will lead to a severe economic crisis as the alternative will be to procure thermal power burning fossil fuel at an astronomically high cost of about Rs.90/- per unit as opposed to the average cost of Rs. 15.77 paid for renewable energy. This will exacerbate the forex crisis and be unbearable to the country at this juncture.

As a whole, CEB owes approximately Rs. 22 billion to renewable energy operators. This has brought the industry to its knees, posing a serious threat of not being able to pay salaries to about 7000 employees potentially leading to a severe social crisis.

At the same time, the banks have lent about 60 billion to the industry, and servicing these loans will come to a grinding halt soon. This can impact the banking system as well.

On the other hand, there are about 550MW projects in the pipeline for impending financial closure and if those are not financed and developed, the country will turn to high-cost fossil fuels for power, further compounding its economic woes.

Sri Lanka is in a huge power deficit because of the wrong type of power plants in operation.

Renewable energy is the cheapest and cleanest option available, however, these payment defaults will seriously discourage potential investors to the sector, completely halting the country’s ambition to become a high renewable energy generating nation.

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