By: Staff Writer
April 21, Colombo (LNW): Sri Lanka is facing growing challenges in debt management and food price volatility, worsened by the ongoing global trade war, according to a recent United Nations report. Meanwhile, the country’s energy sector is experiencing turmoil, particularly due to the Ceylon Electricity Board’s (CEB) decision to shut down small hydropower plants, which began on 11 April.
The Small Hydro Power Developers Association (SHPDA) has condemned this move, calling it reckless and harmful to Sri Lanka’s energy security. SHPDA President Thusitha Peiris criticized the shutdown, which the CEB claims is necessary to stabilize the grid during the festive season. However, Peiris argues that small hydropower plants are essential for maintaining grid stability, providing reliable, round-the-clock electricity, particularly during periods when solar and wind energy are unavailable at night.
The decision to shut down the plants is viewed as a result of the CEB’s failure to modernize the grid and invest in critical technologies such as Battery Energy Storage Systems (BESS) and advanced weather forecasting. The shutdown affects 450MW of small hydro capacity, leading to a daily loss of 1.8 million units of electricity. To compensate for this, the CEB will have to rely on expensive thermal power, which costs over Rs. 50 per unit, compared to just Rs. 10 per unit for small hydro. This could result in daily losses exceeding Rs. 70 million, escalating to over Rs. 700 million over a span of 10 days.
These financial losses are expected to be passed onto consumers in the form of higher electricity bills, negatively impacting both households and businesses. Moreover, the SHPDA claims that the CEB’s actions breach binding Power Purchase Agreements (PPAs), which categorize small hydropower plants as ‘must-run’ facilities. This violation risks undermining investor confidence and could lead to significant financial instability, with developers facing loan defaults and project collapses.
The SHPDA has urged the government to intervene, calling for an immediate reversal of the shutdown, compensation for developers, and a renewed focus on grid modernization. They also demand adherence to the terms of existing PPAs and the creation of a fair, transparent framework for grid management that ensures renewable energy sources, particularly small hydropower, are fully integrated.As a critical component of Sri Lanka’s energy infrastructure, the small hydropower sector provides 8% of the country’s annual electricity demand. The SHPDA warns that the government must take swift action to protect the sector and prevent further damage to the economy and the nation’s environmental sustainability.
