By: Staff Writer
June 22, Colombo (LNW): The World Bank has approved a $150 million financing package to support Sri Lanka’s ambitious transition toward renewable energy, in a major push to scale up solar and wind power while enhancing the country’s electricity grid to prevent future blackouts.
The initiative, titled the “Secure, Affordable, and Sustainable Energy for Sri Lanka” program, is expected to catalyze over 1,000 megawatts (1 gigawatt) of new clean energy capacity. This will significantly contribute to Sri Lanka’s national goal of meeting 70% of its electricity demand through renewable energy sources by 2030.
The World Bank’s support includes a $40 million guarantee facility aimed at reducing investor risks and attracting over $800 million in private sector investment into the renewable energy sector.
The rest of the funds will go toward critical grid upgrades to accommodate fluctuating solar and wind power inputs, thus ensuring system stability and avoiding widespread outages like the one experienced earlier in 2025.
“Modernizing the grid and integrating more renewables will help reduce power outages, stabilize electricity prices, and expand access to energy for households and businesses,” the World Bank said in a statement.
The upgrade is particularly important for maintaining voltage stability, as Sri Lanka’s grid previously experienced reliability issues due to a high penetration of solar without adequate ‘inertia’ from conventional generators.
Sri Lanka’s energy landscape has long relied on large-scale hydroelectric power, particularly from plants owned by the Ceylon Electricity Board (CEB). These older, fully depreciated hydro plants remain the country’s cheapest source of electricity, producing power at rates ranging from Rs. 1 to Rs. 12.69 per unit, according to Power and Energy Minister Kumara Jayakody.
In comparison, solar energy currently costs between Rs. 27.26 and Rs. 35.50 per unit, while coal costs Rs. 20.80 per unit. Diesel and other liquid fuels remain the most expensive sources of electricity. Analysts also point to the lack of competitive tendering in Sri Lanka’s renewable energy procurement as a factor inflating costs relative to international benchmarks.
Despite these challenges, the government remains committed to diversifying its energy mix and reducing its heavy dependence on imported fossil fuels, which have historically burdened the economy during global price shocks.
The World Bank program is seen as a crucial step toward unlocking Sri Lanka’s untapped renewable energy potential, leveraging the island’s abundant solar and wind resources, especially in the northern and eastern regions. With global momentum building around clean energy, the country’s latest partnership with the World Bank marks a pivotal moment in its journey toward a more sustainable and energy-secure future.
