S R Gnanam, joint managing director of the Tokyo Cement group says in some countries dendro plants have run into a trouble because competition drove up feed material prices to levels beyond which the power utility was buying energy.
"We have asked the Sustainable Energy Authority to give only once license within a 50 kilometre radius," Gnanam said in a recent interview.
"Otherwise we will have a big problem."
He said farmers do not grow gliricidia as a monocrop but used the planted it as a live fence or in gardens. Gliricidia leaves are rich in nitrogen and are useful as animal fodder and fertilizer.
Sri Lanka's power grid is already paying about 20 rupees for dendro and 15 rupees a kilowatt for power generated from other types of biomass.
Tokyo Cement is already running a biomass plant to power their grinding plant in Trincomallee which burns paddy husk.
The 10MW plant buns up 300 tonnes of husk or more than 30 trucks a day.
Though Sri Lanka's east is a rich paddy area, he says even now paddy husk is being used in large scale to produce parboiled rice.