Sri Lanka Accelerates Renewable Energy Transition, Grid Upgrades, and Competitive Tariff Reforms

Sri Lanka is aggressively scaling up its renewable energy capacity while overhauling power procurement and transmission infrastructure to ensure stable, cost-effective electricity for industrial and domestic consumers, President Anura Kumara Dissanayake announced during the Sri Lanka Economic and Investment Summit 2026.

Addressing business leaders, President Dissanayake highlighted that renewable sources now account for 69 percent of the nation’s total generation capacity, with recent days seeing up to 77 percent of electricity produced without utilizing a single liter of diesel. The administration has expanded solar capacity by 1,500 megawatts since taking office, bringing total solar generation to 2,600 megawatts once ongoing projects conclude next year. To overcome land constraints on smaller island terrain, the government is pioneering floating solar projects on reservoirs such as Ibbankatuwa, Randenigala, Moragahakanda, and Samanalawewa.

To address the intermittent nature of solar energy and daytime generation surpluses, the government is prioritizing grid storage solutions. A tender for 160 megawatts of grid-scale battery storage is already underway, with the first 130 megawatts expected to be completed by November, followed by an additional 250-megawatt battery tender currently under evaluation. Furthermore, the administration is reviewing tax incentives for domestic solar users utilizing battery systems under a megawatt to encourage distributed residential storage.

Moving away from fixed feed-in tariffs toward competitive open tenders has yielded dramatic cost reductions. The President cited an abandoned wind power project at Mannar previously negotiated at 8.22 cents per kilowatt-hour; when retendered competitively, prices dropped to 3.96 and 3.74 cents per kilowatt-hour. In tandem with generation growth, Sri Lanka is opening up transmission grid development to private investment. While major backbone lines like Kilinochchi-Habarana are being built via foreign aid, four new transmission lines—including Puttalam-Wariyapola and Dambulla-Habarana-Veyangoda—are being tendered to private developers.