Sri Lanka - Country Commercial Guide
Energy

This is a best prospect industry sector for this country.  Includes a market overview and trade data.

Last published date: 2021-09-28

Overview

The Sri Lankan government aims to be an energy self-sufficient nation by 2030.  The objective is to increase the power generation capacity of the country from the existing 4,043 megawatts (MW) to 6,900 MW by 2025 with a significant increase in renewable energy.  Sri Lanka has already achieved a grid connectivity of 98 percent, which is relatively high by South Asian standards.  Electricity in Sri Lanka is generated using three primary sources:  thermal power (which includes coal and fuel oil), hydropower, and other non-conventional renewable energy sources (solar power and wind power).

From 2018 - 2037, Sri Lanka plans to add 842 MW of major hydro, 215 MW of mini hydro, 1,389 MW of solar, 1,205 MW of wind, 85 MW of biomass, 425 MW of oil-based power, 1,500 MW of natural gas and 2,700 MW of coal power into the electricity generation system.  The annual total electricity demand is about 14,150 gigawatt hours (GWH).  The annual demand for electricity is expected to increase by 4.9 percent over the next 20 years, a number constrained by high prices.

Despite the long-term plans, Sri Lanka experienced numerous power outages in 2018, 2019, and 2020 as hydropower reaches capacity and begins to decline due to less predictable weather patterns.  As a result, Sri Lanka plans to add additional renewable and nonrenewable, power plants over the next 10 years, including liquefied natural gas (LNG) plants.  The government is working to develop LNG import facilities and related power plants and is considering options for its aging oil refinery.  In June 2021, bids were collected for tenders in LNG infrastructure, including establishing an offshore Fuel Supply Regasification Unit (FSRU).  The current oil refinery is over 45 years old and urgently needs modernization to meet petroleum sector demand.

The Sri Lanka Sustainable Energy Authority (SLSEA) actively promotes all forms of renewable energy.  The government pledged in September 2021 to not build any new coal-fired power plants, but may still seek to expand or upgrade existing plants.

Leading Sub-Sectors

Power Generation Plants

Opportunities

Sri Lanka must add significant capacity to meet current and future power demand, which is forecast to grow at around 5 percent annually.  Sri Lanka has total electricity generating capacity of 40 GWH, as it mainly relies on thermal power, including a Chinese-built coal power plant, which accounts for 45 percent of its supply.  Inadequate rainfall has limited hydropower generating capacity, and the government was forced to impose power cuts during early 2019 due to lack of generation capacity.  The government regularly purchases expensive emergency power to meet electricity shortages.  Opportunities in the power sector include: wind and solar plants, LNG power plants, converting auto diesel-fired plants to dual fuel (liquid natural gas) plants, mini hydroelectricity plants, home solar systems, wind energy, electrical meters and switches, power transmission and control systems, and power cables.  A Request for Proposals (RFP) for a 300 MW LNG plant was published in February 2021.  An inauguration ceremony for the country’s first LNG plant was held in March 2021; however, funding for the project remains uncertain.  Sri Lanka hopes to add 1000 MW of solar power and 780 MW of wind power from 2020-2025.

The Sri Lanka Sustainable Energy Authority (SLSEA) is actively promoting renewable energy options, and statistics reveal renewable energy contribution is steadily increasing.  Sri Lanka has vast solar-wind-energy resources due to its location in the Indian Ocean.  Eleven wind power plants are currently connected to the national grid.  USAID has assessed wind and solar energy potential for Sri Lanka.  This information is available at www.nrel.gov.

Resources

Ceylon Electricity Board  (CEB)