Courtesy The Daily Mirror

• Ministry of Energy says the new policy will be centred on a people-centric energy transition that is both equitable and affordable for citizens”
• A specific timeline for achieving the Net Zero target was not disclosed
• Shares the government’s aim is a 30 percent tariff reduction within a five-year period

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By Nuzla Rizkiya

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Sri Lanka has set itself yet another ambitious goal, this time raising the renewable energy target from the current 70 percent to 100 percent, aiming for a complete transition to clean energy.

The announcement was made by Secretary to the Ministry of Energy, Prof. Udayanga Hemapala yesterday when he addressed a forum organised by the Asian Development Bank (ADB) on power sector reforms.

Hemapala stated that the new policy will be centred on a people-centric energy transition that is both equitable and affordable for citizens”.

While a specific timeline for achieving the Net Zero target was not disclosed, he shared that the new policy will focus on an integrated approach, encouraging both stakeholder and public participation to develop financially sustainable solutions.

Our aim is a 30 percent tariff reduction within a five-year period, and our long-term target is achieving 100 percent clean energy,” Hemapala said addressing the ADB’s ‘Serendipity Knowledge Programme’ held in Colombo yesterday.

Meanwhile, Ceylon Electricity Board (CEB) Chairman Dr. Tilak Siyambalapitiya cautioned that Sri Lanka’s power system remains weak compared to regional neighbours due to the country’s outdated approaches in power generation and high transmission losses.

He pointed out that power sector regulatory reforms have repeatedly failed to deliver in key areas, particularly in economic regulations, while Sri Lanka’s over-reliance on hydropower development has kept it out of step with global energy trends.

Presenting financial data, Dr. Siyambalapitiya noted that the Public Utilities Commission of Sri Lanka (PUCSL)-approved cost of electricity rose from Rs. 16.91 per kWh in 2010 to Rs. 22.05 per kWh in 2021.

However, the PUCSL-approved price of electricity increased only from Rs. 13.15 per kWh to Rs. 16.81 per kWh over the same period.

Accordingly, this mismatch resulted in annual financial losses of Rs. 80.1 billion for the energy sector by 2021, along with a cumulative regulatory cash shortfall of Rs. 502.8 billion over the decade.

In summary, this figure represents borrowings without corresponding assets, unlike other loans where the sector had assets,” Dr. Siyambalapitiya said.

While regulatory reforms between 2022 and 2024 managed to reduce this shortfall to Rs. 180 billion, he pointed out that the current cost vs. price gap remains a challenge.

As of the latest tariff revisions, the PUCSL-approved cost per kWh stands at Rs. 31.12, while the approved price is only Rs. 24.17, indicating that the financial discrepancy is likely to continue, according to the Chairman.

The Asian Development Bank expressed its support for the government’s new renewable energy policy but highlighted the need for careful planning and investment, especially in the transmission sector, to ensure a sustainable transition.

Speaking at the event, ADB Country Director Takafumi Kadono stressed that energy sector reforms in Sri Lanka must continue despite economic uncertainties and mounting pressure on the industrial sector.

We hope the ownership of reforms remains strong. We have been supporting the 70 percent renewable energy target, and we are hopeful the momentum will continue. A consensus on this is necessary. Without it, implementation will be difficult,” Kadono said.

In April 2024, Sri Lanka set an immediate target to meet 70 percent of its energy needs through renewable sources by 2030. This aligns with its commitment as one of the 43 countries in the Climate Vulnerable Forum that pledged to transition to 100 percent renewable electricity generation by 2050.