The Asian Development Bank (ADB) has approved a United States Dollars ($) 200 million loan to upgrade Sri Lanka’s power sector infrastructure, enhancing the reliability of transmission and distribution networks and facilitating greater integration of renewable energy.
“Driving power sector reforms, combined with targeted infrastructure interventions, is essential to facilitate competitive renewable energy development and reduce power generation costs,” said the ADB Country Director for Sri Lanka Takafumi Kadono. “By expanding and modernising infrastructure and incorporating digitalisation solutions, this project will support the Government’s goal of the increased integration of renewable energy in the electricity mix, reducing power interruptions, and minimising transmission and distribution losses.”
Peak demand reached around 2,800 megawatts (MW) in 2023, including contributions from distributed renewable energy, and is projected to grow significantly by 2030. While Sri Lanka’s total installed power generation capacity reached 5,191 MW in 2023, about 50% of the country’s electricity generation in 2023 came from thermal power plants. In its updated nationally determined contribution, the Government has set a target of 70% electricity generation from renewables by 2030 and carbon neutrality in electricity generation by 2050.
The Power System Strengthening and Renewable Energy Integration Project will enhance climate resilience and expand the capacity of transmission and distribution networks, enabling the greater integration of renewable energy. The project will expand the 220 kilovolt (KV) and 132 KV transmission infrastructure with new transmission lines and substations, modernise the medium voltage distribution network, and upgrade grid protection systems. The project will introduce Sri Lanka’s first grid scale battery energy storage system at the transmission level, establish a renewable energy centre to forecast and monitor renewable energy generation, and implement network automation systems with Supervisory Control and Data Acquisition and remote terminal units, providing operators with real time data and alerts to ensure efficient power delivery.
Sri Lanka power sector reforms aim to enhance financial sustainability, ensure cost recovery tariff revisions, and competitive renewable energy development.
The project will strengthen the institutional capacities of the Ceylon Electricity Board (CEB) and the Lanka Electric Company (LECO). The project will improve their ability to integrate and manage renewable energy systems, adopt digital solutions, and enhance the hosting capacity of rooftop solar installations. Various career development activities for CEB and LECO female staff, awareness raising programs on the safe and productive use of electricity, and training on adopting clean energy solutions for women-led groups and businesses will be implemented.
Of the total amount, $ 150 million will be provided to the CEB and $ 50 million will go to LECO.