The new rooftop solar tariffs proposed by the committee appointed by Power and Energy Minister Kanchana Wijesekera will only be applicable to new customers entering into Power Purchase Agreements (PPAs) with the Ceylon Electricity Board (CEB) after 1 July, according to a letter written by CEB General Manager (GM) Eng. Dr. Narendra De Silva.
In the letter written to the Additional GM – Distribution Division (1-4) on 15 July, the CEB GM has stated that the Cabinet, at its meeting held on 1 July, had decided to revise the tariff for rooftop solar schemes based on the input parameters used for determining the tariff.
“The revised tariffs are applicable only for new customers coming under net accounting, net plus, and net plus plus schemes. Once the PPA is signed, the relevant tariff will be fixed for the next 20 years,” the GM has stated in the letter.
In Cabinet Memorandum No.53/2024/P, Minister Wijesekera had highlighted the urgent need to revise tariffs for solar rooftop systems due to changes in capital costs and economic parameters.
A committee comprising officials from the Ministry of Power and Energy, the Department of Public Enterprises, the Sri Lanka Sustainable Energy Authority (SLSEA), the CEB, and the Central Bank was formed to address this.
The rooftop solar programme has added approximately 875 MW to the grid.
The committee’s 5 June report had considered factors such as capital cost, plant factor, interest rates, operational and maintenance costs, return on equity, and discount rates.
Minister Wijesekera noted improvements in the country’s macroeconomic situation, including significant drops in the cost of solar PV panels and the exchange rate.
The Cost, Insurance, and Freight (CIF) Colombo price for solar PV panels decreased from 27 US cents per kWp to around 13.5 US cents per kWp and the exchange rate fell from Rs. 360 in 2022 to around Rs. 214 in the first quarter of 2024.
Additionally, Value-Added Tax (VAT) and Social Security Contribution Levy (SSCL) have been imposed on solar PV equipment at 18% and 2.25%, respectively.
The committee, consulting with the Renewable Energy Association, had reviewed the capacity classes and proposed tariff denominations.
To meet the Long-Term Generation Expansion Plan (LTGEP) targets for 2024-2030, the committee had recommended flat tariffs of Rs. 27.06 per kW for systems up to 5,000 kW and Rs. 23.18 per kW for larger systems, effective for 20 years.
The new tariffs are to be implemented from 1 July, pending approval from the Public Utilities Commission of Sri Lanka (PUCSL).
In a letter dated 15 July, PUCSL Director General Damitha Kumarasinghe had informed the Secretary to the Treasury that the CEB had requested PUCSL approval for the revised rooftop solar PV purchase tariff under Section 43(6) of the Sri Lanka Electricity Act No.20 of 2009, following a Cabinet decision from 2 July.
The Ministry of Power’s policy aims for 70% renewable energy in electricity generation by 2030, as outlined in the LTGEP (2023-2042), which includes significant solar PV capacity targets.
The commission had noted that the current targets have not been met, with an additional 3,508 MW required by 2030, and that the proposed tariff reduction could impede these goals.
After consulting stakeholders and reviewing consumer complaints, the commission had decided to maintain the current tariff until further information was gathered and verified, after which it would advise the Cabinet.
President Ranil Wickremesinghe, in his capacity as Minister of Finance, has raised important considerations regarding the Cabinet Memorandum submitted by Minister Wijesekera. He has emphasised that the current Government policy aims to achieve 70% of electricity generation from renewable energy sources by 2030.
Reducing the prevailing rooftop solar tariff could discourage developers from investing in rooftop solar projects, potentially hindering the achievement of this target. Therefore, creating an investment-conducive environment is essential to attract more developers and customers to rooftop solar projects.
The tariffs for projects with PPAs signed before 1 July will follow the rates introduced by the CEB through Circular No.2023/GM/36/DCC, issued by the Additional GM DD2, Chairperson of the Distribution Coordination Committee, on 26 June 2023.
The updated rates are Rs. 48.89 for 0-20 kW, Rs. 47.79 for 21-100 kW, Rs. 44.17 for 101-500 kW, and Rs. 43.77 for systems above 500 kW. Aggregation schemes will be subject to a rate of Rs. 46.46. This marks a change from the previous fixed tariffs of Rs. 37 for systems below 500 kW and Rs. 34.50 for systems above 500 kW.