• Detailed infrastructure requirements yet to be finalised despite multiple technical studies over the years

India and Sri Lanka have signed a long-anticipated Memorandum of Understanding (MOU) to connect their electricity grids. However, while diplomatic momentum builds around the agreement, Sri Lanka’s State-run Ceylon Electricity Board (CEB) has confirmed that the technical foundations of the project remain a work in progress.

CEB Chairman Dr. Tilak Siyambalapitiya acknowledged that although there had been multiple technical studies over the years, the detailed infrastructure requirements for the grid interconnection were yet to be finalised.

He also noted that the recent withdrawal of investment by India’s Adani Group had had no impact on the progress of the project itself, particularly its grid connectivity component.

Meanwhile, senior officials attached to Sri Lanka’s Ministry of Energy have said that initial technical details for linking the two national grids have already been agreed upon by both sides. According to reliable sources, these discussions paved the way for the MOU expected to be signed during Indian Prime Minister Narendra Modi’s upcoming visit to Sri Lanka.

However, experts stressed that while the initial framework had been outlined, a number of critical technical and financial considerations – including infrastructure design, cost-sharing models, and operational protocols – remained unresolved.

“The MOU is simply a first step, an expression of intent. The real work begins after it is signed,” said a senior Energy Ministry source familiar with the matter. “The institutions involved will need to work out a detailed agreement. If structured properly, this grid connection could be a major strategic opportunity for Sri Lanka, especially in the context of increasing renewable energy integration.”

A two-decade long vision

The idea of a cross-border electricity link between India and Sri Lanka is not new. 

As outlined in the CEB’s Long-Term Generation Expansion Plan (LTGEP) for 2023-2042, a pre-feasibility study was initially carried out in 2002 by US-based Nexant, with assistance from the United States Agency for International Development (USAID). The study served as a starting point to explore the economic and technical feasibility of the concept.

In 2006, Power Grid – India’s central transmission utility – updated the study, again with USAID support. This led to the signing of an MOU in 2010 between the Indian and Sri Lankan Governments to launch a full-scale feasibility study, jointly conducted by the CEB and Power Grid.

This feasibility report explored multiple aspects of the proposed 1,000 MW High-Voltage Direct Current (HVDC) interconnection project, including technical, legal, regulatory, commercial, and economic parameters. 

Several route options and connection schemes were considered, with a preferred layout emerging: a 130 km 400 kV HVDC overhead line from Madurai to India’s coastline, followed by a 120 km undersea cable to Sri Lanka’s coast, and a 110 km overhead line to Anuradhapura in central Sri Lanka, connected via converter stations on either end.

Revised plans

More recent discussions have updated and, in some cases, altered the original plan. A joint technical team formed in 2017 proposed shifting the Sri Lankan converter station from Anuradhapura to New Habarana. Site surveys revealed that an overhead line link may be feasible across the entire route, potentially eliminating the need for the costly undersea cable.

Both synchronous and asynchronous connection options have been studied. Ultimately, the asynchronous configuration was deemed more desirable for operational and stability reasons. The current proposal calls for a 2x500 MW HVDC overhead link between Madurai and New Habarana, supported by terminal stations at both ends.

Moreover, both conventional Line-Commutated Converter (LCC) and Voltage-Source Converter (VSC) technologies are under evaluation for their suitability in future stages. Detailed power flow studies have been completed by both Indian and Sri Lankan technical teams.

Unresolved financial questions 

Despite technical progress, the financial feasibility of the project remains a significant question. As per the LTGEP, a financial feasibility study has yet to be conducted. While preliminary cost assessments for combined Stage I and Stage II development have been made, officials caution that these figures remain tentative.

Past studies have revealed that the project may not be economically viable under existing cost structures. The primary cost drivers are the submarine cable component – if included – and the high cost of HVDC technology, whether LCC or VSC.

A scenario developed in the LTGEP projects implementation of a 500 MW HVDC link by 2034. An estimated investment of $ 687 million was used for evaluation purposes, with a landed cost of 10 US cents per kilowatt-hour (kWh) based on historical pricing models. This cost includes marginal power costs from India, transmission charges, reliability support fees, and operations and maintenance costs, among others.

To address uncertainties around pricing, a sensitivity analysis was conducted to understand the impact of different transfer prices on interconnection utilisation. The study found high average utilisation rates under various scenarios, largely due to increased integration of renewables on both sides of the grid.

Still, in an unexpected revelation, the LTGEP estimated that the overall cost of the full-scale HVDC interconnection project could reach as high as $ 18.88 billion – a figure that significantly raises the stakes for securing favourable terms.

A broader vision of regional energy cooperation

Despite the challenges, regional energy integration remains a long-term goal for both countries. Cross-border power sharing in South Asia presents opportunities for cost savings, energy security, and reduced emissions through better utilisation of renewable energy. Seasonal demand variation and resource diversity across the region can be leveraged through grid interconnection.

The proposed India-Sri Lanka link is one piece of a broader vision of regional energy cooperation. Its success could pave the way for further integration across South Asia.

According to officials, discussions on the grid interconnection were revived during the tenure of the previous Sri Lankan Government. Then Minister of Power and Energy Kanchana Wijesekera had been expected to sign the MOU in July 2023. The final drafts were reportedly prepared under the supervision of then Secretary Dr. Sulakshana Jayawardena. 

A high-level delegation from the CEB also visited India last year to explore technical feasibility and offer policy-level guidance. Following these meetings, a technical committee was formed to expedite the project’s implementation under the Ministry of Power and Energy.