- Solar at Rs. 18/unit, wind at Rs. 20.30/unit
- 533 submitted in 2021, 136 site-specific; 49 investors confirmed
- USD rates fixed for major plants
- Rividhanavi 8 c/kWh, Mannar wind 4.6 c/kWh, Sampur solar 5.97 c/kWh
The Energy Ministry has instructed the Ceylon Electricity Board (CEB) to implement LKR-denominated tariffs, rather than dollar-pegged rates, for the 49 projects under 10 MW for which energy permits have been issued by the Sri Lanka Sustainable Energy Authority (SLSEA), The Sunday Morning reliably learns.
As per the finalised tariffs, solar power projects will receive Rs. 18 per unit, while wind power projects will be paid Rs. 20.30 per unit, it is learnt.
Highly-placed sources at the CEB told The Sunday Morning that the ministry had made this decision due to concerns that foreign investments were not being encouraged for renewable energy projects under 10 MW in total.
In 2021, the State Ministry of Solar, Wind, and Hydro Power Generation invited investors to develop renewable energy projects with a capacity of 50 MW or more under a Build-Own-Operate (BOO) model to supply the CEB.
A total of 533 proposals were received, 136 of which were site-specific, and 49 investors confirmed their financial capability and interest in proceeding with the projects.
Following the change in government, these projects were reviewed by an expert committee appointed in January 2025, in response to a Cabinet memorandum issued on 26 December 2024, to ensure compliance with the Sri Lanka Electricity Act No.20 of 2009.
The committee presented two options for moving forward.
Option 1, which the committee recommended, involves introducing a standardised tariff and Standardised Power Purchase Agreement (SPPA) for renewable energy projects exceeding 10 MW.
Option 2 involves limited competitive bidding among the 49 shortlisted developers under the National Procurement Guidelines for private sector infrastructure projects, regularising the procurement process in line with the Electricity Act.
The Energy Ministry suggested allowing developers to choose either option, taking time constraints into account. For Option 1, the tariff would be determined using a standardised formula updated periodically based on location, technology, and plant factors.
The ministry also recommended authorising the Secretary to the Ministry of Finance, Planning, and Economic Development to appoint relevant committees to manage each option: a Project Committee (PC) and Cabinet-Appointed Negotiating Committee (CANC) for Option 1, and a Bid Evaluation Committee (BEC), Standing High-Level Procurement Committee (SHLPC), and High-Level Procurement Committee (HLPC) for Option 2.
Nonetheless, the ministry has finalised rates for the Rividhanavi Power Plant in Siyambalanduwa, the Mannar Wind Power Plant, and the Sampur Solar Power Plant at USD 8 cents, USD 4.6 cents, and USD 5.97 cents per kilowatt-hour, respectively.
A senior CEB official, speaking on condition of anonymity, told The Sunday Morning that the ministry did not encourage foreign investments in power plants under 10 MW, but supported large-scale power plant projects.
When contacted, SLSEA Chairman Prof. Wijendra Bandara said the decisions regarding tariffs had been taken by the CEB and not by the SLSEA.
Committee on Public Finance (COPF) Chairman Dr. Harsha De Silva, commenting on the process, said: “The current tariff system creates a disparity: some investors are receiving revenue in dollars, while others receive it in rupees. With oil or coal, paying in dollars makes sense because the raw material is imported. But in the case of wind and solar, the energy source is free. The only dollar-denominated costs are for maintenance and the equipment itself.”
“When investors are repaying loans or covering the cost of turbines, a structured dollar component in the tariff could make sense. If the rupee depreciates, they still have to pay their loans and equipment costs in dollars while receiving income in rupees. Appreciation of the rupee is possible but rare; overshooting hardly occurs with the Sri Lankan currency. Currently, the currency seems to be on a stable path, though depreciation is likely.
“It’s unfair that some investors cannot access dollar tariffs while others can. Capital cost recovery is already built into the tariff, so it is not permanent. Once the initial investment is recovered, there are no ongoing dollar expenses. Unlike oil or coal, wind and solar do not require continuous dollar outlays – only the initial capital costs,” he added.
Attempts made to contact Minister of Energy Kumara Jayakody and CEB Chairman/Energy Ministry Secretary Prof. Udayanga Hemapala regarding the matter proved futile.