• Current procurement plan unlikely to deliver gap-filler in time

Sri Lanka is expected to face an electricity shortfall of around 450 MW by January 2027 as prolonged dry weather linked to the anticipated El Niño event reduces hydropower generation, prompting authorities to fast-track Battery Energy Storage Systems (BESS) through a proposed Feed-in Tariff (FIT) mechanism instead of the lengthier competitive procurement process.

National System Operator (NSO) Chairman Dr. Pradeep Perera told The Sunday Morning that the country had little choice but to rapidly introduce battery-backed renewable energy if it was to bridge the looming supply gap while avoiding greater dependence on expensive diesel-fired generation.

“We expect an additional requirement of around 450 MW by early next year. With hydro generation declining during the dry period, we cannot depend solely on coal. The practical alternatives are diesel generation or battery energy storage integrated with renewable energy, and BESS is considerably cheaper than diesel,” he said.

The warning comes amid forecasts of below-average rainfall associated with El Niño, which is expected to significantly reduce hydropower output during the first quarter of 2027.

Although the NSO’s preferred procurement model remains competitive bidding, Dr. Perera said that the process could not deliver capacity in time.

“Our preference is always competitive bidding because it ensures the best price. However, tenders take several months to complete. Given the urgency of the requirement, introducing a FIT is the only practical option available at present,” he said.

He confirmed that negotiations were underway to revise the tariff levels proposed by the Public Utilities Commission of Sri Lanka (PUCSL), with the NSO seeking rates closer to the cost of furnace oil generation rather than the initially proposed figures.

According to Dr. Perera, the batteries would be charged using electricity generated from renewable energy sources, enabling intermittent renewable power to be dispatched during periods of peak demand.

“BESS enables renewable energy to function as firm energy, which is essential for a country like Sri Lanka because of our dependence on imported fossil fuels,” he said.

He also dismissed claims that engineers attached to the NSO had objected to the proposed tariff framework, stating that the criticism had come from retired Ceylon Electricity Board (CEB) engineers rather than serving NSO officials.

As reliably learnt by The Sunday Morning, should the proposal proceed, developers investing in battery energy storage projects are expected to receive 15-year Standardised Power Purchase Agreements (SPPAs) under the new tariff mechanism.

The proposed tariff structure is currently under public consultation by the PUCSL. 

The consultation paper proposes differentiated FITs for renewable energy projects equipped with battery storage, with electricity supplied during the evening peak period (5.30 p.m. to 9.30 p.m.) attracting significantly higher payments than energy supplied at other times.

For utility-scale projects, the consultation document proposes a feed-in tariff of Rs. 51.55 per unit for ground-mounted solar projects with battery storage and Rs. 60.26 per unit for floating solar projects with battery storage during the priority evening peak period, while lower tariffs would apply outside those hours.

The consultation paper also proposes battery-inclusive rooftop solar tariffs for a 15-year period, with rates varying according to system size and reaching up to Rs. 66.53 per unit during prioritised feed-in hours for certain categories. The commission has noted that the proposed rates remain under stakeholder consultation and may be revised before being finalised.

According to the PUCSL, the proposed tariff framework has been developed under the Sri Lanka Electricity Act No.36 of 2024 and is intended to facilitate the deployment of renewable energy backed by battery storage to improve system reliability. The regulator is currently seeking stakeholder comments before determining the final FITs.

With hydropower expected to decline sharply during the anticipated dry spell, the NSO maintains that rapidly deploying battery-backed renewable generation is critical to preventing a 450 MW electricity deficit by January, while reducing reliance on costly diesel generation during peak demand periods.

Attempts made to contact PUCSL Director General Damitha Kumarasinghe were futile.