Sri Lanka renewable energy tariffs have become a point of debate as Energy Minister Kumara Jayakody cautions that paying high prices for solar and wind power could increase electricity costs for consumers while discouraging genuine developers.
Energy minister warns high renewable tariffs could hurt consumers and investors alike
Sri Lanka renewable energy tariffs have come under scrutiny as Energy Minister Kumara Jayakody addressed parliamentary concerns about the balance between consumer electricity bills and payments to private renewable power producers. Minister Jayakody emphasized that the country cannot sustain cheap electricity if the Ceylon Electricity Board (CEB) is forced to buy power at inflated prices from solar, wind, or other renewable producers.
The minister highlighted that prices paid for solar energy have progressively declined, from 37 rupees per unit to 27 rupees, then 24 rupees, and now 18 rupees. While some opposition voices have called for restoring higher rates to support micro, small, and medium producers, Minister Jayakody clarified that market conditions have changed. He pointed out that solar panel costs have fallen by 30 percent and the rupee has strengthened, which should benefit the public rather than artificially boosting profits for new producers.
Minister Jayakody also noted that developers who rely excessively on debt may face higher costs, but genuine investors with proper equity structures have no significant losses. He cited recent competitive bidding for 50×2 MW wind plants, where bids as low as 3.77 US cents per kilowatt-hour (less than 11.50 rupees) demonstrated market efficiency and investor confidence.
The energy minister stressed that the CEB must invest heavily in grid infrastructure to integrate intermittent renewable energy while preventing blackouts. Projects such as Battery Energy Storage Systems (BESS) and transmission lines financed by multilateral agencies are underway to support the growing share of solar and wind power. Developers are also offered incentives for battery-stored energy delivered at night, with tariffs reaching up to 45.80 rupees per unit.
Sri Lanka’s shift to competitive bidding marks a departure from the previous feed-in-tariff system, which had been criticized for lobbying-driven tariff manipulation and protectionist practices favoring local inputs. Minister Jayakody reinforced that the current administration aims to maintain market competitiveness while ensuring affordability for consumers.
Official data tabled by the minister shows the cost of electricity production varies widely: coal-fired plants average 20.82 rupees per unit, large hydro 2.30 rupees, furnace oil 46.94 rupees, and CEB wind plants 12.12 rupees. Average costs for private renewable energy include 14.13 rupees for small hydro, 15.73 rupees for wind, and 19.49 rupees for ground-mounted solar. Rooftop solar ranges from 27.06 rupees for installations up to 500 kW to 23.18 rupees for larger systems. Urban waste-to-energy projects cost 36.20 rupees per unit but provide night-time supply.
Minister Jayakody concluded that while renewable energy remains vital for Sri Lanka’s sustainable energy transition, tariff policies must balance the interests of consumers, investors, and the broader economy. Overpaying for renewable power could backfire, raising costs for households while discouraging efficient, genuine developers from participating in the market.