India’s Adani Green Energy has announced its withdrawal from the proposed 484 MW wind power project in Mannar and Pooneryn, which included a $1 billion investment in renewable energy and transmission infrastructure. The decision marks a significant setback for Sri Lanka’s efforts to attract foreign direct investment (FDI) and advance its green energy ambitions.
While some analysts have argued that the Adani project would have led to financial losses over its 20-year span, industry experts claim that failing to implement such a large-scale renewable energy initiative will result in even greater economic drawbacks. The absence of the project could force Sri Lanka to spend over $5.5 billion on fossil fuel imports for power generation over the same period.
Adani had proposed a fixed tariff of USC 8.26 per unit, contrasting with USC 4.65 per unit cited by local developers with no proven track record in large-scale renewable projects. Comparatively, Sri Lanka’s current power generation costs stand at USC 12.52 per unit for coal and as high as USC 26.99 per unit for oil-based energy. The withdrawal of Adani’s investment raises concerns over the future of Sri Lanka’s energy mix, particularly as the country strives to meet its target of 70% renewable energy by 2030.
The project was expected to generate 1,500 million units of power annually, supplying energy to 600,000 households and reducing carbon emissions by 1.06 million tons per year. Additionally, Adani’s investment would have eliminated forex outflows for fossil fuel imports and reduced government electricity purchase costs by $83 million annually, leading to lower electricity tariffs for consumers.
With rising energy demand and sustainability goals in focus, Sri Lanka faces the challenge of securing large-scale renewable energy projects to achieve long-term energy security and economic stability.