Renewable energy developers in dire straits have urged the Government to intervene immediately as payment defaults linked to electricity supplied to the national grid continue to place severe financial pressure on Sri Lanka’s renewable power industry.
Renewable energy developers in dire straits amid payment delays
The Federation of Renewable Energy Developers (FRED) has warned that the prolonged non-payment crisis could lead to widespread operational failures, job losses, investor uncertainty, and long-term damage to the country’s renewable energy ambitions.
Addressing the media, Prabath Wickramasinghe stated that payments for renewable electricity supplied to the national grid have remained unsettled since December 2025. According to industry representatives, the outstanding payments now amount to nearly Rs. 10 billion by April 2026.
The federation noted that approximately Rs. 2.5 billion becomes payable each month to renewable energy suppliers through the National System Operator, commonly referred to as the NSO.
Industry officials claim the payment crisis has emerged at a time when the Government is spending heavily on thermal power generation due to inefficiencies in coal power supply. According to FRED representatives, shortfalls in coal-based electricity generation have increased reliance on diesel and heavy fuel power generation, significantly increasing energy costs.
Wickramasinghe stated that the issue had been aggravated by the importation of substandard coal, resulting in lower-than-expected performance from thermal power plants and forcing authorities to prioritise alternative energy generation methods.
The federation argues that despite renewable energy producers supplying comparatively cheaper and cleaner electricity to the national grid, payments to the sector have effectively been halted while thermal power providers continue receiving priority disbursements.
“It is fundamentally unfair that conventional power generators receive preferential treatment for disbursements while the renewable energy sector is completely forgotten,” the federation said in its statement.
According to the developers, the financial crisis is now threatening the survival of many companies operating within Sri Lanka’s renewable energy sector. Industry representatives warn that banks have become increasingly reluctant to provide financing due to uncertainty surrounding future payments and cash flow stability.
Wickramasinghe noted that several renewable energy companies are already struggling to service existing loans, raising concerns that the crisis could contribute to a rise in non-performing loans within the banking system.
He further stated that many business owners have exhausted personal funds to sustain operations while awaiting payments. If the situation continues, thousands of employees attached to renewable energy projects could face salary delays or job losses.
“Thousands of employees including engineers, electricians, mechanics, labourers and administrative staff working in these renewable energy companies would not be paid their wages,” he warned.
The federation also expressed concern about operational sustainability, stating that companies are struggling to purchase spare parts and carry out routine maintenance work necessary to keep renewable energy plants functioning efficiently.
Industry stakeholders say delays in maintenance could eventually lead to equipment failures, plant shutdowns, and reduced renewable energy availability at a time when Sri Lanka is attempting to strengthen long-term energy security and reduce dependence on imported fuel.
FRED President Manjula Perera stated that renewable power generation has also faced curtailment during certain hours on Sundays and mercantile holidays over the past year. According to him, payments have not been made even for curtailed energy supplied under those conditions.
Perera remarked that renewable energy developers experienced comparatively better financial conditions even during the height of Sri Lanka’s economic crisis in 2022 and 2023 than they currently face.
Senior officials within the National System Operator reportedly attribute the liquidity challenges to the prioritisation of thermal power generation costs required to manage daily electricity supply shortages ranging between 100 and 150 megawatts.
Industry officials note that global geopolitical tensions, particularly the conflict involving Iran and the United States, have pushed fuel prices sharply higher, with thermal electricity generation costs reportedly nearing or exceeding Rs. 100 per kilowatt hour.
Renewable energy developers argue that prioritising expensive fossil fuel-based power generation while delaying payments to renewable producers could ultimately worsen the country’s power sector vulnerabilities.
The federation has appealed directly to President Anura Kumara Dissanayake, the Treasury, and the Finance Ministry to provide financial support or grants to stabilise the NSO and enable outstanding payments to renewable energy suppliers.
Industry representatives warn that failure to intervene immediately could damage Sri Lanka’s sovereign credibility among international funding agencies and weaken investor confidence in future energy projects.
They also cautioned that if renewable operators are forced out of business due to financial distress, the country could face even greater electricity supply shortages in the future.
The federation called for urgent Cabinet-level intervention to prevent what it described as the potential “natural death” of Sri Lanka’s renewable energy industry, stressing that immediate financial relief is essential to protect jobs, maintain energy infrastructure, and sustain the country’s long-term transition toward cleaner power generation.