FRED urges President AKD to intervene as policy reversals, tax burdens, and CEB inefficiencies threaten Sri Lanka’s clean energy future
Sri Lanka’s renewable energy sector is facing a crisis, with developers warning that recent tariff reductions and operational setbacks could derail the nation’s 2030 green energy targets. The Federation of Renewable Energy Developers (FRED) has called on President Anura Kumara Dissanayake to urgently intervene and lead evidence-based reforms that can restore investor confidence and secure energy stability.
At a press conference last Friday, FRED President Thusitha Peiris expressed deep concern over the government’s 30% cut to feed-in tariffs for renewable energy, describing it as a “unilateral” move approved by the Cabinet on 16 June without consultation or legal oversight from the Public Utilities Commission of Sri Lanka (PUCSL).
“The foundation of our industry depends on fair, transparent, and predictable policy,” Peiris stated. “This tariff revision is not only abrupt but has bypassed the legally mandated regulatory process, sending shockwaves through the investor community.”
The Federation warned that continued policy reversals, combined with existing tax burdens and operational challenges, could lead to large-scale financial distress. Currently, nearly 75% of renewable energy projects are operating at break-even or a loss, with banks reportedly preparing to step in if developers default on their loans due to delayed payments and revenue losses.
FRED also highlighted the severe impact of tax hikes on imported battery systems. With duties, para-tariffs, and VAT pushing the cost burden to nearly 50%, developers are unable to viably integrate battery energy storage systems (BESS), a critical technology for managing solar power and peak demand. Unlike in other countries such as Vietnam or Singapore, Sri Lanka’s developers cannot reclaim VAT, further worsening the economic feasibility of these projects.
In addition to tariff issues, developers accused the Ceylon Electricity Board (CEB) of failing to implement BESS integration despite repeated requests to install at least 1,000 MWh of capacity. FRED also criticized the CEB for imposing frequent solar power curtailments—particularly after the 9 February blackout—citing grid stability concerns without providing public data.
“These curtailments violate Power Purchase Agreements (PPAs), some in place for over two decades,” said NCCSL Renewable Energy Council Member Eng. Prabhath Wickramasinghe. “The loss of approximately 14 million units of clean energy due to 18 Sundays and 9 public holidays has pushed many developers into serious financial trouble.”
FRED Treasurer Chamil Silva argued that feed-in tariffs remain the most successful policy tool to expand renewable energy, citing the addition of 1,700 MW of rooftop solar through this approach. In contrast, competitive bidding by the CEB has repeatedly failed to yield results.
The Federation also pointed to systemic flaws in the national grid. Eng. Parakrama Jayasinghe of the NCCSL noted that the grid remains outdated and inefficient, unable to support the planned growth of renewable energy. He warned that unless the grid is modernized with automation and redundancy, Sri Lanka will face recurring blackouts and missed targets.
Jayasinghe further emphasized the broader economic stakes, noting that Sri Lanka spends over $5 billion annually on fossil fuel imports, particularly for transportation. “The shift to renewable energy isn’t just about sustainability—it’s about national security, foreign exchange savings, and long-term economic resilience,” he said.
FRED is seeking meetings with President Dissanayake, the Treasury Secretary, and the Minister of Power to urgently address these issues. The group is calling for an independent review of tariffs, the removal of battery import taxes, enforcement of existing PPAs, and structural reforms at the CEB.
With over 2,000 MW of existing non-traditional energy sources already saving the country $600–700 million in foreign exchange, industry leaders stress that any further setbacks could cost Sri Lanka not just energy security—but its future competitiveness in a global economy shifting rapidly toward renewables.