Sri Lanka renewable energy projects will now benefit from duty exemptions on imported capital goods. The move is designed to accelerate investments in clean power generation and large-scale energy storage systems across the island.
Government allows duty-free capital goods imports for Sri Lanka renewable energy expansion
Sri Lanka has taken a decisive step toward accelerating its renewable energy ambitions by allowing duty exemptions for capital goods used in renewable energy generation and storage. The new policy, announced through an official gazette, expands the list of imports eligible for tax relief, creating a more favorable environment for investment in sustainable power infrastructure.
According to the government’s notice, capital goods imported “for the purpose of construction of renewable energy or storage facilities” will now qualify for duty exemptions. The measure applies to new projects as well as extensions of existing facilities, provided they meet the stipulated capacity threshold of at least one megawatt (1MW).
The initiative is expected to provide a significant boost to Sri Lanka’s energy diversification strategy, which prioritizes solar, wind, and battery storage systems as alternatives to fossil fuels. By reducing import costs for key infrastructure components, authorities aim to lower the financial barriers that often delay renewable energy development.
Officials at the Ministry of Finance noted that the exemption aligns with the government’s broader policy of promoting green energy through targeted fiscal incentives. The inclusion of renewable energy generation and storage systems among the list of capital goods marks a strategic shift toward long-term sustainability and energy independence.
Sri Lanka’s renewable energy sector has gained momentum in recent years, with numerous projects in solar and wind power advancing under public-private partnerships. The government has also invited proposals for battery energy storage systems (BESS) to support grid stability and enhance efficiency during peak demand periods. By including storage facilities under the new duty-free category, authorities aim to encourage large-scale adoption of technologies that complement intermittent power sources like solar and wind.
The latest concession extends to both new renewable projects and upgrades to existing plants. Investors and developers working on capacity expansions will now enjoy the same fiscal advantages as those establishing entirely new operations. Analysts say this inclusive approach could stimulate reinvestment in current facilities, leading to better technology integration and higher energy output.
Energy economists view the policy as a timely intervention given global supply chain pressures and rising material costs. The ability to import equipment such as turbines, batteries, and inverters without added fiscal burdens is likely to improve the financial viability of ongoing and planned projects. Additionally, the exemption may attract foreign direct investment, as global renewable energy companies often seek markets with stable and supportive policy frameworks.
Sri Lanka has set ambitious renewable energy targets, aiming to generate 70 percent of its electricity from renewable sources by 2030. Achieving this goal will require a significant increase in clean energy capacity, particularly in solar and wind installations. Battery storage, a critical component of the energy transition, will play an essential role in balancing supply and demand across the national grid.
Industry stakeholders have welcomed the new policy, emphasizing that it could help bridge the financing gap in the renewable sector. By easing import duties on capital goods, developers can allocate more resources toward technology, training, and infrastructure, thereby strengthening the long-term sustainability of Sri Lanka’s energy landscape.
The move also reflects Sri Lanka’s growing commitment to reducing its carbon footprint and aligning with global decarbonization efforts. The government’s focus on renewable energy and storage technologies underscores a national strategy that seeks both environmental and economic resilience. With global interest in green investment on the rise, the country’s decision to simplify access to duty-free imports positions it competitively in the regional energy market.
As implementation begins, authorities are expected to issue further clarifications on the application process and eligibility criteria for duty exemptions. Industry experts recommend clear guidelines to ensure that the policy remains transparent, efficient, and accessible to all qualifying entities.
In conclusion, the newly approved tax exemption for renewable energy capital goods represents a pivotal step in Sri Lanka’s energy transition. By incentivizing clean power investments and modern energy infrastructure, the government is laying the groundwork for a more self-reliant, sustainable, and resilient power sector. This strategic move is likely to attract both domestic and foreign investors eager to participate in the nation’s renewable energy future.