Sri Lanka solar curtailment has intensified in 2026, with renewable energy producers warning that expanded restrictions on grid-connected generation are disrupting cash flows and threatening loan repayments as cutbacks now extend beyond weekends into regular weekdays.
Sri Lanka solar curtailment expands beyond weekends, hitting producers
Sri Lanka’s grid-connected solar sector is facing mounting financial stress as the curtailment of renewable generation, originally limited to weekends, has expanded to public holidays and weekdays, industry representatives say. Solar producers argue that the widening scope of curtailment is undermining their ability to service debt and sustain operations, raising concerns about investor confidence in the country’s renewable energy transition.
The curtailment measures were first introduced in February 2025 following what became known as the “Sunny Sunday” incident, when an exceptionally high share of solar generation in the system contributed to a nationwide outage. According to sector participants, the dominance of non-rotating generation reduced system inertia, creating instability across the grid. In response, the state-run Ceylon Electricity Board introduced controlled cutbacks to manage system balance.
Since then, the Grid Connected Solar Power Association of Sri Lanka says the situation has worsened. What began as a weekend-only measure has steadily expanded to include public holidays and, more recently, regular weekdays. Producers now report losing generation on up to three days in a single week, a level of curtailment they describe as financially unsustainable.
The association estimates that ground-mounted solar firms have already lost around two billion rupees, roughly 15 percent of expected revenue, due to curtailed purchases. With the reduction now extending into working days, the impact on cash flow has intensified. Industry leaders warn that this has created a critical mismatch between expected income and fixed debt obligations.
Prabath Wickramasinghe, President of the association, said many producers are no longer able to meet loan repayment schedules. He noted that plants were developed and financed on the basis that they would operate as “must-run” facilities, making the current curtailment a violation of existing purchase agreements. According to Wickramasinghe, producers are not demanding full compensation but are seeking reasonable payments that would allow them to avoid default.
He added that cutbacks have been imposed during key public holidays such as Vesak, Poson, and Christmas, further eroding predictable revenue streams. With curtailment now affecting weekdays as well, producers face prolonged revenue gaps that lenders had not anticipated when projects were financed.
Committee member Kishan Nanayakkara explained that unlike larger independent producers that receive a fixed capacity-related payment, grid-connected solar firms depend entirely on energy-based charges. This leaves them especially vulnerable when output is curtailed, as there is no alternative revenue to offset lost generation.
The situation is particularly acute for firms that entered the sector through competitive bidding rather than legacy feed-in tariff schemes. While older projects received tariffs of around 25 rupees per unit, competitively bid projects operate at prices closer to 15 to 18 rupees. These rates were secured through transparent tender processes and offer limited margin for revenue shocks. Newer tariff structures have since been reduced to around 17 rupees, reflecting lower capital costs as solar equipment prices declined.
Industry representatives argue that the competitive bidding model has avoided allegations of lobbying or preferential pricing, but its thin margins leave little room to absorb extended curtailment. Wickramasinghe warned that foreign investors, in particular, may either withdraw from future tenders or demand higher risk premiums if curtailment remains unresolved.
Producers say the most viable long-term solution lies in battery energy storage, which would allow excess daytime generation to be stored and supplied during evening peak demand. The Ceylon Electricity Board last year published a proposed rate of 45.80 rupees per unit for energy supplied at night through battery systems, but implementation has stalled. No guidelines or contract amendments have been issued, despite repeated requests, and the previously announced December deadline has passed.
Until storage solutions are operational, producers argue that interim compensation mechanisms are essential. Many projects are leveraged at levels of 70 to 80 percent, leaving little flexibility to absorb prolonged revenue losses. Without relief, industry participants warn that defaults could rise, damaging both the renewable sector and the wider financial system.
Broader macroeconomic pressures have compounded the challenge. Currency depreciation has raised costs for imported equipment, while global battery prices have increased, partly due to anticipated export taxes in major manufacturing countries. These factors have added to the strain on project economics at a time when revenues are already under pressure.
The expansion of Sri Lanka solar curtailment has therefore emerged as a defining issue for the renewable sector in 2026. How authorities balance grid stability with financial sustainability will likely shape the future pace of clean energy investment and determine whether Sri Lanka can maintain credibility with domestic and international investors.