INSUBCONTINENT EXCLUSIVE:
expressing confidence in its potential to yield substantial benefits for both stakeholders and consumers in the coming decades.The President
also underscored that investors venturing into this sector can anticipate a comprehensive and unwavering policy framework in the realm of
2050.President Ranil Wickremesinghe underscored the pivotal role of the rapid renewable energy plan, describing it as a key component of Sri
delivered by President Ranil Wickremesinghe at the Green Technology Forum in Davos, Switzerland.I thank the Swiss Asian Chamber of Commerce
urgent need for acceleration of global actions towards climate change mitigation
There have been multiple global forums which have resulted in numerous commitments towards this end
However, actions have fallen drastically short of commitments.The fallout of this failure in global leadership is borne largely by
developing nations of the global south
When periods of drought extend beyond normal, undermining agricultural production, our food security is in jeopardy
When hydropower gets disrupted due to delayed monsoons, our energy security is in jeopardy
Droughts are often followed by a deluge, leading to flash floods and landslides, disrupting lives and livelihoods of under-privileged
communities in particular.It is very evident that there is a disproportionate impact of the adverse outcomes of climate change on developing
This brings to light the issue of climate justice and the need for a stronger contribution from the advanced economies towards adaptation
and mitigation efforts in the global south.That being said, Sri Lanka will forge ahead with its efforts towards climate mitigation
investment in forests, energy, oceans, mangroves, in the countries of the tropical belt.Today I want to focus on one key aspect of such
a long history of renewable energy
Since independence Sri Lanka developed an extensive network of hydropower, commissioning its first major hydro-power plant in 1950
the optimal levels, there has been an increased effort to include wind and solar power generation to the national grid
energy sources.To reach this target requires a large investment of up to USD 11.5 billion
However, until recently the framework for private investment in the renewable energy sector has not been very conducive
Over the last 2 years several measures have been taken by the government to correct these shortcomings and ensure an optimal investment
climate for renewable energy is in place.FINANCIAL REFORMThe first step was to ensure cost reflective pricing
Between 2014 and 2022 electricity tariffs had not been adjusted
This resulted in major cash flow problems for the Ceylon Electricity Board that sometimes led to payment delays to power suppliers
However, from August 2022 we have shifted to a cost-reflective pricing structure
Accordingly, electricity tariffs are revised every quarter to reflect costs on a forward looking basis.The CEB, which has long been a loss
making entity, returned a profit in 2023, enabling it to settle significant levels of past debt along with some balance sheet structuring
The company now has a strong balance sheet, a far stronger cash flow position, and a pricing structure that ensures liquidity.Rigidities in
the feeding tariff has also been a concern of past investors
However, this has also been addressed with greater flexibility being introduced to the tariff options, including choices between fixed
tariff and variable tariff formulas.In addition to internal reform, we are also putting in place the framework to attract green financing
Sri Lanka has developed the Road Map for Sustainable Finance, Green Finance Taxonomy, the SDG Investor Map and the Green Bond Framework,
that is currently under formulation, creates the enabling environment for Sri Lanka to have a robust engagement in climate finance
The availability of sustainable finance will be an added boost for renewable energy investments in Sri Lanka.LEGISLATIVE REFORMThere have
also been legislative barriers to large scale private investment in the renewable energy sector
Those legal hurdles have also been cleared through necessary amendments to the Electricity Act introduced in 2022.INSTITUTIONAL
REFORMThirdly, the government is in the final stages of implementing unbundling of the Ceylon Electricity Board
This will result in greater financial and operational autonomy for the distribution, generation, and transmission arms of the CEB, resulting
in competition and transparency
Whilst private participation in generation is already available, the unbundling process will open up opportunities for private participation
in distribution as well.This major reform, implemented with the support of the Asian Development Bank, will ensure the CEB operates at the
frontier of efficiency, delivering the best outcome for consumers and the most competitive and efficient producers of electricity
The draft legislation for this reform was already been published last month.INFRASTUCTURE IMPROVEMENTSThe ambition of 70% electricity from
renewals also requires improved system efficiency and upgrades to integrate more renewable energy, particularly from 2026
Investments will be required in storage, transmission, and distribution, along with the ongoing private investments in generation
Plans for this integration up to 2030 are in place and have begun implementation.FUTURE OUTLOOKFollowing the major reforms implemented in
the energy sector in the last 2 years, there has been renewed interest in this sector
There are already large scale solar and wind power projects that have commenced implementation
A major Indian player has commenced implementation of a 350MW wind power plant that is expected to be commissioned in 2025
The same player is considering a further USD 750 million investment in wind power.Wind power is a major opportunity for Sri Lanka
A recent World Bank report indicates that off-shore wind power in particular has the potential to generate power far greater than Sri
Considering this, Sri Lanka and India are in advanced stages of talks regarding grid inter-connection to enable Sri Lanka to export surplus
electricity particularly to the fast growing industrial belt in the Southern part of India
There is also tremendous potential for the development of green hydrogen in Sri Lanka.CONCLUSIONSri Lanka has ambitious plans to fulfil its
sustainable, green development agenda
By 2050 the country has committed to achieving net zero
The accelerated renewable energy plan is a key component of this overall effort and is also an essential step on the path towards energy
Renewable energy will also drive down costs of generation since at present Sri Lanka is compelled to rely on high cost heavy fuels during
Sri Lanka is in the process of establishing an international climate university, which will continue to unlock opportunities in green
Therefore investors can expect a high degree of policy continuity in this sector going forward as well
