Investment Opportunities in the Energy sector

The government of Sri Lanka aims for a country that is self-sufficient in energy by 2030. The goal is to raise the country's power generation ability from the current 4,043 MW to 6,900 MW by 2025 with a substantial renewable energy increase. Sri Lanka has already accomplished a 98 percent grid connectivity, which is comparatively high according to South Asian norms. There are three primary sources of electricity produced in Sri Lanka: heat power (including coal and fuel oil), hydropower, and other non-conventional renewable energy (solar power and windpower).

Sri Lanka intends to add 842 MW of Major Hydro, 215 MW of Mini Hydro, 1,389 MW of solar, 1,205 MW of wind, 85 MW of biomass, 425 MW of oil power, 1,500 MW of natural gas and 2,700 MW of coal power to the electricity generation scheme from 2018-2037. The total annual demand for electricity is approximately 14,150 GWh. It is projected that the yearly demand for electricity will rise by 6 to 8 percent, a number limited by high prices.

Despite long-term power generation plans in place, in the past two years Sri Lanka encountered several energy outages as hydropower energy generated started declining owing to less predictable weather patterns. As a result of this, in the next ten years, Sri Lanka plans to add new power plants for coal, renewable and liquefied natural gas (LNG). There are several active suggestions from the government to establish LNG import facilities and associated power plants and a new oil refinery.

The existing oil refinery is over 45 years old and requires urgent modernization to satisfy the petroleum industry requirement. All forms of renewable energy are actively promoted by the Sri Lankan Sustainable Energy Authority (SLSEA).

OSL Take: Sri Lanka requires to add substantial ability to satisfy present and future energy requirements expected to expand at around eight percent per year. Sri Lanka has a total energy-generating capacity of 40 GWH as it depends primarily on heat energy, including a coal-fired Chinese energy plant, which accounts for 45% of its production. Insufficient rainfall has restricted ability to generate hydropower, and the government was compelled to impose power cuts in early 2019 owing to an absence of ability to produce. To satisfy electricity shortages, the government has resorted to buying costly emergency power.

Opportunities in the power industry include wind and solar power plants, LNG power plants, auto-diesel power plants to dual fuel (liquid natural gas) plants, mini-hydro power plants, domestic solar systems, wind power, electrical meters and switches, power transmission and control systems, and power wires. SLSEA actively promotes alternatives for renewable energy and statistics show a steadily growing contribution to renewable energy. Because of its unique location, Sri Lanka has vast wind energy resources. There are presently 11 wind power plants linked to the national grid. USAID has evaluated Sri Lanka's wind and solar potential.
VBS/AT/15102019/TB1