📈 Solar Industry Raises Alarms Over Draft National Electricity Policy

The Solar Industries Association (SIA) warns that several provisions in the new Draft National Electricity Policy could destabilize Sri Lanka's renewable energy growth and threaten its 70% green energy target by 2030. • Sector Impact & Scale • The renewable energy sector currently supports 400+ companies and provides employment to over 40,000 Sri Lankans. • Total installed capacity stands at 3,333 MW (as of Nov 2025), with 92% (3,042 MW) developed via the Feed-in Tariff (FIT) mechanism. • Critical Policy Concerns • Uncompensated Curtailment: Provisions allow the grid to cut solar/wind supply without financial compensation, undermining project bankability. • Abolishing FIT: Replacing fixed tariffs with competitive bidding for projects under 10 MW may collapse the SME-led solar and mini-hydro sectors. • Forex Risks: Requirement for LKR-denominated Power Purchase Agreements (PPAs) ignores that most equipment is imported in USD, discouraging FDI. • Key Recommendations • Implement a 1% annual curtailment cap with compensation for excess. • Maintain USD indexation for tariffs to protect debt servicing against exchange rate volatility. • Establish technical committees to determine fair PPA extension rates rather than a mandatory 65% tariff cut. • Economic Outlook Failure to address these issues could increase reliance on high-cost fossil fuels, leading to higher consumer tariffs and increased foreign currency outflows.