By: Isuru Parakrama

November 25, Colombo (LNW): The Asian Development Bank (ADB) has approved a substantial loan of $200 million aimed at transforming Sri Lanka’s power sector infrastructure.

The loan will focus on modernising the country’s transmission and distribution networks, improving their reliability, and facilitating a higher integration of renewable energy sources into the national grid, the Bank said in a statement.

Takafumi Kadono, ADB’s Country Director for Sri Lanka, emphasised the importance of these reforms, stating, “Reforming the power sector, alongside strategic infrastructure improvements, is crucial for fostering competitive renewable energy growth and reducing power generation costs. This project will support Sri Lanka’s energy transition, reducing power disruptions, curbing transmission and distribution losses, and increasing the share of renewable energy in the national electricity mix.”

Sri Lanka achieved a remarkable milestone in 2016 by reaching 100% household electrification. However, the country faces growing energy demands, with peak consumption hitting around 2,800 megawatts (MW) in 2023, including renewable contributions.

This figure is expected to surge by 2030, posing challenges to the existing energy infrastructure. Although Sri Lanka’s total installed capacity stood at 5,191 MW in 2023, nearly half of this energy was still generated from thermal power plants.

This highlights the pressing need to transition towards more sustainable and renewable energy solutions.

As part of its commitment to climate action, Sri Lanka’s government has set ambitious targets for its energy future. The goal is to generate 70 per cent of the country’s electricity from renewable sources by 2030, with the broader aim of achieving carbon neutrality in electricity generation by 2050.

The newly approved Power System Strengthening and Renewable Energy Integration Project is designed to accelerate this transition by enhancing the capacity and climate resilience of the country’s energy infrastructure.

The project will focus on expanding and modernising Sri Lanka’s transmission and distribution networks, particularly through the addition of new 220-kilovolt and 132-kilovolt transmission lines and substations.

The modernisation of the medium-voltage distribution network and the upgrading of grid protection systems will also be key components.

One of the most groundbreaking aspects of the project will be the introduction of Sri Lanka’s first grid-scale battery energy storage system, which will be installed at the transmission level to support the integration of renewable energy.

Moreover, the project will establish a renewable energy monitoring centre to forecast and track energy generation from renewable sources.

To enhance efficiency, it will also implement advanced automation systems such as SCADA (Supervisory Control and Data Acquisition) and remote terminal units, enabling real-time data monitoring and alerts to improve the management of power delivery.

Additionally, the project will support the Ceylon Electricity Board (CEB) and Lanka Electricity Company (LECO)—the two state-owned entities responsible for power delivery to consumers—by strengthening their institutional capacities.

This will help both organisations better integrate and manage renewable energy sources, adopt digital solutions, and expand their ability to host rooftop solar installations.

The project also includes targeted initiatives to empower women within the sector. CEB and LECO will roll out career development activities specifically for female staff, as well as awareness programmes promoting the safe and productive use of electricity.

Additionally, training will be provided to women-led groups and businesses on clean energy solutions, further supporting the inclusive and sustainable development goals of the project.

The financing for the project will be split, with $150 million allocated to the CEB and $50 million to LECO. Both loans are guaranteed by the Government of Sri Lanka, ensuring the country’s continued commitment to modernising its energy infrastructure.