The Asian Development Bank (ADB) approved a $200 million loan to upgrade Sri Lanka’s electricity infrastructure, aiming to improve the reliability of its power transmission and distribution systems. The project will enhance renewable energy integration into the national grid, supporting the government’s sustainability and clean energy goals.
Supporting Power Sector Reforms and Renewable Energy Integration
Takafumi Kadono, ADB’s Country Director for Sri Lanka, said “Driving power sector reforms, combined with targeted infrastructure interventions, is essential to facilitate competitive renewable energy development and reduce power generation costs.”
He added, “By expanding and modernizing infrastructure and incorporating digitalization solutions, this project will support the government’s goal of increased integration of renewable energy in the electricity mix, reduce power interruptions, and minimize transmission and distribution losses.”
Sri Lanka reached full household electrification by 2016, and its peak electricity demand hit 2,800 megawatts (MW) in 2023. In 2023, Sri Lanka’s power capacity reached 5,191 MW, with thermal plants generating about 50% of the electricity. This dependence on fossil fuels challenges shifting to a more sustainable energy mix. The government aims to produce 70% of electricity from renewables by 2030 and achieve carbon neutrality in power generation by 2050.
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Enhancing Climate Resilience and Expanding Grid Capacity
The Power System Strengthening and Renewable Energy Integration Project will bolster the climate resilience of Sri Lanka’s energy infrastructure. It will expand the transmission network by introducing 220-kilovolt and 132-kilovolt transmission lines and substations. The project will also modernize the medium-voltage distribution network and enhance grid protection systems. A key feature is deploying Sri Lanka’s first grid-scale battery energy storage system at the transmission level.
The project will also introduce advanced automation systems, including Supervisory Control and Data Acquisition (SCADA) and remote terminal units to improve grid management and efficiency. These systems will provide real-time data and alerts, enabling operators to efficiently manage power delivery and address issues. Furthermore, the project will establish a renewable energy center to forecast and monitor renewable energy generation, improving grid stability.
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The ADB’s loan will support the institutional strengthening of Sri Lanka’s main power utilities, Ceylon Electricity Board (CEB) and Lanka Electric Company (LECO). These two organizations are responsible for power delivery to consumers across the country.
The project also includes initiatives to support gender equality. The project will offer career development for female CEB and LECO staff and provide clean energy training for women-led businesses. Additionally, the project will raise awareness about the safe and productive use of electricity.
The $200 million loan will allocate $150 million to CEB and $50 million to LECO for infrastructure upgrades. Both financing amounts are guaranteed by the government of Sri Lanka, ensuring the successful implementation of the project.
