By Ifham Nizam

Energy expert Dr. Vidura Ralapanawa has raised concerns over proposed amendments to Sri Lanka’s Electricity Act by the government, highlighting particularly two key changes that could significantly hinder the growth of small-scale renewable energy projects.

In his blog, he has stated that the proposed revision seeks to decrease the maximum capacity of renewable energy projects eligible for the Feed in Tariffs (FIT) mechanism from 10 megawatts (MW) to 1 MW.

Ralapanawa argues that this reduction would render the development of new mini-hydro and biomass projects unfeasible, as these technologies typically require capacities exceeding 1 MW to be economically viable. For wind energy, where individual turbines often have capacities between 3 to 4 MW, the proposed limit is particularly impractical.

Even for solar power projects, the inclusion of transmission line costs makes 1 MW installations financially unviable.

He points out that suggestions to locate such projects near substations are impractical due to land scarcity and high costs in those areas.

He emphasizes that the current 10 MW threshold has been instrumental in the success of various renewable energy projects in Sri Lanka, including utility-scale solar, wind, biomass, and mini-hydro developments. Reducing this limit could lead to increased transaction costs and implementation delays, as tendering small capacities becomes inefficient.

Another proposed change involves shifting the responsibility of setting tariffs, including FIT rates, from the PUCSL to the Ministry. Ralapanawa contends that this move is regressive, noting that in many jurisdictions, including India, tariff-setting is managed by independent regulatory bodies to ensure transparency and technical accuracy.

Drawing from his experience in the consultative process of FIT setting, Ralapanawa expresses concern that ministry-led tariff determinations have historically lacked the technical expertise necessary to establish economically viable rates. He cites instances where arbitrary pricing decisions were made without proper consideration of return on investment expectations or economic principles.

He warns that these amendments could deprive Sri Lankans of low-cost power in the future. Currently, FIT-based renewable energy procurement is the second-lowest cost power source in the country, after major hydroelectric projects. Additionally, FIT projects are contracted in Sri Lankan Rupees, providing a hedge against currency depreciation, unlike larger renewable projects contracted in U.S. dollars.

He also highlights the broader economic benefits of FIT-supported projects, which are typically developed by local entrepreneurs and small to medium-sized enterprises. These projects utilize local capital, generate significant employment opportunities, and ensure that financial benefits remain within the country, thereby contributing to a higher GDP multiplier effect.

He expressed disappointment that individuals known for their opposition to renewable energy initiatives were involved in drafting the proposed amendments.

He stressed that legislation should serve the nation’s interests and not be influenced by personal biases or ideologies.

Ralapanawa urges policymakers to reconsider these proposed changes, advocating for a legislative framework that supports the continued growth of renewable energy in Sri Lanka, ensuring energy security, economic development, and environmental sustainability.