Business

Powering through droughts and crises: Redesigning Sri Lanka’s energy resilience

Published

2 months ago

2026/04/29

* Sri Lanka’s energy insecurity is structural, rooted in climate‑volatile hydropower, fossil fuel dependence, and an ageing grid.

* Solar adoption has grown quickly, but grid saturation and high storage costs limit further gains.

* Low‑cost policy fixes such as storage support, shared microgrids, daytime use incentives, and smart meters can strengthen resilience in the near term.

Sri Lanka has lived with energy insecurities for decades. Today, the crisis is a structural problem that is no longer limited to mere episodes. The country’s electricity system sits at the intersection of three converging vulnerabilities. Firstly, the system relies on a bimodal rainfall pattern that makes hydropower inherently boom-and-bust. Secondly, Sri Lanka has a near-total dependence on imported fossil fuels and limited use of other renewables, mainly rooftop solar, to fill the gaps. Thirdly, the country deals with an ageing grid infrastructure that is ill-equipped for the distributed energy future that could solve the problem.

With the El Niño-driven drought intensification, recurring global crises, and geopolitical uncertainties, the urgency of the energy crisis becomes impossible to ignore, especially amid increasing demand. Additionally, demand for cooling energy will rise and become a necessity as the South Asia region becomes increasingly vulnerable to more frequent, intense, and prolonged heat extremes, driven by anthropogenic global warming, urbanisation, and El Niño.

A System Built on Rain

Sri Lanka’s electricity story begins and ends with water. Hydropower has historically provided the cheapest and cleanest baseload generation in the system. In good rainfall years, hydropower can supply 40–45% of national electricity needs. The south-west monsoon from May to September and the north-east monsoon from November to January produce predictable troughs. When the monsoon seasons underperform, as they do in some El Niño years, reservoir levels collapse, drinking and irrigation needs are prioritised, and the Ceylon Electricity Board (CEB) is forced to ramp up thermal generation at enormous cost.

This is not a new pattern. Sri Lanka has navigated El Niño-driven drought cycles throughout history. Generally, these events occur in cycles of 3-7 years. First reported in 1876, the El Niño–Southern Oscillation (ENSO) sometimes suppresses rainfall, causing droughts, while other events bring more rainfall and floods, depending on the timing of the event.

However, preparedness has historically been reactive in the form of emergency procurement, rolling power cuts, and public appeals to reduce consumption. The 2016 drought, 2019 dry spell, and 2022–23 episode triggered emergency diesel and fuel oil procurement, worsening the import bill amid strained foreign exchange reserves. In 2022, thermal plants accounted for roughly 47% of total electricity generation, with oil-based plants absorbing the shock of falling hydro output. Such situations increase costs, especially when they coincide with a global oil price spike. The 2022 crisis, compounded by the Russia–Ukraine war’s fuel price shock, left Sri Lanka unable to secure fuel shipments, mainly due to structural import dependence.

Furthermore, the quality and cost dimensions of thermal generation increase emissions, reduce plant efficiency, and raise maintenance costs in the long run. Meanwhile, global oil price volatility, driven by geopolitical tensions in the Middle East, has made fuel-oil generation a financial wildcard. A prolonged global supply chain disruption will collapse the system.

Solar’s Quiet Revolution and Its Limitations

By 2024, solar’s share of the national electricity mix had reached approximately 7% and nearly doubled in 2025. Between 2020 and 2024, rooftop solar grew from a niche option (2%) to a genuine contributor to the national electricity supply (5%), generating approximately 867 GWh. In 2025, rooftop solar contribution to the national grid reached 9.5%. This growth has been slow yet remarkable. However, today it has encountered two hard constraints.

1. Grid capacity is saturated in densely populated areas

, particularly the Western Province. The CEB has responded by restricting new rooftop solar connections in these areas, creating a situation in which the highest-demand, highest-income catchments are blocked, affecting the very households best placed to invest in solar. Energy curtailment is a key limitation in many parts of the world today, due to limited grid capacity, costly storage, and unpredictable generation.

2. Battery storage costs remain high

, relative to Sri Lankan household incomes. The economics of standalone battery systems have fallen sharply since 2020 and remain out of reach for most households without financial support mechanisms.

However, many energy-dependent economies, including Germany, the UK, the Netherlands, Spain, Australia, and Malaysia, have effectively deployed solar energy and benefited from it during the current Middle East crisis.

The Low-Hanging Fruit: Policy Actions

The solutions are partially deployed, increasingly affordable, and actionable through policy until the costly infrastructure is realised. A few policy interventions can deliver measurable impact in the near term, especially energy security from the ground up.

* Create a targeted storage subsidy scheme for solar households. A co-financing mechanism covering around 20–30% of battery storage costs would significantly improve adoption among middle-income households. A successful programme would develop a local installation and maintenance industry, generating green employment.

* Promote community microgrids with storage facilities in condominiums, industrial parks, and rural areas, rather than individual rooftop connections to a fragile grid. Most countries such as Germany and Spain are using “solar balconies” for condominiums and suggest using them for claddings or roofs of nearby schools and sports complexes instead of land.

* Incentivising the use of daytime electricity is already practised and has recently been revised to accommodate the growing EV fleet through time-of-use tariffs. Alternatively, countries such as the UK urge consumers to use more electricity during the daytime to stabilise the grid, offering incentivised or free rates. This cuts storage needs and reduces payments for solar farms to turn off.

* Accelerate smart meter deployment as a priority. The current rollout has been slow, partly due to procurement bottlenecks, lack of urgency at the policy level, and cost factors. Treating smart meters as critical energy infrastructure with dedicated funding and a statutory rollout target would unlock the full value of every other intervention. The lack of such measures negatively affects time-of-use pricing, demand response, and rooftop solar export measurement.

The Transition Gap: Infrastructure and Finance

Beyond these short-term measures lies the long-term challenge: the transition financing gap. Moving to a distributed, renewable system requires smart grid infrastructure and, potentially, an India–Sri Lanka power interconnection for regional balancing. Power sector reforms open the door to private investment, bridging the gap where government financing falls short. This is exactly where Sri Lanka’s involvement with multilateral climate finance becomes crucial for “climate and crisis resilience infrastructure,” with the widest social distribution of benefits.

Every rooftop panel, every smart meter, every installed battery is a hedge against the next drought, El Niño, or Middle East price spike.

Preparedness, Not Crisis Management

Sri Lanka has always eventually recovered from its energy crises with the help of emergency procurement, IMF support, and the eventual return of the rains. But recovery is not resilience. The next drought, El Niño, and oil shock are all certainties. The opportunity now is to build a system that does not need rescuing.

By Dr Erandathie Pathiraja,
Research Fellow, Institute of Policy
Studies of Sri Lanka (IPS)

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Business

Focus on developing the Coconut and Food & Beverage export industries into a USD 3 billion economy within the next two years

Published

1 hour ago

2026/06/27

Priyan

A discussion was held on Friday (26) afternoon at the Presidential Secretariat between President Anura Kumara Dissanayake and industrialists in the coconut and food and beverage manufacturing sectors on developing the coconut and food and beverage export industries into a USD 3 billion economy within the next two years.

Accordingly, the objective is to expand the coconut-based export industry into a USD 2 billion sector and the food and beverage export industry into a USD 1 billion sector, and extensive discussions were held on the plans required to achieve these targets.

The President stated that the Government is prepared to provide every possible form of incentive necessary to promote export diversification and encourage value-added products.

Proposals and suggestions aimed at developing these industries were also presented during the meeting, and the President further noted that future plans would be formulated after taking all such proposals and recommendations into consideration.

The President also expressed agreement to provide incentives for establishing industries in the Northern Province and assured that the Government would extend its fullest support for setting up coconut-based manufacturing industries in the region.

Attention was also focused on plans to streamline the importation of raw materials required for export production while safeguarding domestic producers. President Anura Kumara Dissanayake further stated that his Government’s objective is to build the country’s economy into an export-oriented production economy by strengthening domestic supply chains.

Minister of Labour and Deputy Minister of Finance and Planning Anil Jayantha Fernando; Secretary to the Ministry of Finance, Planning and Economic Development, Dr Harshana Suriyapperuma; Secretary to the Ministry of Industry and Entrepreneurship Development, Thilaka Jayasundara; and Chairman of the Export Development Board, Mangala Wijesinghe, were among those present.

The President of the Sri Lanka Food Processors Association, Aruna Senanayake; Vice President Rasika Seneviratne; Managing Director of CBL Group, Shyamali Wickramasinghe; Chief Executive Officer of SriLankan Catering Ltd, Mangala Wijesekera; Managing Director of Ma’s Tropical Food Processing (Pvt) Ltd, Mario D. Alwis; Chairman of the Consumer Foods Sector of John Keells Food Holdings PLC, Daminda Gamlath; together with a number of leading business leaders from the food production sector were also present.

President’s Media Division (PMD)

Business

Sri Lanka Retailers’ Association unveils strategic roadmap for the future at 9th AGM

Published

11 hours ago

2026/06/27

Thilina Walpola

The newly elected Office Bearers and Executive Council of the Sri Lanka Retailers’ Association for 2026–2027.

The Sri Lanka Retailers’ Association (SLRA) successfully held its 9th Annual General Meeting (AGM) on 23 June 2026 at Hilton Colombo Residencies, bringing together members of the country’s organized retail sector to review the Association’s achievements over the past year and outline its strategic priorities for the future.

The AGM formally adopted the Annual Report and Audited Accounts for the financial year 2025/26 and elected the Office Bearers and Executive Council for the year 2026–2027.

Infiyaz M. Ali, Director of Healthguard Pharmacy Ltd, was announced as President of the Sri Lanka Retailers’ Association for 2026–2027. He will be supported by Mahesh Wijewardena, Executive Director and Group Chief Executive Officer of Singer (Sri Lanka) PLC, as Senior Vice President, and Kumar De Silva, CEO of SPAR SL Private Ltd, as Vice President.

The newly appointed Executive Council comprises senior representatives from leading retail organizations across Sri Lanka, reflecting the Association’s continued commitment to representing the diverse interests of the retail sector.

Addressing the gathering, President Infiyaz M. Ali emphasized the importance of collaboration, innovation, and industry advocacy in driving the next phase of growth for Sri Lanka’s retail sector.

“Retail continues to be one of the most dynamic sectors of the Sri Lankan economy. As consumer expectations evolve and technology reshapes the industry, the role of SLRA is to create opportunities for knowledge sharing, collaboration, and collective action. We remain committed to supporting our members and contributing to the sustainable growth of the retail ecosystem,” he stated.

The AGM was honoured by the presence of Wasantha Samarasinghe, Minister of Trade, Commerce, Food Security and Cooperative Development, who attended as Chief Guest. In his address, the Minister highlighted the importance of the retail sector as a key contributor to economic development, employment generation, and consumer welfare, while emphasizing the need for stronger public-private collaboration to strengthen the industry’s competitiveness.

Members also had the opportunity to gain insights from the Guest Speaker, Chayu Damsinghe, Head of Macroeconomic Advisory at Frontier Research, who shared perspectives on Sri Lanka’s economic outlook, emerging business trends, and the opportunities and challenges facing the private sector in the years ahead.

A key highlight of the evening was the presentation on the upcoming Sri Lanka Retail Forum 2026, SLRA’s flagship industry event, which will be held under the theme “Retail Without Boundaries – Building the Next Growth Engine.” The forum is expected to bring together more than 500 industry leaders, retailers, entrepreneurs, policymakers, technology providers, and investors to discuss the trends shaping the future of retail.

The Association reaffirmed its commitment to supporting retailers through industry advocacy, professional development initiatives, policy engagement, and knowledge-sharing platforms that foster innovation and business growth.

Since its establishment in 2015, SLRA has played a pivotal role in bringing together retailers from diverse sectors including FMCG, fashion, healthcare, consumer electronics, and digital commerce, creating a unified voice for the industry.

With a renewed leadership team and an ambitious programme of activities planned for the year ahead, SLRA looks forward to working closely with its members and stakeholders to strengthen Sri Lanka’s retail sector and contribute to the country’s economic development.

Business

Month-end profit-takings drive stock trading; indices up

Published

11 hours ago

2026/06/27

Thilina Walpola

CSE trading was yesterday driven by month- end profit-takings, market analysts said.Amid those developments both indices moved upwards. The All Share Price Index went up by 2.77 points, while the S and P SL20 rose by 10.91 points.

Turnover stood at Rs 1.91 billion with two crossings. Those crossings were; ACL Cables 2.1 million shares crossed to the tune of 209 million; its shares traded at Rs 100 and Hayleys 100,000 shares crossed for Rs 24.1 million; its shares traded at Rs 240.

In the retail market companies that mainly contributed to the turnover were: Hayleys Rs 141 million (587,000 shares traded), Lanka Realty Rs 105 million (1.8 million shares traded), CIC (Non Voting) Rs 81 million (3.1 million shares traded), HNB Finance Rs 79 million (8.3 million shares traded), Dialog Axiata Rs 56.7 million (1.2 million shares traded), Colombo Dockyard Rs 48.6 million (371,000 shares traded) and Singer SriLanka Rs 46.6 million (586,000 shares crossed).

During the day 63.9 million share volumes changed hands in 18300 transactions.

It is said that manufacturing sector counters, especially Hayleys, performed well while construction related companies, especially ACL Cables, also performed well. Banking sector counters, especially HNB, were also notable on the floor.

Meanwhile, Lee Hedges concluded negotiations with Amana Bank to sell and transfer its land and premises in Kollupitiya for a total consideration of Rs 2.7 billion, with the transaction completed on June 25, 2026.

Lee Hedges shares were trading up 2.52 percent, at Rs.325.75, while Amana Bank was up 1.13 percent at Rs.26.80.

Yesterday the rupee was quoted at Rs 336.90/337.00 to the US dollar in the spot market, from Rs 337.25/35 the previous day, while bond yields were quoted slightly higher, dealers said.

The telegraphic transfer rate for Sri Lanka’s rupee against the US dollar was 332.3416 buying, 342.0372 selling; the euro was 376.2315 selling, 389.9580 buying; and the pound was 436.5994 buying, 451.8110 selling.

By Hiran H Senewiratne