Overview

In June 2020, USAID provided a $600,000 grant to the National Association of Regulatory Utility Commissioners (NARUC) to support the Public Utilities Commission of Sri Lanka in analyzing Sri Lanka’s energy cost and tariff structure, in furtherance of President Rajapaksa’s objective of hydro and renewable sources accounting for 80% of Sri Lanka’s overall energy mix by 2030.  In May 2021, USAID greatly expanded this effort by awarding a $19 million energy project to help the Government of Sri Lanka make its power sector market-based, secure, reliable, and sustainable. The project will facilitate access to capital and attract investments to increase deployment of renewable energy and advanced technologies. It will also expand the private sector’s role in the power system, enhance competitiveness, and encourage adoption of energy efficiency standards. 

Implementing Partner: National Association of Regulatory Utility Commissioners (NARUC); Total Estimated Cost: $600,000; Performance Period: June 2020 – December 2021
Implementing Partner: Chemonics International; Total Estimated Cost: $18.9 million; Performance Period: May 2021 – May 2026

Objectives

In pursuing its vision of a clean, secure, and market-driven power sector, Sri Lanka faces considerable systemic challenges, including a problematic tariff review process, incomplete long-term planning, mounting financial imbalances, and a lack of competition. To help Sri Lanka overcome these obstacles, USAID’s Energy Program aims to:

• Improve the cost-reflectivity of electricity tariffs.
• Increase the deployment of renewable energy.
• Improve demand-side management.
• Deploy advanced technologies.

Areas of Focus

• EXPANSION PLAN: The project will help to develop a transmission expansion plan that aligns generation capacity and transmission infrastructure with the government’s renewable energy goals for 2030. It will review and make recommendations regarding existing energy tariffs, methodology, and tariff structure, and enable a tariff study based on the expansion plan. This will result in higher renewable energy penetration and reduced requirements for peak generation, thus lowering the cost of supply and reducing the average tariff. 
• RENEWABLE ENERGY: To help meet the government’s renewable energy goals for 2030, the project will identify low-cost options for renewable energy and examine the procurement process to improve competitive tendering processes. It will provide advisory assistance to renewable energy projects that meet Ceylon Electricity Board (CEB) tender criteria, engage with developers to foster capacity to participate in tenders and auctions, and engage financial institutions to expand lending linked to CEB procurements. Further, the activity will provide technical assistance to CEB to build grid capacity for variable renewable energy generation.
• ENERGY EFFICIENCY: The project will work with public sector stakeholders to strengthen incentives for energy efficiency, while working with the private sector to increase energy efficiency projects. The project will work with government agencies to support new energy efficient standards and codes in residential, public, and industrial buildings – especially in areas with limited generation capacity. Additionally, the project will incentivize privately implemented energy efficiency projects in business and industry and encourage public actions, such as energy efficient public lighting.
• ADVANCED TECHNOLOGIES:  The project will evaluate the potential of incubators within the business community, including advanced energy technology start-ups. It will support training, assessments, testing, and pilot demonstrations of technologies and encourage the deployment of innovative energy-sector technologies, such as battery energy storage systems, electric vehicles, smart meters, and efficient cold chain and heating, ventilation, and air conditioning (HVAC) technologies. 

Expected Results

• Increase the pipeline of renewable energy projects to at least 800 MW.
• Increase rooftop solar deployment.
• Identify priority energy efficiency options and support counterparts to implement.
• Design a tariff-setting process, including utility data provision, public communication, stakeholder engagement, and regulatory decisions.
• Improve energy sector planning.
• Improve the competitive tendering processes employed by power sector actors.