ADB Approves $30M Facility to Boost Sri Lanka's Renewable Energy Goals and Power Sector Sustainability

Initiative Aims to Bolster Hydropower, Foster Renewable Integration, and Enhance Energy Transition Efforts Amid Economic Challenges.

The Asian Development Bank (ADB) has sanctioned a $30 million Small Expenditure Financing Facility (SEFF) for Sri Lanka’s Ceylon Electricity Board (CEB), backed by a guarantee from the Sri Lankan government. The facility seeks to support the operational sustainability of energy sector projects while advancing the country’s ambitious renewable energy targets.

“This SEFF marks a significant milestone for Sri Lanka as it addresses both immediate operational challenges and long-term goals to expand renewable energy capacity,” said ADB Country Director for Sri Lanka, Takafumi Kadono. The facility will finance post-completion activities for ADB-funded projects, feasibility studies for advanced renewable energy technologies, grid upgrades, and capacity-building initiatives.

The Moragolla Hydropower Plant, financed by the ADB, will receive $15 million from the facility to ensure its operational sustainability. The remaining $15 million will support preparatory work for integrating renewable energy sources into the national grid.

Renewable Energy Goals by 2030

Sri Lanka aims to achieve 70% of its electricity generation from renewable energy sources by 2030. This target requires substantial investments in infrastructure, including grid modernization and energy storage, alongside policy reforms to encourage private sector involvement and attract international financing.

The SEFF initiative aligns with ADB’s Power Sector Reforms and Financial Sustainability Program and the recently approved Power System Strengthening and Renewable Energy Integration project. Together, these programs support Sri Lanka’s energy transition and financial sustainability in the power sector.

Comprehensive Support for Sector Reforms

The facility is designed to complement ongoing reforms in Sri Lanka’s energy sector. These reforms include implementing cost-recovery tariff adjustments, fostering competitive renewable energy markets, and enhancing the CEB’s capacity to manage renewable systems and adopt advanced technologies.

ADB’s continued support highlights the progress Sri Lanka has made in critical power sector reforms, particularly in advancing financial sustainability and enabling renewable energy development.

Broader Impact on Energy Transition

The SEFF will enable the CEB to integrate digital solutions, streamline renewable energy operations, and bolster resilience within the sector. These efforts will help Sri Lanka navigate its energy transition amid economic challenges while ensuring reliable and sustainable power for its citizens.

Next Steps

Of the $30 million approved, $15 million will enhance operations at the Moragolla Hydropower Plant, while the other half will finance preparatory initiatives for renewable energy integration, including advanced grid technologies and feasibility studies for emerging energy solutions.

ADB’s continued collaboration with Sri Lanka underlines its commitment to empowering the nation’s renewable energy journey, positioning it as a regional leader in sustainable energy transformation.