Sri Lanka approves US$80.5 million solar power project

Sri Lanka’s cabinet on Tuesday approved a loan and grant agreement for a project worth US$80.5 million aimed at expanding rooftop solar power generation, introducing virtual net metering, and modernising the electricity distribution network. The financing package includes a concessional loan of US$35 million from the Asian Development Bank (ADB), a grant of 15.4 million euros from the European Union, and a grant of US$5.5 million from the Japan Fund for the Joint Crediting Mechanism trust fund. Counterpart funding from implementing agencies will cover the remaining project costs. The cabinet approved a proposal by President Anura Kumara Dissanayake, in his capacity as finance, planning, and economic development minister, to sign the agreements. The government had previously authorised negotiations with the ADB and other financing partners. Under the Rooftop Solar Power Generation Aggregation and Virtual Net Metering Project, state-owned Electricity Distribution Lanka (Private) Limited and Lanka Electricity Company (Private) Limited will develop a utility-led model to aggregate electricity generated by large-scale rooftop solar systems and allocate electricity credits to eligible consumers. The scheme is intended to allow micro, small, and medium enterprises as well as community organisations to benefit from solar electricity without having to install solar panels on their own premises. Eligible users facing financial or space constraints will receive allocations through a social compensation mechanism designed to reduce electricity costs. The project is expected to support approximately 25 megawatt-peak of rooftop solar capacity. It will also finance digital upgrades to the distribution networks of both utilities and enhance their ability to accommodate additional distributed renewable energy. ADB Country Director for Sri Lanka Shannon Cowlin said the project will help Sri Lanka expand access to affordable renewable energy while strengthening grid readiness for a more resilient and inclusive power sector. It will support small businesses, advance grid modernisation and digitalisation, and create new opportunities for women and youth in the clean energy industry. Training facilities will also be established to develop green sector skills, strengthen women’s participation, and build technical capacity in advanced low-carbon technologies.