President urged to reconsider rooftop solar tariff revisions

Javid Kamil - President

Sanjeevan S - Secretary

The Solar Industries Association (SIA), representing over 1,000 companies and 40,000 workers in Sri Lanka’s rooftop solar sector, has expressed grave concern regarding the proposed drastic reduction in rooftop solar feed-in tariffs. 

“This decision will have catastrophic consequences for our industry, Sri Lanka’s renewable energy goals, and the broader economy,” said the SIA in a statement, and issued an urgent appeal to President Anura Kumara Disanayake for reconsideration of the proposed move. Following is the statement issued by SIA President Javid Kamil and Secretary S. Sanjeevan.

Economic and industrial consequences of the proposed tariff reduction

1. Investment destruction and massive job losses

The proposed tariff reduction will destabilise the industry, leading to the collapse of numerous small and medium-sized enterprises (SMEs) and the potential loss of 40,000 jobs. Over 100,000 existing rooftop solar connections – primarily owned by middle-class families and pensioners – will be financially impacted, causing severe economic distress. The ripple effects of this collapse will extend beyond the solar industry, affecting supporting industries, financial institutions, and local economies.

2. Loss of investor confidence

Frequent and significant tariff fluctuations will deter both local and foreign investments in renewable energy. This instability threatens Sri Lanka’s ability to meet its renewable energy targets and transition towards energy independence. Without a stable and predictable policy framework, long-term investments in the sector will diminish, setting back the country’s progress in clean energy adoption.

3. Increased cost of energy procurement

If energy is not procured from rooftop solar, the utility will have to purchase electricity at a significantly higher cost from thermal and diesel generation plants. This will:

• Increase generation costs.
• Lead to higher electricity tariffs for consumers.
• Place additional financial strain on the national economy.

4. Risk to grid stability and maintenance

With unviable tariffs, companies will struggle to provide essential Operations and Maintenance (O&M) for the existing 100,000 rooftop solar connections. This will compromise grid stability and the longevity of these installations, putting at risk the reliability of power supply for thousands of homes and businesses.

Flaws in the tariff calculation model

The proposed tariff reduction is based on flawed assumptions, including:

• Incorrect Plant Load Factor (PLF): The committee’s report assumes a PLF of 16%, whereas actual industry data suggests a more accurate range of 13–14%.
• Unrealistic Return on Equity (ROE) and Weighted Average Cost of Capital (WACC): The financial parameters used in the calculations are unjustifiably low, making solar investments unfeasible.

The unique advantages of rooftop solar

The proposal fails to acknowledge the distinct advantages of rooftop solar, including:

• Efficient land utilisation without requiring large-scale Government investment.
• Reduction in transmission and distribution losses, improving overall energy efficiency.
• Strong contribution to national energy security – 88% of Sri Lanka’s 1,800 MW solar capacity comes from rooftop solar.

Addressing the power outage: A misguided blame on solar

Recent claims that rooftop solar contributed to the islandwide power outage are misleading.

The real issues stem from:

• The Ceylon Electricity Board’s (CEB) failure to invest in battery storage, despite its inclusion in the Long-Term Generation Plan.
• The lack of weather forecasting technology and demand-side management systems.

Globally, countries with high rooftop solar penetration, such as Australia (25,000 MW), maintain grid stability through proper storage and grid management. Sri Lanka must follow this model instead of penalising solar producers.

Recommendations for a sustainable future

We urge President Anura Kumara Disanayake to:

1. Reject the proposed tariff reductions that will negatively impact the solar industry and the economy.

2. Conduct a transparent and independent investigation into the recent power outage.

3. Recognise the economic and social benefits of rooftop solar and establish a stable, predictable policy framework.

4. Implement demand-side management and time-of-use tariffs to optimise grid usage.

5. Direct the CEB to install battery storage systems and adopt weather forecasting technology to enhance grid resilience.

6. Consider the economic impact of alternative energy procurement, as purchasing power from thermal and diesel sources will lead to significantly higher costs for the country.

Conclusion

The rooftop solar industry is a cornerstone of Sri Lanka’s renewable energy strategy and economic development. A well-structured, stable policy framework will encourage long-term investments, create jobs, and contribute to energy security.

We request an urgent review of the proposed tariff structure and the implementation of a viable tariff that ensures the sustainable growth of Sri Lanka’s rooftop solar industry. The potential loss of 40,000 jobs must not be ignored. The SIA remains committed to collaborating with the Government to achieve a sustainable and prosperous future for the nation.