Charting Sri Lanka’s path to sustainable energy, innovating for greener future with energy wheeling, green hydrogen exportation

Regen Renewables Managing Director/CEO, National Chamber Of Commerce Of Sri Lanka Renewable Energy Council Chairman Dr. Lakmal Fernando 

As the world stands on the brink of a new era in energy, the industry finds itself at a pivotal juncture. The demand for cleaner, more efficient power sources is accelerating, driven by the pressing need to combat climate change and ensure energy security for a rapidly growing global population. As such, the energy sector is undergoing a transformative shift, embracing innovation and sustainability to meet these challenges head-on.

Renewable energy sources are at the forefront of this transformation. Wind, solar, and hydroelectric power are not just supplementing traditional fossil fuels; they are increasingly replacing them. The transition to a sustainable energy future is also underpinned by supportive policies and substantial investment. Governments around the world are implementing policies to promote clean energy, such as subsidies for renewable power projects, carbon pricing mechanisms, and stringent emissions regulations. The private sector is also playing a crucial role, with investors increasingly prioritising environmental, social, and governance (ESG) criteria.

Amidst this transformation, Sri Lanka finds itself at a crucial juncture in its energy evolution. Driven by an urgent need to address climate change and secure its energy supply, the nation is increasingly pivoting towards renewable energy sources to shape its future energy framework. Providing his perspective on what Sri Lanka’s ideal energy strategy should be, Regen Renewables Managing Director/CEO Dr. Lakmal Fernando, a leading voice in the country’s renewable energy sector shared his insights.

He said that Sri Lanka’s energy sector currently is at crossroads, aiming to transition from traditional fossil fuels to a more sustainable and resilient energy system. The Sri Lankan government aims to achieve 70% renewable energy dependent grid by 2030. Electricity in Sri Lanka is currently generated from three main sources: thermal power (including coal and fuel oil), hydropower, and non-conventional renewable energy sources such as solar and wind power.

Dr. Fernando also pointed out that Sri Lanka’s geographical position offers vast potential for solar energy. “The country enjoys high solar insolation levels, making it ideal for multiples of medium scale solar power projects. The Government therefore should focus on solar energy and aim to decentralise power generation, increase grid access, and reduce the strain on the national grid by way of large capacity plants. Rooftop solar initiatives and expansive solar farms will play a crucial role in achieving these objectives. Transitioning to rooftop solar power can contribute to lowering carbon emissions and mitigating environmental degradation. 

“This shift towards clean energy aligns with global commitments to reduce greenhouse gas emissions and promotes Sri Lanka’s image as a responsible steward of the environment. To fully capitalise on rooftop solar power, a supportive policy framework, clear vision and a roadmap is essential. Sri Lanka can incentivise rooftop solar installations through tax holidays, and net accounting framework that allow consumers to sell excess electricity back to the utility. Clear regulations and streamlined permitting processes can also facilitate easier and faster deployment of rooftop solar systems, encouraging widespread adoption among homeowners and businesses alike.”

He further stated, “Local individuals, entrepreneurs, and companies are keen to contribute to the renewable energy sector. To support this, the government and the Ceylon Electricity Board (CEB) must address and introduce a multi-buyer model along with energy wheeling. Energy wheeling involves the use of the national grid to transport electricity generated from various sources, including renewable energy projects, to consumers across different regions. This mechanism allows for a more flexible and efficient distribution of power, ensuring that electricity can be delivered where it is needed most without being confined to the immediate vicinity of generation sites.”

Dr. Fernando went on to explain, “Energy Wheeling also optimises the utilisation of existing grid infrastructure, minimising the need for costly expansions and reducing energy losses during transmission as the projects can be located closer the utilisation location. This enhancement not only bolsters grid reliability but also ensures a more cost-effective power supply across the nation. One of the pivotal benefits of energy wheeling lies in its capacity to integrate renewable energy sources like solar and wind power into Sri Lanka’s energy mix. Energy wheeling can also serve as a magnet for manufacturers/exporters by fostering a predictable and transparent energy market. This predictability appeals to investors, particularly in the renewable energy sector, who seek reliable mechanisms to transmit and distribute power generated from their investments.”

He added, “Additionally, large-scale energy consumers such as industries and businesses stand to benefit significantly from energy wheeling. They can procure electricity directly from renewable energy producers at competitive rates, potentially reducing their operational costs and enhancing their competitiveness in the market. By facilitating the adoption of renewable energy, energy wheeling plays a crucial role in mitigating Sri Lanka’s carbon footprint. By reducing reliance on fossil fuels, it contributes to the nation’s efforts to combat climate change and achieve its environmental sustainability goals. One of the most important key factors in energy wheeling is the exporters and bulk consumers of energy can plan their cashflows and better prepared with an ability to predict their one of the major cost items – Energy.”

Dr. Fernando stressed that to achieve these goals, the Sri Lankan Government must establish a robust regulatory framework to govern energy wheeling transactions and ensure equitable grid access for all stakeholders. “The framework should prioritise transparency and fairness by setting tariffs that accurately reflect transmission costs and guaranteeing equal opportunity for all energy producers to connect to the grid. Introducing a multi-buyer model is also crucial, allowing multiple entities to buy and sell electricity in a competitive market environment. This approach not only helps in determining fair market prices for energy but also stimulates investment in the sector. The overall success in optimising energy wheeling will hinge on collaborative efforts among diverse stakeholders, including Government bodies, private investors, energy producers, and consumers. Local entrepreneurs and companies can also play pivotal roles, contributing to both the generation and distribution of renewable energy across the country.”

He also emphasised that the country should also explore the potential of geothermal energy, tapping into its abundant natural resources. “By leveraging geothermal energy, Sri Lanka can further reduce its dependence on imported fossil fuels, lower greenhouse gas emissions, and enhance the resilience of its energy system.” 

Dr. Fernando further noted that exporting renewable energy offers significant economic opportunities, as neighbouring South Asian countries seek sustainable energy sources to meet growing demands. “The revenue from these exports could strengthen the national economy, support infrastructure development, and fund further renewable energy projects. Conventional energy export mechanism through HVDC lines can be replaced with energy exportation through Green Hydrogen form that is produced without carbon emissions, making it a sustainable alternative to fossil fuels,” he said. 

He also added that to foster a hydrogen economy, Sri Lanka should develop a supportive policy framework and regulatory environment. “This includes developing an investor friendly renewable energy policy and make one government agency accountable for achieving RE targets. Limited tax holidays can be an incentive to hydrogen production infrastructure, and agreements with potential export markets to ensure a stable demand for Sri Lankan hydrogen in the emerging European markets. As such, embracing hydrogen exportation represents a significant opportunity for Sri Lanka to capitalise on its renewable energy potential, strategic location, and contribute to global efforts towards sustainability. By establishing a supportive regulatory framework, investing in infrastructure, and fostering innovation, Sri Lanka can position itself as a key player in the emerging hydrogen economy, driving economic growth and environmental stewardship simultaneously,” he stated.

Dr. Fernando concluded by saying, “With continued innovation, strategic investment, and supportive policies, the vision of a sustainable, resilient, and inclusive energy system is within our reach. As we move forward, the energy sector’s ability to adapt and evolve will be crucial in shaping a future that meets the needs of both people and the planet. The journey is complex, but the destination—a world powered by clean, reliable, and affordable energy—is one worth striving for.”