Power sector gets $ 200 m ADB boost

• Approves new loan to advance power system expansion, renewable energy integration in SL
• ADB Country Director Takafumi Kadono emphasises importance of power sector reforms to enable competitive renewable energy development and reduce generation costs
• Of $ 200 m loan, $ 150 m will go to CEB and $ 50 m to LECO, both guaranteed by Govt.

The Asian Develo-pment Bank (ADB) has approved a $ 200 million loan to upgrade Sri Lanka’s power sector infrastructure, enhancing the reliability of transmission and distribution networks and facilitating greater integration of renewable energy.

ADB Country Director for Sri Lanka Takafumi Kadono said: “Driving power sector reforms, combined with targeted infrastructure interventions, is essential to facilitate competitive renewable energy development and reduce power generation costs. By expanding and modernising infrastructure and incorporating digitalisation solutions, this project will support the Government’s goal to increase integration of renewable energy in the electricity mix, reduce power interruptions, and minimise transmission and distribution losses.”



Sri Lanka achieved 100% household electrification in 2016. Peak demand reached around 2,800 megawatts (MW) in 2023, including contributions from distributed renewable energy, and is projected to grow significantly by 2030. While Sri Lanka’s total installed power generation capacity reached 5,191 MW in 2023, about 50% of the country’s electricity generation in 2023 came from thermal power plants, underscoring the challenges in transitioning to a more sustainable energy mix. In its updated nationally determined contribution, the Government has set an ambitious target of 70% electricity generation from renewables by 2030 and carbon neutrality in electricity generation by 2050.

The Power System Strengthening and Renewable Energy Integration Project will enhance climate resilience and expand the capacity of transmission and distribution networks, enabling greater integration of renewable energy. The project will expand the 220-kilovolt and 132-kilovolt transmission infrastructure with new transmission lines and substations, modernise the medium voltage distribution network, and upgrade grid protection systems. The project will introduce Sri Lanka’s first grid-scale battery energy storage system at the transmission level, establish a renewable energy centre to forecast and monitor renewable energy generation, and implement network automation systems with SCADA and remote terminal units, providing operators with real-time data and alerts to ensure efficient power delivery.

The approval of this project reflects the significant progress made by Sri Lanka in advancing power sector reforms, which aims to enhance financial sustainability and ensure cost recovery tariff revisions and competitive renewable energy development. The ADB’s support for infrastructure upgrades is contingent on these reforms, recognising their critical role in renewable energy integration and improving the sector’s overall performance.

The project will strengthen the institutional capacities of the Ceylon Electricity Board (CEB) and the Lanka Electric Company (LECO) – the only utilities in the country responsible for power delivery to end-consumers. The project will improve their ability to integrate and manage renewable energy systems, adopt digital solutions, and enhance the hosting capacity of rooftop solar installations. 

Various career development activities for CEB and LECO female staff, awareness-raising programs on safe and productive use of electricity, and training on adopting clean energy solutions for women-led groups and businesses will be implemented. 

Of the total amount, $ 150 million will be provided to the CEB and $ 50 million will go to the LECO. Both financing will be guaranteed by the Democratic Socialist Republic of Sri Lanka.