Renewable energy sector poised to receive US $ 200mn inflows over next 6-8 months

• Banks, with CB’s permission, promote SL’s renewable energy goals to raise foreign funds for sector 
• Majority of foreign funds expected to come into country for solar energy sector development 
• Revised NDCs commit for 70% power generation through renewable energy sources by 2030
• Solar industry given new target to increase installed capacity to 2700 MW, from current 400 MW 

By Nishel Fernando
Sri Lanka’s renewable energy sector is likely to see US $ 200 million worth of foreign inflows to the sector, through the banking sector over the next six to eight-month horizon, as the government moves to commit for 70 percent power generation through renewable energy sources by 2030.

Taking part in a webinar themed ‘Solar Roofs Market Outlook: Sri Lanka - 2021’, organised by India-based FirstView Group this week, the newly appointed Board Member of the Sri Lanka Sustainable Energy Authority (SEA) and Solar Industries Association of Sri Lanka (SIASL) General Secretary Lakmal Fernando revealed that the country’s banking sector started promoting the country’s renewable energy goals in an attempt to raise foreign funds for the sector’s development, with the permission of the Central Bank.

Therefore, he predicted that the country is likely to see around US $ 200 million foreign exchange inflows through the banking sector over the next six to eight months.

In particular, he expects the majority of foreign funds to come into the country for the development of the solar energy sector.

The Cabinet of Ministers approved the country’s revised Nationally Determined Contributions (NDCs) under the Paris Climate Agreement, recently. According to the revised NDCs, the country commits for 70 percent power generation through renewable energy sources by 2030, with a long-term target to achieve carbon neutrality for the power sector in 2050.

Under the new policy, Fernando noted that the solar industry is given a target to increase its installed capacity to the 2700 MW target by 2030, from the current 400 MW. Consequently, he expects the industry to contribute to save foreign exchange outflows worth of US $ 540 million per annum, compared to the current US $ 90 million per annum.

The country received US $ 1.73 billion in climate finance flows into adaption measures (US $ 1.73 billion), followed by mitigation finance (US $ 1.4 billion) and US $ 245.8 million into cross-cutting measures, according to a presentation made by the United Nations Framework Convention on Climate Change (UNFCC), early last year. In addition, the country attracted US $ 65.7 million in private climate finance flows. 

In order to achieve this target, the rooftop solar sector needs to achieve a compound annual growth rate (CAGR) of 22 percent from 2021-2030.

Sri Lanka’s rooftop solar sector currently consists of 300 firms, employing over 10,000 workforces and providing services to around 33,000 green customers. 

Fernando noted that removing institutional barriers would be the key hurdle for the solar sector achieve its goal. However, he was optimistic of the prospective while noting that the top management of the Ceylon Electricity Board (CEB) has come on board with the new government policy.