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ECONOMYNEXT – Sri Lanka is considering energy transition legislation, similar to that in South Australia, to open up power generation and power distribution to the private sector, President Ranil Wickremesinghe said.
“It may be useful for us to have energy transition legislation. One is we are going to a new sector. We are opening it up, not merely for power generation but for power distribution. We will have the private sector playing the lead role. So it is going to be private-sector-driven,” Wickremesinghe told an energy discussion held with the World Bank.
World Bank Country Director for Sri Lanka, Faris H Hadad-Zervos, said it was important to enhance institutional capacity and regulatory frameworks for renewable energy procurement to attract private sector investments.
“The Government of Sri Lanka has embarked on ambitious power sector reforms to improve governance, efficiency, and financial sustainability. The World Bank Group, in collaboration with other partners, supports these reforms through policy advice, technical assistance, and financial products,” Hadad-Zervos was quoted as saying by the president’s media division.
Hadad-Zervos said there was a need for a comprehensive roadmap and clear procurement frameworks to attract private investments for renewable energy projects.
He called for joint action from stakeholders, including policymakers, development partners, and the private sector, to realize Sri Lanka’s ambitious energy goals.
Sri Lanka’s ambitious renewable energy targets include aiming for 70% renewable energy by 2030 and advancing carbon neutrality to 2040.
Private sector investments and innovations will be crucial in transforming Sri Lanka’s energy sector, generating employment, and enhancing energy security, Hadad-Zervos said.
“We have sufficient potential to emerge as a player in the field of renewable energy. Sri Lanka’s dry zone and its potential for wind power are such that we have identified this sector for rapid development,” Wickremesinghe said.
Sri Lanka has already begun on supporting legislation the president said.
The Electricity Reform Bill was approved by the Supreme Court with a number of amendments, and will be debated in Parliament soon.
An Economic Transformation Bill has already been tabled in Parliament. A Climate Change Act is being drafted.
“There is no other way in which we can achieve our targets by 2040 or, for that matter, 2050. The Ministry of Finance will also work with others. The Ministry of Environment and the Ministry of Power will work on a green finance policy. So the green finance policy will also drive us. These are the components that we will have for the transition into green hydrogen and using renewable energy,” Wickremesinghe said.
“There is significant potential for green hydrogen. But there are many more questions to be answered about green hydrogen today than earlier. We have to work on what the cost is and when it will be attractive for private-sector investments.”
India has already included the export of green hydrogen in its plans, with a fairly substantial amount of green hydrogen.
“What is the framework we have for the exploitation of renewable energy in Sri Lanka, and what will be the future trends of green hydrogen? About a month ago, PricewaterhouseCoopers put out its latest report on green hydrogen, which is very interesting.
“We have to call everyone in. We don’t have full expertise, I must admit. We need assistance from outside. So World Bank, ADB, and others who are interested, certainly come in. Because we are committed to a green economy and we want to go ahead.
“The rest of the details I leave it to you to tell the government what needs to be done.”
Sri Lanka faces several challenges in integrating renewable energy sources, including a financial crisis deterring high-level developers from investing in the country.
Local developers and some international partnerships have to bear significant risks, Power and Energy Minister Kanchana Wijesekera told the forum.
“Discussions with development partners have focused on mitigating these risks through financial and technical tools,” Wijesekera said.
Infrastructure development is another significant hurdle, particularly in identified renewable energy zones in the northern and eastern parts of Sri Lanka.
There was a “need for additional technical assistance in evaluating projects and determining appropriate pricing to attract the right investors with suitable technology and ensure competitive pricing for consumers.” (Colombo/May30/2024)
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