The Asian Development Bank (ADB) has approved a $200 million loan to enhance Sri Lanka’s power sector infrastructure. This initiative aims to improve the reliability of transmission and distribution networks while facilitating the integration of renewable energy sources.
“Reforming the power sector alongside targeted infrastructure upgrades is vital to advancing competitive renewable energy development and reducing power generation costs,” said ADB Country Director for Sri Lanka, Takafumi Kadono. “This project will support the government’s goal of increasing renewable energy’s share in the electricity mix, reducing power interruptions, and minimizing transmission and distribution losses through modernized infrastructure and digital solutions.”
Sri Lanka reached 100% household electrification in 2016, with peak demand hitting approximately 2,800 megawatts (MW) in 2023. The demand is expected to grow substantially by 2030. Despite a total installed capacity of 5,191 MW in 2023, nearly half of the country’s electricity was generated from thermal power, highlighting the challenges of transitioning to sustainable energy. Sri Lanka has committed to generating 70% of its electricity from renewables by 2030 and achieving carbon neutrality by 2050.
The Power System Strengthening and Renewable Energy Integration Project is designed to expand climate-resilient transmission and distribution capacity. It will introduce new 220-kilovolt and 132-kilovolt transmission lines and substations, modernize medium-voltage networks, and upgrade grid protection systems. The project includes Sri Lanka’s first grid-scale battery energy storage system, a renewable energy monitoring center, and advanced network automation systems equipped with SCADA and remote terminal units. These upgrades will provide operators with real-time data, improving efficiency and reliability in power delivery.
ADB’s support hinges on ongoing reforms in Sri Lanka’s power sector to enhance financial sustainability, adopt cost-reflective tariffs, and foster competitive renewable energy markets. This project aligns with these reforms, focusing on integrating renewable energy and improving overall sector performance.
The initiative will also strengthen institutional capacities at the Ceylon Electricity Board (CEB) and Lanka Electric Company (LECO), the sole power utilities in Sri Lanka. These upgrades aim to improve their ability to manage renewable energy systems, implement digital solutions, and accommodate more rooftop solar installations.
Additional components of the project include career development programs for female staff at CEB and LECO, community awareness campaigns on safe electricity use, and training initiatives for women-led groups to adopt clean energy solutions.
Of the total funding, $150 million will be allocated to CEB, while $50 million will support LECO, with both amounts guaranteed by the Democratic Socialist Republic of Sri Lanka.
ADB, established in 1966 and owned by 69 members, continues to work toward a prosperous, inclusive, resilient, and sustainable Asia-Pacific region, while striving to eradicate extreme poverty.
ADB
