Sri Lanka’s Ministry of Power is working on reducing electricity generation costs to 25 rupees per unit by mid-2025 through competitive bidding, according to Energy Minister Kumara Jayakoday. In July 2024, the average cost per unit of electricity was 37 rupees, but this has since decreased to 29 rupees.
The administration of the National People’s Power has pledged to reduce electricity bills by 30 percent over three years, as outlined in their election platform. Minister Jayakoday stated, “We are planning to bring generation costs down to 25 rupees. If we achieve this, there will be a 32 percent reduction in costs. To reduce a unit to 25 rupees, the purchase price must be below 25 rupees.”
He emphasized that the ministry aims to procure all electricity units through competitive bidding to lower costs, moving away from feed-in tariffs. “Under competitive bidding, crony businesses will not be able to overcharge the Ceylon Electricity Board,” Minister Jayakoday explained. “Through this approach, we were able to reduce the purchase price of wind power to 12 rupees per unit. Battery storage costs have also fallen below 20 rupees. We anticipate further cost reductions in the future.”
However, due to significant currency depreciation by the central bank, renewable power investors are now seeking tariffs in US dollars. When the central bank depreciates the rupee, the costs of all power, except for the Ceylon Electricity Board’s renewable plants with repaid loans, increase, challenging the government’s economic strategy.
(Colombo/Jan07/2025)
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