Sri Lanka's electricity price hike sparks interest in solar

by Amantha Perera | @AmanthaP | Thomson Reuters Foundation
Wednesday, 12 June 2013 11:41 GMT

Electricity meters are seen on a board at a housing complex in Colombo, June 7, 2013. REUTERS/Dinuka Liyanawatte

Image Caption and Rights Information

Heavy power users are starting to take up solar, but installation costs are still too high for most to afford

COLOMBO (Thomson Reuters Foundation) – Angelo de Silva’s mobile phone hasn’t stopped ringing of late. In the month since the Sri Lankan government hiked electricity prices, the boss of Access Solar has been fielding one call after another, answering queries about the solar panels his company provides.

“Yesterday I logged three-and-a-half hours of talk time on my mobile,” he told Thomson Reuters Foundation, adding that callers wanted to find out how solar panels can help them reduce their electricity bills.

It is the same for Herath Dissanayake, head of Wisdom Solar, another company specialising in solar power. “Right now there is a lot of interest, especially from households who are high-end consumers,” Dissanayake said.

The new tariff structure was first announced in April by the debt-laden, state-owned Ceylon Electricity Board (CEB), after repeated requests from the International Monetary Fund for government-run power firms to stem mounting losses.

But the initial plans for rate changes sparked indignation and public protests, as they would have hit all domestic consumers, including the poorest.

In response, Sri Lankan President Mahinda Rajapaksa ordered that the price increases – which took effect from May’s bills - should not apply to consumers using 60 units or less per month.

There are over 5 million households connected to Sri Lanka’s national grid, but of these, only 3 percent use more than 180 units per month. For households with monthly usage of 180 units, bills have risen from around Rs 3,800 ($30) to Rs 7,500 ($60), according to energy experts.

“It is an artificial increase, where the low-level consumers pay less, and at the high end, the consumers are saddled with more surcharges,” said Tilak Siyambalapitiya, an energy expert who has worked in Sri Lanka and the Middle East and is now managing director of RMA Energy Consultants.

The revised pricing structure means that a household using 20 units or less per month will pay only Rs 3.60 ($0.03) per unit, while a customer whose monthly usage is 1,000 units will pay around Rs 50 ($0.40) per unit.


This additional cost burden is pushing heavy electricity users to seek relief by considering a switch to renewable energy sources, especially solar.

Both Access Solar and Wisdom Solar have seen fresh interest from households that consume between 600 and 1,000 units per month, now costing Rs 30,000 ($250) to Rs 50,000 ($450).

“It makes business sense for them, because they can recoup their investment in three to four years,” Access Solar’s de Silva said.

Since the tariff hike, Access Solar has installed new systems to the tune of Rs 25 million ($200,000). Wisdom Solar is currently installing 12 units, with a base value of around Rs 1 million rupees ($ 8,000) each.

Energy expert Siyambalapitiya said it was too early to predict whether the electricity rate hike might create a mass movement towards solar energy. “For the low-end consumer, it simply does not make sense to shift to solar right now,” he said.

Anton Fernando, who uses between 180 and 200 units each month, told Thomson Reuters Foundation he was not interested in paying Rs 1 million to install a solar system. “Even if I have to pay Rs 5,000 ($40) per month (on my bill), I can easily spread that amount over a decade - solar is too expensive right now,” he said.

That situation could change if a shift to solar power among high-end customers shrinks much-needed cash flow to the CEB, forcing it to raise charges for smaller users after all, Siyambalapitiya said.

“Also these high-end users are influential personalities in society - they can influence a lot of others,” he said. Nonetheless, solar costs will have to come down if the renewable source of energy is to become a viable alternative, he added.  


Only 34,000 households use solar as an energy source, a tiny proportion of the country’s 5.1 million households with access to electric power, according to government data.

Sri Lanka depends on thermal power plants, fuelled mainly by imported oil and coal, for around 60 percent of its electricity supply, and hydro for 40 percent. Last year, however, when the rains failed, the proportion generated by fossil fuel plants rose to around 80 percent.

Officials from the Sustainable Energy Authority told Thomson Reuters Foundation solar power is a feasible energy source for almost 80 percent of Sri Lanka, as much of the island nation enjoys sunshine for at least 300 days a year. But the high cost of installation has prevented more consumers from taking up solar, they added. 

In addition, there is little interest in incorporating solar energy into the national grid because most is generated during daylight hours, whereas electricity demand peaks between 7 and 10 pm due to heavy domestic usage, when solar is least effective.

Political backing for solar power is also weak, as the government has yet to launch any major schemes aimed at popularising it.

Amantha Perera is a freelance writer based in Sri Lanka.




Our Standards: The Thomson Reuters Trust Principles.