Sri Lanka
With a cumulative score of 1.44, Sri Lanka ranks number 57 among emerging markets and number 86 in the global ranking.
- Emerging markets
- Asia-Pacific
1.53 / 5
Power score
1.23 / 5
Transport score
Buildings score
Only 56 markets (28 emerging markets) are scored on the Buildings sector. See the full list on the methodology page.
Low-carbon strategy
Net-zero goal and strategy
Sri Lanka has yet to adopt a net-zero emissions goal or strategy.
Nationally Determined Contributions (NDC)
The country submitted its updated Nationally Determined Contribution (NDC) ¬¬– its plan to help achieve the goals of the Paris Agreement – to the United Nations Framework Convention on Climate Change in July 2021. This includes an ambition to generate 70% of its electricity from renewables by 2030, and to achieve carbon neutrality in the power sector by 2050. Sri Lanka also aims to reduce greenhouse gas emissions by 4% by 2030 versus anticipated levels in a business-as-usual scenario. With international financial and technological support, it could lower emissions by a larger 14.5%. The document also envisions Sri Lanka developing around 800 megawatts (MW) of wind-power generation on its northern coast by 2030, as well as 2,000MW of solar power capacity, including rooftop installations, and small-scale and large power plants.
Fossil fuel phase-out policy
While Sri Lanka does not have a fossil-fuel phase-out policy yet, it pledged not to add any more coal power plants in September 2021, as well as to convert existing fuel-oil-based combined cycle units to natural gas, and to introduce natural-gas-based power plants to support its targets for reducing carbon emissions. The country has therefore scrapped coal-power plant additions from its long-term generation plan running up to 2041.
Power
Power policy
Unlike other countries in South Asia, Sri Lanka has provided electricity to nearly every household in the country. Total installed power capacity was around 4,186MW in 2021, of which 52% is based on renewables, including hydro, wind, solar and biomass. Electricity generation from renewables met 51% of demand that year.
Power policies
Power prices and costs
The Public Utilities Commission of Sri Lanka sets two types of tariff for residential customers, last revised in 2014. Block tariffs are based on monthly power consumption. Time-of-use tariffs apply at different times of the day, varying from 13 Sri Lankan rupees per kilowatt-hour (4 US cents/kWh during an off-peak night-time period to 54 rupees/kWh in evenings when demand spikes. There is also a fixed charge of 540 rupees per month.
Power market
Sri Lanka’s power market is heavily regulated. The Ceylon Electricity Board (CEB) is the dominant utility, controlling 72% of generation capacity and distributing more than 99% of the country’s power. The Lanka Electricity Company is the only other distributor. It is owned by CEB and buys electricity from it for resale to end-use customers. The government sets volumes and pricing for such power-purchase agreements, and entities are forbidden from concluding pacts themselves.
Installed Capacity (in MW)
Electricity Generation (in GWh)
Utility privatisation
Which segments of the power sector are open to private participation?
Wholesale power market
Does the country have a wholesale power market?
Doing business and barriers
The World Bank says foreign direct investment in the power sector has dropped in recent years due to policy uncertainties and the risk of currency depreciation. The Sri Lanka Electricity Act stipulates that the government must hold a 50% stake in any new power project or control a proportion of shares to be determined by the Treasury and Ministry of Finance. Either could potentially erect barriers for domestic and international investors.
The CEB is owned by the state, which means that its debts are fully backed. However, its financial stability is undermined by the lack of tariff revisions weighing on revenue. In the meantime, its current liabilities grew to 212 billion rupees at the end of 2020, from 145 billion rupees in 2018, and its long-term borrowing to 478 billion rupees at the end of 2020, from 392 billion rupees in 2018.
Currency of PPAs
Are PPAs (eg. corporate PPAs and all other types) signed in or indexed to U.S. Dollars or Euro?
Bilateral power contracts
Can a C&I (Commercial and Industrial) customer sign a long-term contract (PPA) for clean energy?
Fossil fuel price distortions - Subsidies
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) down through subsidies?
Fossil fuel price distortions - Taxes
Does the government influence the wholesale price of fossil fuel (used by thermal power plants) up through taxes or carbon prices?
Transport
EV market
There were more than 900,000 passenger vehicles in Sri Lanka at the end of 2021, compared to over a million three-wheelers and 5 million motorbikes. Tax changes have contributed to a change in the mix of new passenger vehicle registrations. In 2015, internal combustion engine vehicles accounted for 58% of registrations, hybrids 39% and electric vehicles (EVs) made up 3%. For two- and three-wheelers, almost all the new registrations used petrol and diesel.
EV policy
Sri Lanka has announced plans to ban sales of internal combustion engine cars by 2040, and more than a decade ago prohibited imports of three-wheeled vehicles powered by two-stroke petrol engines – known as auto rickshaws and a popular form of transport. The government lowered import taxes for hybrids in 2010 and for EVs five years later.
The Clean Air 2025 Action Plan provides a roadmap for air-quality management. Among its measures, the plan called for the government to allocate 100 million rupees promoting solar-powered charging units for battery-electric vehicles, financing that would also help attract private investment. Besides, president Ranil Wickremesinghe said in August 2022 that newly purchased state vehicles would be exclusively battery powered.
There are over 100 EV charging stations in Sri Lanka, in line with the government’s 2020 target and the country's plan to obtain a minimum 20% of its energy from renewable sources.
The government unified its import and excise taxes on cars and raised the levy in 2019. The tax is applied based on the car’s engine capacity; however, electric cars are taxed at the lowest rates.
Transport policies
Fuel economy standards
Does the country have a fuel economy standard in place?
Buildings
Buildings market
The country’s climate means that the focus is on cooling rather than heating buildings, although there is a lack of substantive policy to improve the energy efficiency and carbon intensity of such efforts.
Energy efficiency policy
Does the country have a national energy efficiency plan?
Energy efficiency policy
Are there minimum energy performance standards for buildings?
Energy efficiency incentives
Is there access to loans or grants for energy efficiency measures (i.e. Wall or loft insulation or double glazing)?
Buildings policy
The Sri Lanka Sustainable Energy Authority Act empowers authorities to specify and enforce an energy efficiency code for buildings, including water heating, pipe insulation and minimum air-conditioning performance standards.
Buildings policies
Additional insights
from BNEF
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