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BMI View: Sri Lankan power generation is estimated to have grown to 13.90TWh in 2015, up 12.4% from
2014. Coal-fired generation grew at an 18.0% pace, with overall thermal generation expanding by
9.1%. During the period 2016-2025, Sri Lanka's overall power generation is expected to increase by an
annual average of 5.3%, reaching 23.16TWh by the end of the forecast period. With much of the country's
hydropower potential harnessed, growth in this type of generation will slow to 1.25% over the next decade.
However, the country is likely to meet its growing demand through coal and renewables.
Latest Updates And Structural Trends
? During the period 2016-2025, Sri Lanka's overall power generation is expected to increase by an annual
average of 5.27%, reaching 23.16TWh. Driving this growth will mainly be a rise in coal, accompanied by
the build-up of output from non-hydro renewables.
? The government maintains its bold plan to increase the share of non-conventional renewable energy - its
National Energy Policy Target sets out that 10% of grid electricity should be from these sources. Under
the Mahinda Chinthana Future Vision, the target is for 20% of the nation's grid electricity is to be sourced
from these sources. Despite the push for these isolated and smaller renewable sources, we note that
infrastructure limitations (notably from the length of transmission lines and substation transformers)
could reduce the benefits and attractiveness of this type of generation.
? Sri Lanka's Public Utility Commission announced on July 26, 2016 that it would begin to revise
electricity tariffs every six months beginning in April 2017. This should allow for significantly greater
market efficiencies, as producers will now be able to charge rates that are much more closely in line with
market developments. Likewise, we believe that this will lead to greater sustainability of the
government's fiscal accounts, as well as the accounts of power providers, thereby providing a more stable
backdrop for the development and operation of power infrastructure going forward.