Sri Lanka Offers An Opportunity For India In Solar

Sri Lanka, which joined the renewable energy bandwagon much later than many others, thanks to its extended civil war and the brush with bankruptcy till recently, is finally ready to move ahead on its targets. The island nation targets taking the share of renewable energy to 70% of its requirements, from a share of just 2% in 2018.  With almost 100% access to electricity thanks to a grid reaching 98% of its population, Sri Lanka, as it recovers from the bankruptcy that stifled growth in the past two years, has much catching up to do. With a total installed capacity of 5000 MWs in its grid, Sri Lanka is expected to reach over 3 GW of solar capacity by 2030. According to the Ceylon Electricity Board, Sri Lanka has around 7 million buildings, but only 50,000 of them have installed rooftop solar systems. Power is usually being brought from rooftop generators at US 12 cents, or almost INR 10.

For India, the neighbouring country offers a great opportunity to work with in the area of renewable energy, be it solar or wind. While a $100 million line of credit announced in 2020 and activated in 2022 for renewable energy is well known, there are many other opportunities that the country will offer to Indian solar players. And India is alive to the possibilities, it would seem. This week, we heard about plans for an estimated USD 1.2 billion undersea transmission line that will link the island nation’s power grid with that of India. The line will connect Sri Lanka’s north central town of Anuradhapura to Chennai, in Tamil Nadu state.  An undersea line from Chennai (via a submarine cable) will emerge at Thiruketheeswaram in Mannar in northeast Sri Lanka. The two countries should seriously consider using solar power for these energy exports. With a per capita income that, at over $4000 is much higher than India’s per capita of $2500 or below, Sri Lanka is also a market that might afford better margins to Indian players.

Already, there is the largest and oldest project involving NTPC building a 100 MW solar plant in Eastern Sri Lanka’s Sampur. Then, of course, there are the Adani-backed solar and wind projects in Manna and Pooneryn in North Sri Lanka. Last week, Bengaluru-based U Solar bagged three  Solar and Wind hybrid projects worth 2.2 MW  near Jaffna. While all these projects will benefit from funding support provided by the Indian government, other sectors of Sri Lanka’s economy will offer many more opportunities.

Take the Sri Lankan garment sector. A vital contributor to the economy with exports of over $6 billion at its peak, the Sri Lankan garment sector will also be making a significant shift to renewable energy, driven by internal and external constraints, as their top exporting countries seek greener supply chains.

With large global garment brands like Gap, Patagonia, Hugo Boss and Victoria’s Secret sourcing from manufacturers here, the factories have an obvious path to sustain their business. Go Green.

The Board of Investment, Sri Lanka’s foreign investment promotion arm, has announced plans to turn three of its 14 free trade zones into environment-friendly areas. Besides other changes, that will mean a significant shift to renewable energy, mostly solar and wind.

International organizations like the Sustainable Apparel Coalition (SAC) are pushing firms in the textile sector to move faster. The SAC recognizes the fashion sector’s high impact on global emissions and is working to reduce it faster than many had hoped for. Its first big target is a 45% reduction in CO2 emissions by 2030 in the sector. That’s at least five years before most estimates from just three years ago.

The San Francisco-based alliance counts 300 leading apparel, footwear and textile brands, retailers and manufacturers among members. As the textile sector adapts, which can actually pay for a large share of the changes it requires, the broader Lankan market will also change, be it tourist resorts or other key sectors such as mining, food processing, tea etc. This is especially so as a significant part of Sri Lanka’s fossil fuel usage depends on imports, something the island nation will find well worth watching as it counts every penny to build up its reserves again, from an existing solar capacity of under 250 MW.