Sri Lanka Set To Introduce Auctions For Solar Power Projects

Following a successful auction of wind energy projects, Sri Lanka is now planning to set up solar power projects through the competitive auction route.

Sri Lanka’s deputy power minister recently told media outlets that the government is planning to set up 60 MW solar power capacity by auctioning projects of 1 MW capacity each. The government decided to take the auction route as the country’s utility has been paying very high feed-in tariffs for operational projects.

The Ceylon Electricity Board currently pays as much as US¢16/kWh as feed-in tariff to solar power project developers. The lowest tariff bid in neighbouring India is around US¢6.0/kWh while the lowest tariff bid in the world is around US¢2.0/kWh.

Significant appetite for competition was seen in the recently concluded wind energy auction. Project developers offered a discount of as much as 35% over the prevalent wind energy feed-in tariff.

As per the recently modified net-metering regulations, Ceylon Electricity Board will pay LKR22.00/kWh (US¢15/kWh) for this first seven years while the from the eighth year onwards it will pay LKR15.50/kWh (US¢11/kWh). The payments shall continue for a period of 20 years.

Sri Lanka aims to ramp up the share of renewable energy in power generation to 60% by 2020 and 70% by 2030. To achieve this target, 600 MW of wind plants and 3,000 MW of solar plants will be built within the next 10 years.

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