Ad hoc policy shifts and renewable energy development

TWO weeks ago, the Federation of Renewable Energy Developers (FRED) at a press conference expressed its strong disapproval of the Government's decision to reduce feed-in tariffs for renewable energy projects, pointing out that ad hoc policy changes could disrupt the country's drive towards renewable energy.

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Recently, the Ceylon Electricity Board (CEB) announced a revised set of feed-in tariffs applicable to standardised power purchase agreements below 10 megawatts, without competitive tendering. These new tariffs, effective from June 2025, reflect reductions from previous rates.

The controversial move has attracted widespread criticism, with many claiming the State-owned electricity utility operator's action would be detrimental in terms of attracting investments into clean energy. In response to the allegations, the CEB had claimed that the new tariff structure reflects falling solar panel costs, lower interest rates, and improved economic conditions while ensuring fair returns for investors as well as affordability for consumers.

FRED had conveyed its profound displeasure about the alleged harmful decisions by the CEB that risk destabilising investment flows, undermining the viability of the sector at a critical time of the country's energy transition. The industry association had opined that the very foundation of sustainable energy development - predictable and fair policy - has been diminished by the CEB's questionable actions.