Sri Lanka : Power System Reliability Strengthening Project

Energy / Electricity transmission and distribution

Sri Lanka''s energy sector performance has achieved a national electrification ratio of 99.3% (2016) of the households up from 29% in 1990. However, the demand for electricity continues to grow with increasing economic growth and improving living standards of the population. While trying to meet this increasing demand the sector continues to struggle because of the high cost of electricity emanating from poor generation mix and inadequate level of reliability. This is partly due to underinvestment in the transmission network, medium voltage network, and protection system resulting from high government debt-to-GDP ratio over the years and the poor financial status of Ceylon Electricity Board (CEB)the state-owned public utility whose operations have been constrained by non-implementation of full cost recovery tariff and receivables.

In 20152016, Sri Lanka suffered three country-wide blackouts within the span of 7 months. All these blackouts were attributed to poor operation of the protection system, lack of operational flexibility and bottlenecks in the transmission system. Economic loss from the three blackouts was estimated at monetarized value at the unit of $/kWh un-served activity. Indirect social impacts, such as increase in crime rates, were also reported.

Strengthening the transmission system, improving the 33/11 kilovolt (kV) medium voltage network, and upgrading the protection system are needed to ensure reliable operation of the power system. These interventions will also help increase absorption of intermittent wind and solar power which in turn will contribute to achieving government targets for clean energy development. Similarly, these will improve the quality of power supply in rural areas, where currently the quality is low.

The project is consistent with the national sector investment program that is based on the National Energy Policy and Strategies of Sri Lanka and Vision 2025. The project is also in line with Asian Development Bank's (ADB's) country partnership strategy for Sri Lanka where the energy sector is expected to focus on, among others, expanding nontraditional renewable energy using wind and solar, and improving reliability of power supply. The project is also strongly linked to recently approved ADB programs supporting investments in removing bottlenecks in power transmission and strengthening distribution system, and expanding access to clean electricity and promote renewable energy development.

Lessons from previous projects will be considered and incorporated into the project design and implementation arrangements. Specifically, the project will integrate renewable energy, and improve implementation arrangements by strengthening CEB and Lanka Electricity Company (Private) Ltd. (LECO) capacity in complex project supervision and safeguard monitoring.