Sri Lanka’s power sector is facing growing instability after revelations that payments owed to renewable energy producers have been delayed for several months, raising fears of a broader energy supply crisis. Industry stakeholders warn that the prolonged non-payment has placed hundreds of renewable energy projects under severe financial strain, threatening both operational continuity and investor confidence in the country’s clean energy transition.
According to reports, more than Rs. 10 billion in payments for renewable energy supplied to the national grid between December 2025 and April 2026 have not yet been settled by the National System Operator (Private) Company. The delay has created significant cash flow difficulties for renewable energy developers, many of whom rely on timely payments to service bank loans, maintain infrastructure, and sustain day-to-day operations. With financial obligations mounting, several producers are now questioning their ability to continue supplying electricity to the national grid without immediate intervention.
The situation has been further complicated by inefficiencies in coal-based power generation, which have contributed to a daily shortfall of approximately 150 megawatts in electricity supply. To bridge this gap, authorities have increasingly relied on diesel and furnace oil-based generation, both of which come at a significantly higher cost. As a result, priority in government expenditure has reportedly shifted toward fuel-based thermal power generation, leading to delays in payments owed to renewable energy suppliers.
Prabath Wickramasinghe, Vice President of the Renewable Energy Developers’ Association, warned that the current payment delays could have far-reaching consequences for Sri Lanka’s energy security. He noted that the global rise in fuel prices, partly driven by geopolitical tensions in the Middle East, has pushed the cost of thermal power generation to nearly Rs. 10 per unit or higher. This, he said, has made renewable energy not only a more sustainable option but also a financially critical component of the national grid. However, he emphasized that neglecting payments to renewable suppliers undermines the very stability the system depends on.
Wickramasinghe highlighted that the impact of the payment crisis is being felt across multiple segments of the renewable energy sector. This includes ground-mounted solar power plants, small hydroelectric projects, wind farms, and biomass energy facilities, excluding rooftop solar systems. In total, around 389 renewable energy plants across the country are affected, with a combined installed capacity of approximately 1,073.9 megawatts. He warned that continued financial strain on these operators could lead to widespread disruptions in energy supply and long-term damage to the sector’s viability.
Industry representatives have also raised concerns about a cascading set of risks arising from the payment delays. These include the possibility of loan defaults among plant operators, collapse of livelihoods dependent on renewable energy projects, reduced investor confidence, and a broader slowdown in future energy investments. According to stakeholders, the situation could severely undermine Sri Lanka’s progress toward expanding its renewable energy share, a key component of the country’s long-term energy strategy.
The National System Operator (Private) Company has acknowledged the delay in payments but attributes the issue to broader financial constraints within the system. Its Chairman, Dr. B.L. Pradeep Priyadarshana Perera, stated that discussions are currently underway with the Ministry of Finance to resolve the matter. He assured that urgent measures are being taken to address the backlog and restore normal payment cycles to renewable energy producers.
