I.      Context and justification of the need

1)      Expertise France

Expertise France (EF) is a public agency and the French inter-ministerial actor in international 

cooperation. It became a subsidiary of the French Agency for Development Group (AFD Group) in January 2022. As the second largest agency of its kind in Europe, it designs and implements projects that sustainably strengthen public policies in developing and emerging countries on a range of policy issues (e.g. sustainable development, governance, stability, health, education). It operates in key areas of development and contributes alongside its partners to the implementation of the Sustainable Development Goals (SDGs).

For more information, please visit the website: www.expertisefrance.fr

2)      European Union Delegation to Sri Lanka and the Maldives

The European Union (EU) Delegation to Sri Lanka and the Maldives is the funding partner of the EU Green Recovery Facility^[1]. Cooperation between the EU and Sri Lanka is based on the partners’ mutual respect for democratic principles and human rights and covers a number of key areas of cooperation, including; diversification of trade and investment; networking between EU and Sri Lankan business communities; strengthening technical, economic and cultural linkages and providing technical assistance to Sri Lanka to interact more effectively with the EU; supporting Sri Lanka’s efforts to improve the living conditions of the poorer sections of the population; green recovery, environmental protection and sustainable management of natural resources.

The EU Green Recovery Facility is part of a series of EU funded initiatives to be rolled out between 2021 and 2027 under the Team Europe Initiative (TEI) “Green Recovery”, which will mainly focus on green economic recovery and on valuing and protecting Sri Lanka’s rich biodiversity.

For more information, please visit the website: https://www.eeas.europa.eu/delegations/sri-lanka_en?s=238 

3)      EU Green Recovery Facility

The EU Green Recovery Facility (The Facility) is a four-year intervention funded by the European Union (EU). It uses the current economic crisis as an opportunity to support Sri Lanka towards a more sustainable growth trajectory. The ultimate goal entails achieving a green (and blue) economy that is circular, carbon neutral, and socially inclusive; which, not only, is more respectful of biodiversity resources and socio-economic/demographic context, but would also provide much needed macroeconomic stability.

In this context, the Facility harnesses policy experiences and knowledge from the EU, along with national and regional ones, to contribute to the green recovery (medium term) and transition (long term) of the Sri Lankan economy and society.

The Facility more specifically supports the mainstreaming of green economy (GE) challenges and objectives in the Sri Lankan policy landscape, as well as the facilitation of bringing GE policy to action by contributing to the following specific objectives:

·         SO1: Support the development and implementation of inclusive national green, blue and sustainable public policies, with participation of women and men in all their diversity.

·         SO2: Improve the business and investment climate in view of promoting an inclusive circular economy (both green and blue).

·         SO3: Increase accessibility and availability to green and sustainable finance.

The primary direct beneficiaries of the Facility are public institutions, particularly the Ministry of Environment and the Ministry of Finance, as well as government institutions focused on SMEs. Other direct beneficiaries include the private sector, financial institutions, and civil society.

4)      Background and justification

Sri Lanka’s energy sector is a pivotal component of its socio-economic landscape, experiencing significant transformations to align with global and national sustainability goals.

Over the years, the country has focused increasingly on renewable energy (RE) and energy efficiency (EE), as critical pillars for achieving its climate commitments and reducing reliance on imported fossil fuels. Guided by ambitious targets, including a 70% renewable energy share in electricity generation by 2030 and complete carbon neutrality by 2050, Sri Lanka’s strategic approach is centred around comprehensive reforms, robust policies, and active involvement from both public and private sector stakeholders.

Sri Lanka has nearly achieved 100 percent of grid connectivity, which is very high by South Asian standards.  However, the current economic crisis has affected all key segments of the economy, including the energy sector.

The Sri Lankan energy sector consists primarily of electricity, petroleum, and biomass resources, with electricity being the focal point of ongoing renewable energy advancements. In Sri Lanka's energy sector, biomass and petroleum each contribute around 40-45% to primary energy supply, while electricity accounts for 10-12% of final energy use, with biomass dominating residential energy needs and petroleum primarily serving the transport sector.

Electricity in Sri Lanka is generated using three primary sources: thermal power (which includes coal and fuel oil), hydropower, and other non-conventional renewable energy sources (solar power and wind power). However, due to the energy policy decisions taken, this has led to limited renewable energy expansion, slow modernization of the transmission grid and lack of new power plants over the last decade has hindered the development electricity supply in the country. Currently, the electricity sector reforms are underway, these reforms are expected to create more transparency and competitiveness that is expected to attract more renewable energy investment into the country.

The power sector is structured under the Ministry of Energy (MoPE), while the Ceylon Electricity Board (CEB), the key player in electricity generation, transmission, and distribution, is the dominant entity.  However, the CEB faced many challenges such as underperforming electricity distribution by municipal, urban, and town councils. In 1983 Lanka Electricity Company (LECO) a state owned enterprise (SOE) established with the intention of improving operational efficiency in power distribution in Sri Lanka, mainly focusing on specific geographic areas. LECO receives electricity from CEB at 11 kV and distributes in LECO franchise areas along the Western coastal belt. The Public Utilities Commission of Sri Lanka (PUCSL) serves as the regulator, overseeing compliance, efficiency, tariff and consumer protection procedures and standards. Additionally, the Sri Lanka Sustainable Energy Authority (SLSEA) leads efforts in promoting renewable energy and energy efficiency initiatives across various sectors.

Sri Lanka's focus on renewable energy is a progressive step towards sustainability. The Energy Policy of 2019 emphasizes developing local renewable energy sources to their fullest potential while reducing reliance on fossil fuels. By prioritizing economic feasibility, technology readiness, and supply quality, the country aims to achieve an ambitious target—70% of its electricity generated from renewable sources by 2030. Sri Lanka’s ambitious energy sector targets are further detailed in the Nationally Determined Contributions (NDCs) under the Paris Agreement which emphasize a robust commitment to reduce greenhouse gas (GHG) emissions by 14.5% from the business-as-usual (BAU) scenario for the decade 2021- 2030. Sri Lanka’s ambitious initiatives not only address energy security but also contribute to a greener and more self-reliant future.

The Facility is keen to explore and keep abreast of Sri Lanka’s power and energy sector developments, in particular initiatives that may offer opportunities to European investors and/or European technologies and where the Facility may able to support through developing future activities.

Areas of interest include but at not limited to: Investment opportunities, Renewable energy, Wind (on-shore and off-shore), Solar (Floating, roof top, ground mounted), Energy storage (Pump storage, Grid connected battery storage, etc.), Natural gas exploration, Fuel storage/ bunkering and Oil refineries.

II.      Objectives and desired results

1)      General Objective of the Consultancy

To facilitate EU investments in the power and energy sectors in Sri Lanka.

2)      Specific objectives of the Consultancy

The stakeholders of the EU Green Recovery Facility have a deeper understanding of the potential, present and future development plans and trends of Sri Lanka power and energy sector.

3)      Anticipated results

•       EU Green Recovery Facility is well-informed of Sri Lanka's current, future and potential energy sector landscapes, policies, and trends.
•       EU investment in Sri Lanka’s energy sector is facilitated
•        The Facility is supported with energy sector expertise