Regulation for renewable energy development: Lessons from Sri Lanka experience

Abstract

The paper examines the key features of the renewable energy development environment in Sri Lanka which led to sector's rapid expansion. The recent development framework of the renewable energy sector was based on the importance of using indigenous resources, recognizing the positive environmental impacts and the avoidance of high cost alternative thermal generation. This framework also recognized the pioneering effort of the developers in site identification by giving rights to develop on a first-come first-served basis. The policy framework was later extended with a renewable energy portfolio standard to achieve 10% of power generation through renewable energy. The standard power purchase arrangements reduced the transaction costs. The feeding tariffs originally based on avoided costs later shifted to cost based, technology specific tariffs encouraging diversification of the renewable energy portfolio. The introduction of net-metering for renewable energy based distributed generation and the limited interventions in the form of green-tariffs also assisted the renewable energy development. The paper concludes that the policy and regulatory frameworks and different approaches to implementing them have been mostly successful experiences in Sri Lanka and they would provide useful lessons for similar countries when formulating and implementing related polices, regulations and legal frameworks.