Broadlands Hydropower Project (BHP) harnesses the last hydropower potential of Kehelgamu-Maskeli Oya rivers with an installed capacity of 35 MW and 126 GWh annual energy generation. Excavation of the powerhouse switchyard site exposed to a bedrock formation with highly weathered granitic gneiss beneath a thin layer of scum soil top, resulting in an irregular high soil resistivity profile. Therefore, the main purpose of this research is to design a safe and effective grounding system for the switchyard of BHP, which can carry fault current into the ground without exceeding tolerable ground potential rise, ensuring the desired operation of protective & control devices so that not to endanger human & equipment. Owing to the nature of non-uniform high soil resistivity and limited land space for extension, this has become a great challenge. Research used two approaches, guidelines of conventional IEEE 80-2000 standards and Finite Element Method (FEM). Initially, resistivity measurement was conducted covering the entire area of concern. A soil model was prepared using orthodox horizontally stratified two-layer soil model using Sunde’s graphical technique based on measured data. Then the grounding grid was designed adhering to guidelines given in IEEE 80:2000 standard and observed high overall grid resistance, eventually exceeding the tolerable step and touch potential levels. Thereafter a soil model was prepared based on FEM which facilitates plot of accurate and smooth surface voltage distribution over the entire switchyard area. Applying fault current to these discrete finite elements and based on the first principle of Kirchhoff’s current distribution balance, the localized voltage distribution has been developed for the entire area and plotted using a self-developed MATLAB computer program. FEM model can trace the points where the touch and step potentials exceed safe limits in two-dimensional stratified grid, estimation of voltage gradients at boundary areas, which all are unable to track using conventional IEEE method. Accuracy of the model can further be increased by reducing the size of the soil element. Finally, several sensitivity studies were conducted so as to optimize the BHP switchyard grid design ensuring safe grid operation.