In 2002, nearly 60% of the population of Sri Lanka had access to electricity. However, the disparities between regions were staggering. While the more developed Western Province had around 80% access, the lagging Uva Province had less than 30% access.
Sri Lanka’s largest source of electricity came from hydropower and the task of increasing the supply with limited resources was challenging given that most of the major hydro sites had already been fully developed. The government would have had to rely purely on conventional thermal power generation as an alternative to hydro in order to serve the unmet demand and achieve its electrification targets. As a result, expansion of the grid through thermal power was the principal vehicle for electrification in the country along with expanding the national grid network.
The Sri Lankan Government recognized the problem of access to electricity and worked with the World Bank to lay the foundation for this transformation through the Energy Services Delivery Project (ESD) in 1997. The 2002 Renewable Energy for Rural Economic Development project (RERED) took grid/off-grid electricity services to the next level reinforcing the World Bank’s commitment to green energy. Increased demand fueled additional financing from IDA that further enhanced the successful impacts and results of ESD/RERED.
Moreover, the government was also keen to promote private sector participation in the energy sector and devised a mechanism that would enable private developers, commercial banks/financers and entrepreneurs to be key stakeholders in this endeavor and thus catalyze an entire industry in Sri Lanka for renewable energy.