Proposed Reduction in Rooftop Solar Feed-in Tariffs: A Threat to Sri Lanka's Energy Future

A proposed reduction in rooftop solar feed-in tariffs in Sri Lanka has sparked serious concerns within the Solar Industries Association (SIA). This drastic cut could significantly harm the solar energy sector, leading to severe economic and social consequences for the country.

Understanding Feed-in Tariffs and Their Importance

Feed-in tariffs (FiTs) are set rates paid to individuals or companies for the electricity they generate and feed into the national grid. For rooftop solar systems, these tariffs incentivize homeowners, businesses, and organizations to invest in solar energy by offering a financial return for the surplus energy they produce. These tariffs are critical to sustaining the growth of renewable energy in Sri Lanka, a nation striving to meet its renewable energy targets and reduce dependence on fossil fuels.

The Potential Impact of Reduced Tariffs

Financial Insecurity for Solar Investors: The proposed tariff reduction would make solar energy significantly less financially attractive to investors, particularly for those with existing rooftop solar systems. Homeowners and businesses who rely on these payments as a return on investment would face substantial losses, discouraging new installations and endangering existing ones.

Job Losses and Economic Setback: A reduction in tariffs could destabilize the rooftop solar industry, potentially leading to the loss of 40,000 jobs in the sector. These workers are involved in various stages of solar energy production, from installation to maintenance. The ripple effects of this loss could also impact supporting industries, such as manufacturing, distribution, and financial services, causing a broader economic downturn.

Compromise on Grid Stability: With lower tariffs, companies would struggle to maintain existing rooftop solar systems, which provide vital energy to the grid. This could lead to a decline in operational efficiency, compromised grid stability, and the possibility of power outages. Over 100,000 rooftop solar connections—primarily owned by middle-class families—could face deterioration, jeopardizing the reliability of electricity for thousands of households and businesses.

Impact on Renewable Energy Targets: Sri Lanka is working toward ambitious renewable energy goals to reduce its carbon footprint and achieve energy independence. However, inconsistent and reduced tariffs could discourage both local and international investors from backing renewable projects, ultimately undermining the country’s efforts to transition to cleaner energy sources.

Higher Energy Costs for Consumers: Without rooftop solar energy, the Ceylon Electricity Board (CEB) would have to purchase more electricity from expensive thermal and diesel plants, resulting in higher electricity tariffs for consumers. This would place a significant financial burden on the population, particularly at a time when economic recovery is crucial.

Why the Proposed Tariff Cuts Are Misguided

The Solar Industries Association argues that the proposal to reduce rooftop solar feed-in tariffs is based on flawed assumptions. The assumption that a reduction will bring about a reduction in costs for consumers or improve the grid's efficiency is unfounded. In reality, it could destabilize the entire renewable energy sector and slow down Sri Lanka’s progress toward achieving its clean energy goals.

Rooftop solar energy offers several key advantages—namely, reducing dependence on expensive and polluting fossil fuels, lowering electricity costs, and creating sustainable jobs. Cutting tariffs threatens to undermine these benefits, leaving Sri Lanka more reliant on costly and less environmentally friendly energy sources.