PUCSL resets renewable tariffs, targets 450 MW solar-plus-storage by March 2027

Sri Lanka is placing battery storage at the centre of its next phase of renewable energy expansion, with the Public Utilities Commission of Sri Lanka (PUCSL) approving a new three-tier feed-in tariff structure, while requiring the electricity system to add at least 450 MW of solar photovoltaic (PV) capacity paired with battery energy storage by March 2027.

The new tariffs, effective from today (25) through 24 February 2027, are designed not only to remunerate renewable power producers but also to address an anticipated capacity shortage in the first quarter of next year.

The National System Operator (NSO) has been directed to ensure that at least 450 MW of solar PV with Battery Energy Storage Systems (BESS) is added to the system by March 2027, with sufficient capacity available to meet peak demand and avoid scheduled power interruptions arising from capacity shortages.

The tariff decision also places a firm cost discipline on existing battery-storage procurement.

The NSO must ensure that the per-unit cost of the already offered 160 MW of BESS does not exceed Rs. 20/kWh on a monthly average basis. Any cost above that threshold will not be recognised, recovered, or allowed under the end-user electricity tariff.

The move represents a significant shift in the structure of renewable power incentives, with higher tariffs being offered where storage can help make intermittent solar generation more dispatchable.

For standalone renewable power plants, the approved tariff components vary substantially by technology. Mini-hydro has a non-escalable component of Rs. 30.37/kWh and an operation and maintenance (O&M) component of Rs. 4.50, while wind has Rs. 20.80 and Rs. 4.93, respectively.

Ground-mounted solar has a non-escalable component of Rs. 18/kWh and an O&M component of Rs. 2.72, while floating solar receives Rs. 23.58 and Rs. 3.92, respectively.

Biomass tariffs incorporate fuel-price components, taking the effective 2026 components for dendro biomass to Rs. 31.20/kWh and agricultural/industrial waste to Rs. 17.80/kWh, in addition to their non-escalable and O&M components.

The tariff structure becomes markedly more attractive when battery storage is incorporated. For power plants with BESS, ground-mounted solar receives a feed-in tariff of Rs. 47.08/kWh during prioritised feed-in periods, comprising a non-escalable component of Rs. 44.06 and O&M of Rs. 3.02. At other periods, the tariff is Rs. 20.72/kWh.

Floating solar with BESS commands an even higher prioritised-period tariff of Rs. 53.28/kWh, compared with Rs. 27.50/kWh during other periods.

The differentiation signals the regulator’s intention to attach greater value to renewable generation that can contribute to the grid when electricity is most needed, rather than treating all renewable energy output equally.

The same principle is evident in the prosumer tariff structure. New rooftop solar systems of up to 10 kW will receive Rs. 23.11/kWh, declining to Rs. 19.15 for systems above 10 kW and up to 40 kW, and Rs. 17.11 for systems above 40 kW and up to 250 kW.

For larger systems, the tariff rises sharply where BESS is incorporated. New rooftop solar-plus-BESS systems between above 250 kW and 1 MW will receive Rs. 45.53/kWh for the first 15 years during prioritised feed-in periods, compared with Rs. 15.81/kWh at other periods.

For systems above 1 MW, the corresponding prioritised tariff for new rooftop solar-plus-BESS is Rs. 42.49/kWh for the first 15 years.

Existing rooftop solar prosumers adding BESS will also receive enhanced prioritised-period remuneration, with the tariff calculated using the existing Standardised Power Purchase Agreement (SPPA) rate, subject to the formula specified by the PUCSL.

The regulator has simultaneously tightened the framework governing distributed generation. Distribution licensees must assess and publish their available network hosting capacity for rooftop solar and BESS installations each month, while the NSO is required to monitor monthly capacity additions under each feed-in tariff category and report them to the PUCSL.

Systems of 100 kW and above will also require a generation licence once the new Electricity (Applications for Licences and Exemptions) Regulations are enacted.

The tariff decision comes as Sri Lanka seeks to expand renewable generation while maintaining grid stability. The regulator has therefore retained provisions allowing the distribution licensee or NSO to temporarily limit or curtail exports from rooftop solar and BESS installations where required for system security, subject to written justification to the PUCSL.

BESS installations will operate under 15-year SPPAs, while the new tariff applies only to rooftop solar and BESS applicants obtaining valid grid clearance on or after 25 August 2026.

The PUCSL’s decision consequently goes beyond a routine tariff reset. By offering materially higher remuneration for battery-backed renewable generation while imposing cost limits and a hard capacity target, the regulator is attempting to align private investment incentives with the immediate operational needs of the electricity grid.

The test will now be whether the enhanced tariffs can translate into 450 MW of commissioned solar-plus-storage capacity within roughly seven months, without transferring excessive procurement costs to electricity consumers.