Sri Lanka’s trillion-dollar opportunity: Unlocking energy independence through green hydrogen

Sri Lanka’s unique geographical attributes align perfectly with textbook specifications to potentially become the world’s first truly green hydrogen economy

Within this challenge lies a monumental opportunity, one that could redefine Sri Lanka’s economic and environmental future. Imagine a revitalised Sri Lankan economy, powered by green hydrogen, attracting a trillion dollars in foreign capital. Our island nation is blessed with world-class wind and solar potential, resources that are not subject to the whims of global markets or geological depletion. Furthermore, the Levelised Cost Of Energy (LCOE) for both these renewable sources has witnessed a dramatic and continuing decline, making them increasingly competitive. Our equatorial location, guaranteeing approximately 12 hours of daylight year-round, further amplifies our solar advantage

By Lt. Col. (Retd) Athula 

R. Samarasinghe

The unseen grip of fossil fuels 

Building upon the urgent need for sustainable energy solutions, as previously explored, a profound unease hangs in the global energy sector. Despite the undeniable surge in renewable energy adoption, the world’s voracious appetite for fossil fuels continues its upward trajectory. Astonishingly, data from ‘Our World in Data’ reveals that global fossil fuel consumption has roughly doubled since 1980, a stark reminder that the transition to renewables, while gaining momentum, is still battling a deeply entrenched monster. While the eventual depletion of these finite resources is a certainty, the precise timeline remains a moving target, obscured by technological leaps, unforeseen discoveries, and the ever-shifting sands of consumption patterns. One undeniable consequence of this persistent fossil fuel addiction, however, is the escalating and potentially irreversible crisis of global warming.

For Sri Lanka, this global reality hits with particular force. Our economy, like many others, remains fastened to the volatile and environmentally damaging umbilical cord of fossil fuel dependence. Consider the stark figures: in 2023 alone, our island nation generated approximately 17,220 GWh of electricity. According to official reports from the Ceylon Electricity Board (CEB) and the Public Utilities Commission of Sri Lanka (PUCSL), a staggering 36.92% (6,357.6 GWh) was derived from coal, and another 27.52% from thermal oil. The financial burden of this dependence is equally alarming, with approximately $ 500 million spent on coal and $ 400 million on thermal oil in the same year. This represents a significant drain on our national treasury, a constant outflow of valuable foreign exchange for a fuel source with a limited lifespan and devastating environmental consequences.

A trillion-dollar horizon: Sri Lanka’s untapped green gold 

However, within this challenge lies a monumental opportunity, one that could redefine Sri Lanka’s economic and environmental future. Imagine a revitalised Sri Lankan economy, powered by green hydrogen, attracting a trillion dollars in foreign capital. Our island nation is blessed with world-class wind and solar potential, resources that are not subject to the whims of global markets or geological depletion. Furthermore, the Levelised Cost Of Energy (LCOE) for both these renewable sources has witnessed a dramatic and continuing decline, making them increasingly competitive. Our equatorial location, guaranteeing approximately 12 hours of daylight year-round, further amplifies our solar advantage.

Yet, the path to fully harnessing this potential is not without its hurdles. The CEB’s recent insinuations regarding power outages due to grid instability highlight a critical challenge: the inherent variability of renewable energy supply and demand. The current model, where energy producers expect the grid to absorb and pay for all generated power, irrespective of immediate demand, leads to energy devaluation when supply exceeds usage. This necessitates a paradigm shift in how we manage and integrate renewable energy into our grid.

Herein lies the crux of a trillion-dollar opportunity. The World Bank and the Asian Development Bank (ADB) have independently confirmed Sri Lanka’s immense renewable energy potential: a staggering 56 GW of wind and 16 GW of solar capacity. Our current electricity generation capacity stands at a mere 4 GW. Consider the ambition required to replace auto diesel in our rail and road transport sectors alone – an estimated 21 GW of additional capacity. This scope, replacing approximately 1.8 billion litres of imported auto diesel annually, unveils the potential for a trillion dollar foreign investment ecosystem to take root in Sri Lanka.

The objective, therefore, is clear: capitalise on Sri Lanka’s abundant renewable energy resources, directly address the CEB’s legitimate grid stability concerns, and, crucially, make sound economic sense in the process.

To this end, a comprehensive model has been meticulously developed, one that simulates a green energy system capable of replicating the performance of a traditional thermal oil generator under ideal replacement conditions. Initial analysis revealed a higher upfront capital expenditure (CAPEX) for the green system, approximately two-thirds more than a thermal oil plant. However, the operational expenditure (OPEX) painted a dramatically different picture, with the green system proving two-thirds cheaper to run over its lifespan. A 25-year simulation indicated a convergence of total costs between the two systems over time.

The initial higher Net Present Value (NPV) of the thermal oil system, driven by the lower upfront investment, has been strategically addressed. Our innovative model leverages the inherent capacity of a hybrid renewable energy system, which, while replicating the output of a thermal oil plant, offers significant additional power that can be dedicated to cost-effective green hydrogen production for the heavy transport sector. This groundbreaking approach allows for the simultaneous decarbonisation of both the electricity grid and the heavy transportation sector in an economically viable manner.

From blueprint to reality: The crucial pilot  project: 

Furthermore, to translate this compelling vision into tangible reality, a pilot project has been meticulously designed as a proof of concept. While the large-scale deployment of green hydrogen technology requires strategic planning and development, our proposed pilot project offers a crucial first step in demonstrating its feasibility and scalability. The crucial next step lies with the Government of Sri Lanka. Facilitating a streamlined approval process and fostering ideal conditions for this pilot project’s success as a public-private partnership is paramount. This will not only fast-track Sri Lanka’s journey towards energy security but also send a powerful message to the world about our unwavering commitment to Net-Zero emissions.

The success of this special model hinges on its vertically integrated business structure, a deliberate design choice to address potential socio-economic concerns and mitigate technological limitations. Sri Lanka’s unique geographical attributes align perfectly with textbook specifications to potentially become the world’s first truly green hydrogen economy.

If Sri Lanka can successfully demonstrate the financial feasibility of this model, the rewards will be manifold. Beyond attracting substantial foreign investment, we stand to gain invaluable technological transfer, positioning our nation as a global green energy technology test bed. For Sri Lankan businesses, this represents an unprecedented opportunity to become pioneers in a global green energy market. For our scientific and technical community, this is a chance to lead cutting-edge research and development in green hydrogen technologies. The Government of Sri Lanka holds the key to unlocking this potential through swift approvals and supportive policies.

Seizing the moment: Sri Lanka’s trillion-dollar choice

The opportunity is immense, the potential transformative. It is time for Sri Lankan businessmen, energy scientists, practitioners, and the Government to seize this trillion-dollar moment, to unpack this unique hydrogen equation, and in doing so, potentially set a global trend, securing our energy independence and paving the way for a prosperous and sustainable future. The world is watching; let us show them what Sri Lanka is truly capable of.

(The writer applies his results-oriented and innovative approach, evidenced by two patents. With ICT and Information Security expertise, he has pivoted from MPhil studies to champion a green hydrogen economy. His current ambition is to design, build, and operate a vertically integrated green hydrogen project, aiming to define a practical pathway for Sri Lanka’s energy independence and environmental sustainability. This article reflects his research and commitment to this vision. The writer can be reached at [email protected].)