World Bank approves $150M program to support Sri Lanka’s clean energy transition

The World Bank Group approved a new $150 million program to support Sri Lanka’s move toward clean, reliable, and affordable energy. 

The program—Secure, Affordable, and Sustainable Energy for Sri Lanka—will support the country reduce its reliance on expensive fossil fuel imports and accelerate its shift toward solar and wind, the World Bank Group said in a statement.

“This program will help deliver clean, affordable electricity to families and businesses across Sri Lanka,” said David Sislen, World Bank Division Director for the Maldives, Nepal and Sri Lanka. “We are excited to work with both the government and private sector to make this shared vision a reality.”

The program will support new solar and wind energy projects that will add 1 gigawatt of clean electricity to the grid – bringing Sri Lanka closer to its goal of generating 70 percent of its electricity from renewable sources by 2030. The program is also expected to mobilize more than $800 million in private investment, helping to lower electricity costs and improve reliability for families and businesses.

A core feature of the initiative includes $40 million in World Bank Group guarantees in the first phase. This will help reduce risks for private investors and energy producers. It is targeted to derisk payment obligations from Ceylon Electricity Board (CEB), thus improving investors’ confidence and attract financing on more favorable terms. 

The World Bank Group’s private sector arms - the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) – will provide complementary support through direct investments and political risk insurance, the statement stated.

“Sri Lanka’s energy transition is an opportunity to expand clean energy, improve energy access, and build long-term resilience,” said Imad N Fakhoury, IFC’s Regional Director for South Asia. “Achieving this requires close collaboration and investment from both public and private sectors. As one World Bank Group, we are uniquely positioned to enable and mobilize private capital and foster partnerships that deliver affordable, reliable electricity while driving sustainable growth and creating jobs that strengthen Sri Lanka’s economy and expand opportunities for its people.”

MIGA will support the program by offering political risk insurance to help reduce uncertainty for international investors.

“Investors need confidence to take bold steps in new markets,” said Muhamet Fall, Director of Operation with MIGA. “Our guarantees will help de-risk projects and attract the private capital needed to scale up clean energy in Sri Lanka.”

The program also supports the upgrades to Sri Lanka’s electricity grid, enabling it to better handle renewable energy and reduce power outages. This modernization will help stabilize electricity prices and improve energy access for households and businesses across the country, it added.

In addition, the initiative will provide technical assistance to the CEB to strengthen planning, procurement, and operations, and supports government-led reforms to improve competitiveness, utility management, and regulatory oversight.

By using the full breadth of the World Bank Group’s tools - financing, knowledge, and private sector partnerships - the World Bank Group is helping Sri Lanka expand energy access, attract private investment, and lay the foundation to power Sri Lanka’s long-term economic growth.