Rs. 10B in unpaid dues threatens Sri Lanka’s renewable energy industry survival, warns FRED

The Federation of Renewable Energy Developers (FRED), the apex body of renewable energy developers in Sri Lanka and an associate of the Colombo Chamber of Commerce (CCC), warns that unless the Government steps in to resolve the financial crisis the industry is in due to the payment defaults by the National System Operator (Pvt) Limited (NSO), the domestic renewable energy sector faces a natural death.

Payments for renewable energy supplied to the national grid have been entirely halted since December 2025. With LKR 2.5 Billion falling due each month, the defaults have ballooned to an unsustainable LKR 10 Billion as of April 2026, it said.

According to senior officials at the NSO, the primary reason for this liquidity drain is the prioritization of payments for diesel and heavy fuel power generation to operate approximately 100MW to 150MW of daily supply shortfall arising from inefficiencies and shortfalls in coal power generation since December, the statement added.

Driven by the ongoing geopolitical conflict between Iran and the US, the cost of generating this thermal power has skyrocketed to exorbitant levels, nearing or exceeding LKR 100 per kWh.

“It is fundamentally unfair that conventional power generators receive preferential treatment for disbursements while the renewable energy sector is completely forgotten,” the federation said. 

FRED demands that the exact same payment priority afforded to coal, diesel, and heavy fuel operators must be extended to renewable energy developers and warns that prioritizing payments for expensive fossil fuel powerplants, and defaulting on the renewable energy developers who provide significantly cheaper and cleaner energy, can have a backlash if those operators are forced out of business leaving a bigger supply shortfall.

It called for immediate Treasury intervention and grant allocation as well as Cabinet intervention to avert the “complete collapse of the renewable energy sector and prevent reciprocal damage to the broader economy”.

The Federation of Renewable Energy Developers further said it stands ready to work with the government to ensure a stable, sustainable, and economically viable energy future for Sri Lanka, but warned immediate financial relief is non-negotiable to keep the lights on today.