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Sri Lanka has seen a rapid rise in solar power in recent years. By 2024, solar PV accounted for about 14% of the country’s electricity generation, up from negligible levels a decade ago. Rooftop solar installations have surged—rising from roughly 930 MW in 2024 to an estimated 1,700 MW by mid-2025. Renewable energy developers now supply over 3,300 MW of clean power to the national grid. This growth reflects Sri Lanka’s abundant sunshine, a need to cut costly fuel imports, and a global push for climate-friendly energy. Expanding solar can boost energy independence and save import dollars while also creating jobs. However, integrating so much solar onto an aging grid has proven challenging. More details can be read here
The “Sunny Sunday” Blackout and Grid Inertia
In early 2025 Sri Lanka’s grid suffered a severe stress test. On February 9, 2025, a fault at a substation led to a cascade that caused a nationwide blackout. An official report and CEB investigation found the culprit was unusually low system inertia due to extremely high solar output on a low-demand weekend. On that “Sunny Sunday,” solar PV supplied over half of the country’s electricity demand. With so much of the grid powered by inverter-based solar, which lacks the spinning mass of conventional generators, the system could not absorb a voltage disturbance. In other words, the grid lacked the stabilizing inertia usually provided by big diesel, gas, or hydro turbines. The resulting imbalance triggered cascading disconnections and a total power failure. A CEB expert committee warned that conventional power plants were running at minimal output that day, leaving the system “more vulnerable.” More details can be read here and here
The report coined this the “Sunny Sunday” effect—low weekend demand plus high solar output creates instability. Many other countries with high solar have seen similar issues. The CEB says this event showed the urgent need for solutions like battery storage, synchronous condensers, or smart inverters to boost inertia. Battery storage, for instance, can act as a “synthetic” generator to stabilize frequency. In the immediate aftermath, CEB announced measures including keeping more synchronous generators active and even running some gas turbines as condensers to provide voltage support. The CEB also explicitly embraced limited solar curtailment as a tool. CEB started curtailing ground-mounted solar PV generation during low-demand periods to mitigate instability risks.
CEB’s Curtailment Policy and Industry Reaction
To prevent a repeat outage, the CEB began routinely limiting solar output on certain days. At first this was limited to Sundays, hence the nickname “Sunny Sunday” curtailment. But solar producers say it soon expanded. By 2025, private solar farms report being instructed to shut off in midday on all weekend days and public holidays. In early 2026, curtailment began creeping onto weekdays as well—the Grid Connected Solar Power Association (GCSPA) says plants were recently told to shut down on two or three weekdays each week. More details can be read here and here
The CEB insists curtailment is a short-term emergency measure to stabilize the grid when demand is very low and solar generation very high. In its own words, curtailment is done “only when necessary” as one tool among others to prevent blackouts. CEB has also pointed to long-term plans for more storage and grid upgrades, many funded by donors, to eventually allow full solar integration.
Solar developers and investors, however, say the lack of coordination is hurting their businesses. Key industry voices have strongly criticized the way curtailment has been handled. The GCSPA and media reports estimate losses around Rs 2 billion due to curtailed solar output since early 2025 . Ground-mounted solar operators say their monthly income has fallen roughly 15% under the curtailment regime. More details can be read from here and here
In Sri Lanka, there have been multiple concerns about this solar supply curtailment to the national grid. The main concern is about the breaking of contracts signed by solar energy suppliers and CEB. Most independent solar plants were built under “must-run” Power Purchase Agreements. Industry experts note that unlike thermal plants, which get paid capacity charges even if offline, solar generators only get paid for energy delivered. Unilaterally forcing these plants to idle violates those contracts, they argue. While attending a recent media briefing in Colombo, former GCSPA (The Grid Connected Solar Power Association of Sri Lanka) member Kishan Nanayakkara warned this “unilateral breach” of PPA (Power Purchase Agreement) s undermines investor trust.
Loan defaults: Many solar firms are highly leveraged. GCSPA President Prabath Wickramasinghe says in the media briefing that curtailed revenues mean companies are now unable to service loans taken to build the plants. Banks fear a wave of defaults if the revenue disruptions continue.
Investor confidence: Developers worry that unpredictable curtailment and policy changes will scare away future investors. Wickramasinghe warned that foreign investors “will not participate” in tenders if curtailment undermines their projects . Analysts and bankers have publicly cautioned that chronic losses could trigger a non-performing loan crisis that chokes credit to renewables .
Solar firms say the blackout warranted a grid fix—but they argue the response should focus on building storage or better planning, not long-term cuts in their output without pay.
Managing Grid Stability: Solutions and Delays
Both the government and experts agree that “curtailing” the sun is a blunt instrument. They emphasize it is only a stopgap. The real solution is to upgrade the grid and add balancing technologies so solar can run at full tilt without risking blackouts.
In fact, several stability measures are either underway or proposed: –
Battery energy storage (BESS): Local investors and operating renewable energy developers are ready to install Battery Energy Storage Systems (BESS) to store the excess electricity curtailed during the day and release it during the night peak demand time (18:30-22:30). For this purpose, the Cabinet of Ministers approved a price of Rs. 45.80 per unit in June 2025, and the Finance Ministry provided tax concessions in September 2025. However, the CEB has still not released implementation guidelines to enable this proposed system, and as per developers, the CEB is doing this to deliberately delay the process. More details can be read here
Synchronous condensers and generation management: CEB is deploying quick fixes like running old thermal units or turbines in “synchronous condenser” mode, which can spin freely to add inertia and keep more hydro/diesel plants active at all times. These provide immediate stability support, albeit at some fuel cost. CEB’s published action plan also includes fine-tuning inverter settings on rooftop solar and shifting some industrial loads to weekends.
Pumped storage and grid upgrades: Looking further ahead, Sri Lanka has big projects planned. The 600 MW Maha Oya pumped-hydro facility is meant to soak up excess renewables and release on demand. A World Bank-backed program approved in mid-2025 will invest $150 million to strengthen the grid and add 1,000 MW of solar and wind projects. This package explicitly aims to make the grid “better handle renewable energy and reduce power outages.” New smart grid technologies and real-time inertia monitoring are also on the roadmap.
In sum, curtailment is not sustainable long-term. The immediate fixes have been put in place, and bigger infrastructure is approved—but private developers complain implementation is sluggish. As per private solar firm developers, storage is the solution, but until it comes, firms should be paid enough money to repay loans.
Sri Lanka has committed to generating 70% of its electricity from renewables by 2030. Reaching that target will require stable policies and continued private investment. Policy uncertainty, administrative delays, and controversial decision-making under the current government are already eroding confidence in the power sector. Bankers reportedly fear that if solar firms start defaulting on loans, it could trigger a wave of non-performing loans that hurts the entire economy. We can explain the current situation as a “policy paralysis” threatening the clean-energy transition.
References
https://www.ft.lk/columns/Solar-industry-Future-of-Sri-Lanka/4-786789
https://www.ft.lk/energy/Death-knell-to-local-renewable-energy-industry/10509-787309
https://economynext.com/sri-lankas-ceb-explains-measures-to-counter-sunny-sunday-blackouts-205838
Sri Lanka gets $150mn World Bank financing to boost renewables, avoid blackouts
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Banner Image: Photo by Nuno Marques on Unsplash
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