By Shanika Somatilake –

Shanika Somatilake

Sri Lanka’s national electricity policy draft reflects a necessary shift in thinking, away from the concept that power systems can be managed by simply adding more generation and leaving the rest under markets or operator judgement. This transformation is not ideological. It reflects lived experience. Repeated system stress, blackouts, fiscal shocks and increasing climate volatility have revealed the limits of energy-only thinking in action.

Sri Lanka’s power system was generally stable for many years. Rainfall fell in typical seasonal ways. Hydro reservoirs acted within typical ranges. Demand had grown gradually and extreme events were rare. Under those conditions, ensuring sufficient generation capacity was often enough. That stability is gone. The rain now comes in short intense bursts. Reservoir waters rise and fall at faster rates than operating standards allowed it to accommodate. Renewable output swings sharply. Peak demand is more and more in constant contact with times of heat stress. In this world, having sufficient energy on paper is not a guarantee of reliable supply. Stability depends on the degree to which variability, scarcity and extreme operating conditions can be controlled before they lead to wider system failure.

Renewable energy is not inherently unreliable. It is variable by design. Systems that embed high concentrations of renewables effectively do not try to resolve that variability. They absorb it using buffers, such as firm fuel, financial capacity, institutional strength, interconnection or explicit demand management. The transition to renewables is therefore less about the chosen technologies and more about the level of risk a country is able to handle and govern.

Sri Lanka’s problem is that many of these buffers are still weak. There is limited fiscal space to absorb long-term price shocks. The island grid has restricted external interconnection for smooth fluctuations. There are unevenly formalized and frequently opaque operational rules on hydro releases, response to scarcity, and allocation of losses. Meanwhile, political and social tolerance for extended blackouts is similarly low. Taken together, these constraints amplify renewable variability into a system-level instability, especially in environments that lack strong institutions or refuse to confront demand curtailment directly.

Bangladesh could provide an interesting contrast, not because it is a renewable heavy power producer but because of how control is exercised. Its electricity system is still mostly thermal, relying on gas, oil, coal and imported power, with renewables at the edges. What distinguishes Bangladesh is governance not technology. Scarcity is recognized in and accommodated for with scheduled load shedding. Priority sectors are protected. Households bear interruptions. No guarantee of uninterrupted supply occurs. The social cost is real, but the system is still operable when stressed. Renewables are added slowly under a scenario of manageable thermal capacity and selective demand reduction rather than of automatic balance.

Vietnam presents a structural parallel in its situation, as another hydro-dominated monsoon-working hydro-system that can be compared to Sri Lanka. Vietnam has expanded solar and wind quickly, and has since adapted to the increasing usage of large hydro reservoirs and thermal generation. The distinction is not so much the mix as the manner in which it is managed, as well as how its work will be performed. Hydro reservoirs are strategic and multi-functional assets. Operations are harmonized over cascades under legal rules that focus on flood control, dry season safety, and downstream welfare and power production. Energy optimization is replaced, instead of the retrospective blaming, by centralized decisions during severe events giving way to system stability. This demonstrates institutional consensus that hydro in volatile climate environments cannot be handled via decentralized discretion alone.

New Zealand is at the other end of this spectrum. It is effective in pushing renewable penetration forward, because there are well-established buffers. Their strong institutions, a stronger regulator and a higher fiscal headroom allow price volatility to be absorbed while making reliability a binding obligation. The assumption that energy-only markets will effectively self correct when environmental stress forces them with no return on investment has been set aside. Reliability is being increasingly regarded as a regulated product. This is the reality behind the use of liquified natural gas (LNG) as a strategic backstop in a virtually renewable system. It isn’t retreating from decarbonization. It is accepted that in dry years and prolonged lulls in wind, controllable capacity will be the only course of action.

From this backdrop, Sri Lanka’s move away from coal production and toward LNG is understandable. Coal plants are slow and inflexible. They are unsuitable to maintain the intermittent renewable output. LNG fired generation can have a faster response time, more flex capacity and operate more flexibly while being a significant reduction in emissions intensity. Systemically, LNG is no baseload alternative to coal. It’s an extreme management tool. The danger does not lie in getting at LNG but in being a low governance and dispatch priority nation with little understanding of rules for scarcity.

The real problem is that Sri Lanka doesn’t yet fully understand its transition from energy-only thinking. Policy recognizes the need for diversification and flexibility. However, it largely skips the process-driven rules that will solidify high renewable penetration. Hydro reservoirs continue to depend on judgment rather than enforceable and time-indexed rule curves, which accommodate rainfall predictions, inflow risks, lower risk of downstream flooding and the wants of power supplies. Demand is almost entirely passive but certainly not an active control variable determined by price, contractual disruption and/or pre-announced emergency plans. Scarcity remains an issue, with no plans to govern it ahead and no public awareness of it.

A credible renewable pathway for Sri Lanka demands practical realities and not higher numerical priorities. Hydro needs to be treated as the backbone of our community, not just as cheap energy. LNG should be approached and regulated as strategic firming rather than a fix or an idealistic trade-off. Demand must be brought directly into the system control. Above all, institutions must be able to enforce reliability before crises emerge.

Renewables are not a moral accomplishment. They are a systems engineering problem. Countries that effectively adopt them do so because they can withstand failure, openly ration demand, and manage scarcity with enforceable rules. Sri Lanka can only ensure a renewable future if it builds an operating system that joins data, forecasts and authority to binding action in the face of stress. Without that design, renewable ambition remains fragile, not because of a scarcity of resources, but because the system is not yet set up to handle when circumstances do not go as planned.