The Adani Group, which is setting up two wind power projects in Sri Lanka with a combined capacity of 484 MW, has offered the cheapest tariff in the country at 8.25 cents per unit, data showed.
Post intense negotiation with the government in Colombo, Adani has offered a tariff of 8.25 cents a unit, equivalent to LKR 24.75, which is much lower than the tariff from the island country’s existing renewable and traditional energy sources, according to local media reports.
Adani’s tariff is lower than the Sri Lankan government’s own wind power and country’s fossil fuel-based power plants, which range from 8.75 cents a unit to 26.99 cents.
The Adani group is investing over $1 billion in the wind projects, which would be the largest of such projects in that country.
The Ahmedabad-based conglomerate has received Sri Lankan cabinet approval for the project and currently the power purchase agreements are being hammered out with the government. Work will begin shortly after it is finalised, and the project is expected to be delivered in two years.
Of strategic importance
The project is strategically important for both nations.
It is coming up in northern part of Sri Lanka close to the Indian mainland. The project will aid the island nation in fulfilling its key sustainability goal of achieving 70 per cent renewable energy generation by 2030 and carbon neutral by 2050.
To put this in perspective, in FY24, fossil fuel-based power plants accounted for over half of Sri Lanka’s total power generation, and under 8 per cent came from solar or wind, with hydro contributing 31 per cent.
Over the next 25 years, the country’s power demand is projected to grow at around 5 per cent annually and it will need to add close to 7,000 MW of fresh renewable energy, mainly consisting of 4,700 MW of solar and 1,800 MW of wind power.
The Adani project will displace fossil fuel worth over US$ 270 million annually, which Sri Lanka currently imports. This project will also save valuable foreign exchange, having only recently battled an acute economic crisis with dwindling forex reserves. The project will not only pump FDI into the nation, but also cut its fossil fuel import bill.