In a landmark climate policy update, Sri Lanka secures World Bank Group support to scale up renewable energy and modernize its grid infrastructure. ESG BROADCAST shares key takeaways.
The World Bank Group has approved a $150 million initiative titled “Secure, Affordable, and Sustainable Energy for Sri Lanka,” designed to bolster the country’s clean energy transition. The program aims to reduce Sri Lanka’s dependency on costly fossil fuel imports while supporting its national target of generating 70% of electricity from renewables by 2030.
The program focuses on utility-scale solar and wind energy development, expected to add 1 gigawatt of clean electricity to the national grid. The initiative also includes $40 million in guarantees from the World Bank Group to reduce financial risk for private investors. These guarantees will support payment obligations of the Ceylon Electricity Board (CEB), thereby improving investor confidence. The program is projected to mobilize over $800 million in private investment, helping reduce electricity costs and enhance reliability for residential and industrial consumers.
The implementation will be carried out through collaborative efforts between the Government of Sri Lanka and private sector entities, with technical and investment support provided by the World Bank’s private sector arms—the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). IFC will deploy capital and provide advisory support, while MIGA will extend political risk insurance to de-risk investment for foreign developers and financial institutions.
“Sri Lanka’s energy transition is an opportunity to expand clean energy, improve energy access, and build long-term resilience,” said Imad Fakhoury, IFC’s Regional Director for South Asia. “This requires sustained collaboration from public and private sectors. As one World Bank Group, we are equipped to mobilize capital and partnerships for sustainable growth.”
In parallel with renewable capacity expansion, the program will fund grid upgrades and technical assistance to enhance CEB’s planning, procurement, and operational practices. This is critical to accommodating intermittent renewable sources while ensuring grid stability. Moreover, the initiative aligns with regulatory reforms aimed at increasing transparency and competitiveness in the power sector.
The initiative takes a comprehensive approach by integrating financing instruments, regulatory support, and private-sector engagement to strengthen Sri Lanka’s environmental governance. Modernizing grid infrastructure is expected to minimize outages and price volatility, delivering economic and social benefits across regions.
Strategic significance lies in the program’s potential to decarbonize Sri Lanka’s energy mix while accelerating sustainable infrastructure investment. For ESG stakeholders, this presents new opportunities in green finance frameworks, project development, and impact investment aligned with net zero targets. Regulatory analysts and sustainability officers should note that the guarantees, investment flows, and grid modernization components will play a critical role in tracking the country’s progress toward its climate commitments.
ESG BROADCAST will continue monitoring the updates related to this topic. Stay tuned to be updated on the related policy and pivotal regulatory shift.
