The World Bank approved on June 14 additional financing of US$40 million credit to strengthen the Government of Sri Lanka's efforts to bring electricity to remote rural communities and promote private sector power generation from renewable energy sources in urban areas.
Expressing confidence that the additional financing will scale up the project, Naoko Ishii, World Bank Country Director said "Over the past four years, the Renewable Energy for Rural Development (RERED) Project has clearly shown that alternative environment friendly systems can be a viable and effective alternative for remote and rural areas."Â
The initial RERED project brought about an increase in power generation capacity with active private sector involvement and improved energy access in rural areas. Its impact was seen in the socioeconomic developments reflected in the creation of income-generation activities leading to raised earning levels in villages where the project was active.
"Sri Lanka has made strong progress in terms of promoting private investments in renewable and rural energy,"Â said .Mudassar Imran, Senior Energy Economist and Task Leader for the project. "The additional financing for this project will facilitate the development of the renewable energy sector thereby contributing to the government's renewable energy development goals."Â
Specifically, the additional financing will aim to:
(i) increase the grid-connected capacity by a further 50 MW through renewable energy technologies by the private sector;
(ii) provide energy access to 60,000 additional households in rural areas through off-grid electricity services; and
(iii) provide access to an additional 500 rural micro- and small-scale enterprises.
The primary goal of the first project was to bring electricity to remote communities and individual households through village-led electricity societies and solarenergy dealers. The productive use of electricity resulted in an increase of non-farm incomes of rural households and improved the delivery of social services such as health and education through customized electricity provisions.
A valuable gain was the strengthening of the generation supply of the national grid through the support given by private sector-owned mini-hydro, and other renewable energy projects that feed into the grid.
The original project components will remain the same and include refinancing support for grid-connected renewable energy, investment in solar power technology (photovoltaic) and further commercialization of village hydro and other community-based independent grid systems. Technical assistance to build capacity to enable communities to realize both direct and indirect benefits of electrification remains a vital part of the project.
The credit is provided by the International Development Association (IDA), the World Bank's concessionary lending arm, and has 20 years to maturity and a 10-year grace period. -World Bank
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