The following report is conducted as a feasibility study, aimed to objectively uncover the advantages and challenges of increasing the amount of small scale solar power in Sri Lanka. The demand for electricity in Sri Lanka has been steadily increasing the last few years and there is an urgent need to find new ways of generating electricity. To not further increase the already high dependency of foreign oil and to decrease the impact on the environment, a transition from traditional combustion of fossil fuel to new renewable energy is required.

The report shows that there exists substantial potential for generating solar energy in Sri Lanka. Calculations show that an investment in a photovoltaic system can be economically favourable and that the investment often is paid back within a few years. Current regulations and electricity pricing increases the economic incitement for high electricity consumers to invest in small scale solar power. Furthermore, the report demonstrates that there are likely no technical obstacles of increasing small scale solar power at this period. In contrary, the report shows that small scale solar power in general decreases line losses, voltage drops, and the peak demand of electricity.

At present, it is probably not the lack of economic incitement but rather socio-economic factors that limit the development of small scale solar power. Sri Lanka is still a relatively poor country and the long years of civil war have prevented development and wealth. Lack of funds and a high ratio of low-income earners are probably the main reason for the slow development