Importing Solar Panels to Sri Lanka: Green Energy Incentives 2026

Sri Lanka's renewable energy sector is experiencing a significant transformation in 2026, driven by government policies that make importing solar panels more financially attractive than ever before. With duty exemptions on capital goods for projects exceeding 1MW and updated technical standards ensuring quality installations, now is the ideal time to invest in solar technology for our energy needs.

Understanding Solar Panel Import Regulations

The Sri Lanka Customs Department classifies solar panels under Chapter 85 of the Harmonised System (HS) code, specifically covering photovoltaic modules and solar home systems [1]. All importers must comply with the National Imports Tariff Guide 2026, which consolidates customs duty, Value Added Tax (VAT), Port and Airport Development Levy (PAL), and other applicable taxes into a single reference document [2]. The Sri Lanka Sustainable Energy Authority (SLSEA) has introduced updated technical standards for solar panel imports to ensure long-term durability, better performance, and environmental safety [3].

Required Documentation and Permits

Importing solar panels requires proper classification using the correct HS code and submission of a Customs Declaration (CusDec) [2]. All imports are subject to the Foreign Exchange Act No.12 of 2017, and importers must obtain any necessary approvals from relevant authorities before clearance [2]. For commercial-scale projects, registration with the Sustainable Energy Authority may be required, particularly for grid-connected systems [4].

Green Energy Tax Incentives 2026

The most significant incentive for solar imports in 2026 is the duty exemption on capital goods for renewable energy projects. Through an official gazette notice issued in October 2025, the government now allows duty-free imports of capital goods "for the purpose of construction of renewable energy or storage facilities" [5]. This exemption applies to new projects and extensions of existing facilities with a minimum capacity of 1 megawatt (MW) for generation or 1 megawatt-hour (MWh) for storage [6].

Which Taxes Are Exempted?

Under the bonded warehouse facility provisions, qualifying renewable energy projects can import capital goods free from customs duty, PAL, and certain other levies [7]. This represents a substantial cost saving compared to standard import taxes. However, it's important to note that smaller residential and commercial solar installations not meeting the 1MW threshold still face standard import duties and taxes [5].

Tax Structure for Standard Imports

For solar panels and batteries imported outside the capital goods exemption scheme, importers face a combined tax burden. According to the Federation of Renewable Energy Developers (FRED), batteries for solar power are hit with approximately 46% in taxes at import, comprising around 25% import duty, 5% Port and Airport Development Levy, and 18% Value Added Tax [8]. Because electricity isn't under Sri Lanka's VAT regime, developers cannot recover the VAT by invoicing the Ceylon Electricity Board (CEB), making it a permanent capital cost [8].

Quality Standards and Certification

To be eligible for connection to the CEB grid and qualify for feed-in tariffs, solar modules must meet specific international and local quality standards [9]. The SLSEA's updated technical standards aim to prevent substandard products from entering the market and ensure reliable system performance [3]. Solar panels must undergo certification through approved testing bodies, and manufacturers should provide compliance certificates demonstrating adherence to International Electrotechnical Commission (IEC) standards [10].

Import Quality Control

The government has announced plans to give the Sustainable Energy Authority power to regulate solar panel importers and prices, addressing concerns about private importers fixing prices based on volatile dollar rates [11]. This regulatory framework will help standardise pricing and ensure quality control across the industry.

Grid Connection and Feed-In Tariffs

Sri Lanka supports rooftop solar through three government-approved schemes: Net Metering, Net Accounting, and Net Plus [12]. These programmes allow consumers to export excess solar electricity to the grid and receive credits or payments. The CEB has announced a 45.80 rupee per unit tariff for solar battery energy stored during the day and discharged into the grid between 6:30 PM and 10:30 PM [8].

Net Metering Benefits

Net metering allows homeowners and businesses with solar panel systems to earn credits for excess electricity they generate and send back to the national grid [13]. When your solar panels produce more power than you consume, the surplus energy is fed into the grid, and your electricity metre essentially "spins backward," providing credits that offset future electricity consumption [13]. Most residential and commercial customers of CEB and Lanka Electricity Company (LECO) are eligible for net metering through a registered solar installer [13].

Market Outlook and Investment Opportunities

The government's strategic shift toward renewable energy aligns with Sri Lanka's 2026 development roadmap, which emphasises energy security, sustainability, and industrial innovation [7]. The inclusion of renewable energy generation and storage systems among capital goods eligible for tax relief marks a pivotal step in attracting both domestic and foreign investment [6]. Feed-in tariffs have successfully facilitated approximately 1,700MW of rooftop solar installations, demonstrating the effectiveness of government incentive programmes [8].

Large-Scale Project Opportunities

Sri Lanka has advertised for battery energy storage systems on a build-operate-own basis, along with wind and solar plants [5]. These utility-scale projects benefit from the most generous tax incentives and represent significant investment opportunities for renewable energy developers. The 1MW threshold for duty exemptions makes medium to large commercial and industrial installations particularly attractive.

Practical Steps for Importers

Start by determining your project size and whether it qualifies for capital goods duty exemptions. For projects exceeding 1MW, work with the Ministry of Finance to obtain approval under the bonded warehouse facility provisions [7]. Ensure your solar panels meet SLSEA technical standards and have proper IEC certification [3]. Calculate total landed costs including all applicable taxes using the formulas provided in the National Imports Tariff Guide 2026 [2].

Working with Approved Installers

For grid-connected systems, you'll need to submit an application to CEB or LECO through a registered solar installer [13]. The approval process involves site inspections and safety certifications to ensure compliance with grid connection standards [12]. Choose installers who are familiar with the latest SLSEA standards and can provide proper documentation for customs clearance.

Challenges and Considerations

Despite generous incentives for large projects, smaller residential and commercial installations face the burden of import taxes that increase upfront costs. The 46% tax on batteries makes energy storage expensive compared to other countries [8]. Policy stability remains a concern, as changes in government or regulatory priorities can lead to adjustments in tariff rates or programme rules [9]. The 10-year warranty period commonly offered may be insufficient for the actual lifespan of quality solar installations, according to industry developers [8].

Future Policy Developments

The government continues to refine its renewable energy policies to accelerate the transition away from fossil fuels. The expanded list of capital goods eligible for duty exemptions demonstrates commitment to green energy infrastructure [6]. Regulatory frameworks for pricing and quality control are being strengthened to protect consumers and ensure market transparency [11]. As Sri Lanka works toward energy independence and sustainability goals, additional incentives and support mechanisms are likely to emerge throughout 2026 and beyond.