According to the Sri Lanka energy sector development plan, the Government envisages to give prominence to green energy sources to reduce carbon footprint and meet the Sustainable Development Goals. Sri Lanka is endowed with several types of renewable energy resources, including biomass, hydropower, solar and wind. Sri Lanka aspires to become a carbon neutral country by 2050 by making the most out of the energy available and developing cleaner energy resources according to the National Energy Policy and Strategies of Sri Lanka.

As per the Energy Sector Assessment of the Asian Development Bank (ADB), 2019, much of the hydropower capacity has been developed already for electricity generation: 1,390 megawatts (MW) in larger power plants by the Ceylon Electricity Board (CEB) and 350 MW in smaller power plants by private investors. The technical resource potential for solar power generation is estimated to be 6,000 MW. The target capacity of rooftop solar PV is 200 MW by 2020. The exploitable wind power potential is estimated to be 5,600 MW, of which about 130 MW has been developed, with a further 130 MW under construction.

The ADB actively supports Sri Lanka in refining and translating their nationally determined contributions into potential investment projects to address climate change and enhance environmental sustainability in the region. In this context, there are many opportunities for foreign investments in sustainable energy sector of Sri Lanka.