An Analysis of the Energy Sector Performance

The Energy Sector is a combination of the four energy forms, viz., energy resources, energy supply including conversion, production and distribution, energy demand and end use. Energy used in a country is found in different forms at different stages of its flow from the raw form found in nature to the actual end use form. Broadly, these stages can be categorised as;

  • Energy Resources
  • Energy Supply including conversion/production and distribution
  • Energy Demand
  • End Use

Energy sector is the combination of all the above stages of different energy forms which are interrelated, as illustrated below.


Energy Balance


The above flow diagram explains that, owing to various end uses of energy, a demand exists in the market, which is fulfilled by the energy supply using the available resources.  This follows the basic demand supply economic model valid for any scarce resource.


Energy Resources

A natural resource is considered an energy resource, if it can be converted to a usable form of energy. There are numerous forms of energy sources in the world and different countries use different resources, primarily selected on economic principles. However, environmental and political reasons also influence the selection of a country’s energy portfolio.


Availability, either local or global, is not necessarily the only factor considered for using a particular resource as an energy supply source. More importantly, the use must be economical compared with other available sources. Hence, the technology available for converting the resource to a more usable form is important in the selection of an energy resource for energy supply. Change of technology and availability of resource over time can change the economics of using the resource for energy supply. Therefore, the resources used by a country for energy requirements also change with time.


Indigenous Resources

Attributed to geo-climatic settings, Sri Lanka is blessed with several types of renewable energy resources. Some of them are widely used and developed to supply the energy requirements of the country. Others have the potential for development when the technologies become mature and economically feasible for use. Following are the main renewable resources available in Sri Lanka.

  • Biomass
  • Hydro Power
  • Solar
  • Wind

In addition to the above indigenous renewable resources, the availability of petroleum within Sri Lankan territory is being investigated.


Global Resources

In the international market, many forms of energy sources are available for Sri Lanka to import and use for its energy needs. However, up to now, Sri Lanka has been largely using only petroleum fuels for this purpose. Increasing petroleum prices have prompted Sri Lanka to examine the feasibility of using other sources such as coal and Liquefied Natural Gas (LNG) to replace liquid petroleum in certain applications. Following are the most common energy sources globally available for energy supply on a commercial scale.

  • Petroleum
  • Coal
  • Natural Gas
  • Nuclear Energy

More recently, new energy supply technologies such as biofuels and energy carriers such as hydrogen have emerged as alternatives to the above conventional technologies and transfer options. However, use of these technologies for energy supply purposes is still limited in Sri Lanka.


Energy Supply

To understand the status of the energy sector of a country, what is more important is not the availability of different energy resources, but the extent of use of these resources. As explained earlier, mere availability of a resource within a country does not enable its utilisation. Therefore, it is more important to analyse the resources which are actually being used to meet the energy demand of the country. Following are the three main energy supply forms in Sri Lanka.

  • Biomass
  • Petroleum
  • Coal
  • Electricity

Energy supply is essentially the conversion of energy resources from one form to a more usable form. However, this conversion can vary from producing electricity from the potential energy in a hydro reservoir to refining crude oil into gasoline or diesel.



For each energy supply source, there must be a distribution mechanism through which it can be served to the points of end use. From the production or storage facilities of the energy supply system, the distribution system transports energy to the end user.


The biomass distribution network is quite simple, and in the case of most users, a formal network does not exist. The majority use of biomass is in households, where the source and the point of use, both are within the same home garden. Even in industrial use, distribution is a one-to-one arrangement, which links the source to the user through a direct biomass transport.


 In the case of petroleum, distribution is from the petroleum storage facilities up to end user points such as vehicles, power plants and industries, channelled through regional storage facilities and filling stations.


 For electricity, distribution starts from the generating station (power plant) and ends at consumer points such as households and industries. The high voltage transmission network, medium voltage regional networks and low voltage local distribution networks are collectively considered as the energy distribution system of electricity.



For the energy sector, demand drives the market. Demand arises owing to energy needs of households, industries, commercial buildings, etc. According to the needs of the user, the supply of energy has to take different forms. For example, the energy demand for cooking is in the form of biomass in rural areas, while it is in the form of either LP gas or electricity in urban areas. Therefore, not only the quantity of energy, even the quality and the form it is delivered, is determined by the demand.


In this report, the demand is categorised in terms of end-use sectors and is not based on the actual usage or the application of energy at appliance level.



The Sri Lanka Sustainable Energy Authority wishes to express its sincere thanks to the following institutions for their valuable cooperation in the compilation of the “Sri Lanka Energy Balances” and the Analysis of Energy Sector Performance. 

  • Ministry of Environment and Renewable Energy
  • Ministry of Power and Energy
  • Ministry of Petroleum and Petroleum Industries
  • Ceylon Electricity Board
  • Lanka Electricity Company
  • Ceylon Petroleum Corporation
  • Railway Department
  • Department of Census and Statistics
  • Central Bank of Sri Lanka
  • Sri Lanka Energy Managers Association
  • Administrative Unit, RERED project at the DFCC Bank
  • All institutions, which responded positively to our request to provide relevant data
  • International Energy Agency – for their continuous support and encouragement