India and Sri Lanka firmed up plans to lay a 285-km undersea power transmission line between the two nations at an estimated cost of $450 million. The project started in November 2008.

The submarine link will initially facilitate exports of 500 megawatts (MW) of electricity from India to Sri Lanka and will be functioning by the end of 2009 or beginning of 2010. The capacity will be scaled up to 1 gigawatt (GW) by the end of 2010 or beginning of 2011. With the completion of ongoing power generation projects, the southern region of India is expected to have large surplus supplies of power by 2012, with a peak surplus of 6 GW and off-peak surplus of more than 12 GW.

The undersea link eventually will enable the exchange of electricity between the countries. Sri Lanka is likely to generate surplus electricity when ongoing large-scale power generation projects are commissioned between 2015 and 2018. The undersea power transmission network will be used to direct surplus electricity from Sri Lanka to India.

The cable will be laid on the seabed similar to undersea Internet and telecom cables. It will be fitted with safeguards against electrocution in the event of damage by sharks or ship anchors. An optical fiber cable will be laid alongside the power cable to monitor the link and to provide additional telecom capacity between the countries.

Sri Lanka currently has 2.4 GW of installed power generation capacity, with hydropower stations accounting for 54 percent of the total power generation and thermal power stations accounting for the rest. The country generates 8.7 million megawatt-hours of electricity every year. Households consume 40 percent of the electricity produced while industrial and commercial establishments account for the remaining consumption.

The government aims to provide electricity to 90 percent of its population by 2010 and will need to increase the installed capacity by 550 MW with an investment of $2.5 billion.