Khen Energy Limited Secures Second 10MW/40MWh Battery Energy Storage System Project in Sri Lanka

Key Points for Investors

• Significant Expansion: Khen Energy Limited, through its wholly-owned subsidiary WKV Hydro Technics (Pvt) Ltd., has secured a second Letter of Award (LOA) from National System Operator (NSO) in Sri Lanka for a standalone 10MW/40MWh Battery Energy Storage System (BESS) project.
• Total Portfolio Growth: With this new award, Khen Energy’s total BESS capacity in Sri Lanka now stands at 20MW/80MWh, effectively doubling its awarded capacity in this segment.
• Strategic Shift: The move follows the company’s restructuring and a renewed strategic focus on renewable energy, further diversifying its portfolio which already includes mini-hydro and solar power assets.
• Project Timeline: The company is expected to achieve commercial operation for the second BESS project within nine months of signing the Energy Storage Agreement, anticipated within a month from LOA acceptance.
• Funding: The project will be financed through a mix of internal resources and external financing.
• Positive Revenue Impact Anticipated: Barring unforeseen circumstances, the project is expected to contribute positively to group revenue for the financial year ending 31 December 2027, though the impact on earnings per share or net tangible assets per share for FY2026 is not expected to be material.
• Regulatory Background: The BESS projects stem from a tender originally issued by the Ceylon Electricity Board (CEB) in July 2025. After the CEB’s restructuring in March 2026, NSO, now wholly owned by the Sri Lankan government, is responsible for procurement and system operation.
• Shareholder Approval: The company’s expansion strategy and participation in the BESS tender were supported by shareholders at an extraordinary general meeting on 2 March 2026.

Details and Analysis

Khen Energy Limited has made a significant stride in its renewable energy ambitions by securing a second Letter of Award for a 10MW/40MWh Battery Energy Storage System in Sri Lanka, following an earlier award announced in February 2026. The award was granted to its subsidiary, WKV Hydro Technics, by the National System Operator (NSO), a government-owned entity vested with the operation and maintenance of Sri Lanka’s power system, as well as the bulk procurement of electricity.

This development brings Khen Energy’s total awarded BESS capacity in Sri Lanka to 20MW/80MWh. The projects originate from a tender initiated by the former Ceylon Electricity Board (CEB) in July 2025, designed to attract investment in battery storage at grid substations for a 15-year operating period. As part of a major regulatory overhaul, CEB’s responsibilities and assets were transferred to four new government-owned companies, including NSO, in March 2026 in accordance with Sri Lanka’s Electricity Act No. 36 of 2024.

The company’s strategic expansion into battery storage aligns with a broader push to grow its renewable energy portfolio post-restructuring, which was completed in June 2025. This was further validated by shareholder approval at a March 2026 extraordinary general meeting. The inclusion of battery storage alongside existing mini-hydro and solar assets is aimed at enhancing portfolio diversification and supporting long-term, sustainable growth.

The Energy Storage Agreement for the second BESS project is expected to be signed within a month of the LOA’s acceptance, with commercial operation targeted within nine months from that point. Financing for the project will come from both internal and external sources. While the project is expected to positively impact group revenue for FY2027, management does not anticipate a material effect on earnings per share or net tangible assets per share for FY2026.

The company underscores that none of the directors or controlling shareholders (other than in their capacities as shareholders or directors) has any interest in the project. Management also noted that further major project announcements may follow, given their active pursuit of additional renewable energy investments in Sri Lanka.

Potential Price-Sensitive Information

• Doubling of BESS Capacity: The total BESS capacity awarded to Khen Energy now stands at 20MW/80MWh. This significant increase could be viewed positively by the market as it reflects rapid portfolio expansion and strengthens the company’s positioning in the region’s energy transition.
• Revenue Contribution Timeline: The project is scheduled to begin contributing to revenue in FY2027, providing investors with a clear timeline for expected financial impact.
• Execution Risks: The company has cautioned that while positive revenue contribution is anticipated, there are execution risks and no guarantee regarding the future success of the BESS projects. This uncertainty should be noted by shareholders.
• Ongoing Green Energy Strategy: Additional projects and announcements may further affect the company’s valuation as it continues its expansion in Sri Lanka’s renewable sector.
• Shareholder Caution: The company has explicitly advised shareholders to exercise caution when trading shares due to the uncertainties associated with project execution and the nascent nature of the business segment.

Conclusion

Khen Energy Limited’s latest award marks a significant step in its renewable energy growth strategy, potentially setting the stage for further expansion and revenue growth in the coming years. While the positive revenue contribution is expected in FY2027, investors should closely monitor the company’s execution capabilities and any further developments in its project pipeline, as these could have material implications for share value.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors are advised to conduct their own due diligence and consult professional advisors before making investment decisions. The company has highlighted execution risks and uncertainties regarding the future success of these projects. Shareholders should monitor official announcements and exercise caution when trading in the company’s shares.

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