This paper will initially describe the electricity infrastructure in Sri Lanka, covering history, current status, and future directions. Secondly, it will explore the costs of electricity generated by different sources including initial capital, return on investment, as well as the costs of continuous operation, fuel, and maintenance in the context of Sri Lanka. It will then review the different requirements of base load plant and a peaking plants and how a significant contribution from variable and intermittent Renewable Energy resources can be accommodated for a secure and sustainable energy supply whilst addressing the environmental and economic concerns related to electricity generation. Finally, in will conclude by describing a set of policy options are needed for increasing energy efficiency with measures that are available now and at low or no cost, it's a cheaper option when compared to investment in energy infrastructure.