The production process of tea is such that the industry's maximum power need coincides with the power system peak demand, thus consuming expensive energy. This industry is largely located in the Central, Sabaragamuwa and Uva provinces, where the topography coupled with heavy persistent rainfall offers a good opportunity to harness hydro‐power, the most widely used power source in the plantation sector, to meet the entire power requirement of the industry. This potential remains largely underutilised, as grid electricity supply is at present available in almost all tea estates, particularly at the factories where tea is processed. These plantations also practise cultivation and harvesting of fast‐growing tree species in abandoned tea‐growing land to meet the industry's thermal energy requirements. This biomass usage could also be extended to electricity generation, though realising the scope for this application in the Sri Lankan context is in an experimental stage. Widespread use of these two indigenous energy sources by the plantation industry can be expected to reduce the peak demand while making the cost of electricity in the sector less sensitive to external factors. Further, the use of micro‐hydro and biomass can contribute to the reduction of undesirable environmental impacts associated with electricity generation. The paper discusses a detailed estimation of the aggregate potential of biomass‐ and microhydro‐based energy supplies in the tea plantation sector. Also, its substitution effect on demand for electricity in the sector in terms of its economic impact both in the plantation sector and in the national energy scenario is examined
