In 1947 the Department of Industries in Ceylon agreed to meet the electricity demand of the Jaffna peninsula, which at that time stood at only 370 kW, from the power station at Kankesanthurai cement factory.

[2] From 1950 the peninsula was supplied by an isolated Medium Voltage (MV) power transmission network operated by the Department of Government Electrical Undertakings.

To meet the increased demand, a power station was established in Chunnakam in 1958 to supply the local MV network.

[7][13] The Jaffna MV local network was connected to the national grid in 1973 via a 132kV double-circuit transmission line from Anuradhapura to Chunnakam.

[15][16] On 9 August 1990, as the Sri Lankan military tried to regain control of the peninsula from the militant Liberation Tigers of Tamil Eelam (LTTE) following the withdrawal of the Indian Peace Keeping Force, the Sri Lanka Air Force bombed the power station twice, setting two diesel storage tanks on fire.

[19] The Sri Lankan military re-captured much of the Jaffna peninsula, which had been under LTTE control since 1990, in 1995/96 and took over Chunnakam Power Station.

[20] As a result, the government decided in 2006 to cease buying electricity from the two IPPs from 2007 and instead build a Northern Power Station at Chunnakam.

[20] Northern Power also failed to deliver the 30MW they had agreed to which meant that Aggreko had to be kept open to meet demand (Koolair had been shut down in 2009).