Bangladesh’s energy system is two-faced when it comes to renewable energy. On one hand, its off-grid solar programme has seen it become the world’s single largest market for solar home system kits, with over 4m sold. On the other, the government sees very limited options for on-grid and utility-scale renewables, and is instead aiming to turn to coal to expand its power sector.
The particular limitation cited is land availability: the country has the world’s highest population density for countries of more than 10m people. As a consequence, it set a target of only 10% renewables by 2020 (around 2GW) under its 2008 dedicated renewable energy policy. This was updated in 2015 under the government’s RE Development Targets to 3.1GW by 2021. This contrasts with the goal of 4.5GW of new coal capacity by 2020 and almost 20GW by 2030 under the Power System Master Plan – 50% of its capacity, from zero today.
As much as 98% of the country’s 10.8GW installed capacity is based on fossil fuels (of which about 70% is natural gas), with large hydro representing the remaining 2%. Due to a rise in economic activity, Bangladesh has installed more than 2GW of oil and diesel based rental power plants since 2009. These rental power plants raised the fuel cost per kWh from $0.014 to $0.04 between 2009 and 2015. They are usually set up by private players for terms of three to seven years, with the purpose of meeting energy deficit, peak deficit and seasonal demand.
Bangladesh’s Sustainable and Renewable Energy Development Agency (SREDA) was formed in 2014 to consolidate policy initiatives and coordinate implementation for renewable energy. For instance, it can receive unsolicited project proposals. The government-owned generation utility, Bangladesh Power Development Board (BPDB) is the sole buyer of all of the power generated in the country and sells it to the distribution utilities. Transmission and distribution of electricity is controlled by government owned utilities that serve their respective allocated zones.
Apart from a range of financing programmes for off-grid solar, solar irrigation, mini-grids, biogas and biomass projects, the country does not have specific incentives for larger projects. A draft feed-in tariff for wind and solar projects stalled in 2015. SREDA is currently focusing on a feed-in tariff for rooftop solar projects – and if it fails to pass government approval will launch rooftop tenders – but these are likely to be for quite limited capacity.
The government has pledged to tender sites on its own land, and there are around 150MW of solar projects in the works. SunEdison also signed an agreement to develop a 200MW project, but since the company’s demise its likelihood is unclear. A 60MW wind project is under development at Cox’s Bazaar, but is progressing slowly, while SREDA is overseeing national wind resource mapping.
The government’s grid extension programme means officially 74% of people have electricity access as of 2015. But this disguises chronic power shortages and load shedding. The Infrastructure Development Company Limited (IDCOL) has successfully rolled out solar home systems by financing partner organisations to offer 3-year micro-credit to end consumers. There is high potential for more recent IDCOL programmes on solar irrigation, and to a lesser extent mini-grids. The government’s “500MW by 2016” solar programme is moving slowly, with around 150MW of utility-scale project having been tendered.
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