There are two somewhat contradictory aspects to Bangladesh’s relationship with 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 turning to coal to expand its power sector.
Development of large-scale renewables is limited by a lack of available land: the country has the world’s highest population density (among countries with more than 10m people). As a consequence, the government set a target in 2008 of only 10% renewables by 2020 (around 2GW). This was updated in 2015 under the government’s Renewable Energy Development Targets to 3.1GW by 2021. This is in contrast to the country’s goal to have 4.5GW of new coal capacity by 2020 and almost 20GW by 2030 under the Power System Master Plan, which represents 50% of total proposed capacity in 2030, up from a minimal amount today.
As much as 98% of the country’s 12.8GW installed capacity is based on fossil fuels (of which about 62.5% 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 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 the energy deficit.
Bangladesh’s Sustainable and Renewable Energy Development Agency (SREDA) was formed in 2014 to consolidate policy initiatives and coordinate development of renewable energy projects. The government-owned generation utility, Bangladesh Power Development Board (BPDB), is the sole buyer of all power generated in the country, which it sells to distribution companies. A growing amount of the electricity is being delivered by independent power producers which own about half of the country’s generation capacity. Transmission and distribution of electricity, meanwhile, 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 (FiT) for wind and solar projects stalled in 2015. SREDA is currently focusing on a FiT for rooftop solar projects, but these are likely to be for quite limited capacity. If the agency fails to get government approval for FiTs, it will launch rooftop tenders.
The government has pledged to tender sites on its own land, and there are around 150MW of solar projects in the works. SunEdison signed an agreement to develop a 200MW project, but since the company’s demise it is unclear whether this will go ahead. A 60MW wind project is under development at Cox’s Bazaar, but is progressing slowly, while SREDA is overseeing a national wind resource mapping project. The government’s grid extension programme means 74% of people officially had access to electricity 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 thereby enabling them to offer three-year micro-credit to end consumers. There is considerable potential for 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 projects tendered as at mid-2016.
Bangladesh scored 1.40 in Climatescope 2016, placing it 25th among countries overall. Its score was higher than on the previous year’s survey, yet it dropped one place on the list. Its best performance was on Low-Carbon Business & Clean Energy Value Chains Parameter III.
On Enabling Framework Parameter I, Bangladesh was placed 25th.The country’s off-grid policies, in particular those related to energy access and distributed power, supported its score in this category.
On Clean Energy Investment and Climate Financing Parameter II, its score dropped as new money for the sector failed to materialise in 2015. It was ranked a relatively poor 45th.
Bangladesh’s score on Low-Carbon Business & Clean Energy Value Chains Parameter III edged slightly higher and it was placed 16th, reflecting the presence of a relatively large number of value chains and service providers.
On Parameter IV its score increased and it took 18th place as further corporate awareness initiatives and carbon mitigation measures were introduced.
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