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Dhaka Wednesday,  Oct 4, 2023

Green energy in Bangladesh: Govt moves to save solar mini-grids

Sadrul Hasan

The government is moving to save solar mini-grids supplying green energy in remote areas from incurring staggering losses and closure as power distribution companies expand operations in off-grid areas.

Power tariff from such mini-grids is much higher compared to grid-electricity, an official at the Sustainable and Renewable Energy Development Authority (Sreda) said, explaining that if the tariff for a 50-unit consumer of grid electricity is Tk 3.75 per unit, it is Tk 18-35 for a mini-grid consumer.

Official sources said 26 solar mini-grids have so far been set up in different areas and their total general capacity is about 5 megawatts. They said the Power Division primarily calculated the asset value of these mini-grids at Tk 109 crore.

Sreda, the agency responsible for promotion of green energy and energy conservation, is likely to finalise the modalities and other tariff related issues within a month to purchase electricity from solar mini-grids across the country.

According to official sources, Sreda will sit with the stakeholders over the next two weeks to settle some issues about the modalities of electricity purchase and tariff-related matters.

“We’ve made some good progress but we need to have another meeting to settle the issues,” Mohammad Alauddin, Chairman of Sreda, and also an additional secretary at the Power Division, told UNB.

Available statistics with Sreda show that the country currently generates 649.61MW from renewable sources while its total generation capacity is 22,000MW.

Of this, 415.68MW is being generated from solar power while wind energy produces 0.9MW, hydro 230MW, biogas 0.63MW and biomass 0.4MW.

Also read: Energy experts emphasise renewable energy to meet electricity needs

A recent study – National Solar Energy Action Plan 2021-2041 –conducted by Sreda, in collaboration with the United Nations Development Programme (UNDP), suggest that Bangladesh can easily generate 40,000MW from solar energy by 2041, if an action plan is prioritised.

In that case, solar energy would constitute half of the country’s installed capacity.

The study notes that at least 8,000MW solar power could be generated by 2041 in case of “as usual business case scenario”, and 25,000MW in a “medium case scenario”.

Official sources said the move to purchase electricity from solar mini-grid power projects has been initiated by the government to save the private investors who set up the mini-grids in remote localities, mainly in off-grid islands to offer electricity to consumers.

They said such mini-grids generate electricity from solar power and sell it to consumers through a small grid system in areas far from the grid system and with no connection with grids.

Some private sponsors installed these grids under a government policy “Remote Area Power Supply System (RAPSS)” for which they get soft loan from financial institutions like state-owned Infrastructure Development Company Limited (IDCOL). But the generation cost is much higher than conventional electricity.

Mini-grid operators started facing financial losses after the expansion of grid to those areas.

Sources said the solar mini-grid power projects were implemented in the off-grid areas where private investors installed the projects for a period of 20 years with financial support from IDCOL. IDCOL funded 80 percent in the projects while private investors 20 percent, they said.

During implementation, there was commitment from the government that the power distribution companies will not reach these areas with their services within the project tenure of 20 years.

But the distribution utilities, especially the Rural Electrification Board (REB), expanded their power supply to those areas amid political pressure from local MPs, said the sources.

When government utilities moved to these areas, the consumers of mini-grids opted for new connections, putting the sponsors and IDCOL in serious financial trouble.

Shot in the arm

Against this backdrop, the Power Division decided that consumers of mini-grids would pay bills to the mini-grid operators at the same tariff applicable in grid-areas.

In this case, the mini-grid operators will not face financial loss as the concerned utilities of those areas will mitigate the financial loss of the mini-grid operators.

If the government utilities purchase electricity from these mini-grids, it will require about Tk 19 crore to pay the mini-grid sponsors, according to official sources.

Also read: Govt rooftops can generate 2,000 MW of solar power, say experts

“This will bring an equality among the grid and off-grid consumers as the government wants to remove anomalies in tariff for common consumptions,” said Mohammad Alauddin.

“If the things are implemented, it’ll help save the investment of both the private investors and IDCOL,” said Enamul Karim Pavel, head of renewable energy of IDCOL.

Also read: Experts for re-fixing solar power generation target to 30,000 MW by 2041

Solution to energy woe

State Minister for Power, Energy and Mineral Resources Nasrul Hamid said that the government’s emphasis is now on increasing the share of renewable energy in total power generation.

“We’ve targeted to generate 10 percent of electricity from renewable energy,” he told a webinar in July.

Last month, experts at a workshop suggested re-fixing the target of solar power generation to 30,000MW by 2041 instead of current target of 40,000MW and linking it with other national plans like Delta Plan 2100.

A recent study by the Energy Economics and Financial Analysis (IEEFA), a US-based international research and analysis organisation, noted that Affordable energy over the medium and long term remains essential for Bangladesh to sustain rapid economic growth.

Bangladesh should reprioritise its power system development and redirect resources at technologies that can deliver the price stability and competitiveness required to realise the goals of ‘Vision 2041’, IEEFA said.

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