Explosion of solar power in Bangladesh

Bangladesh is a massively power-deficient country with peak power shortages of around 25%. More than 60% of its people do not have access to the power grid. The country only produces 3500-4200 MW of electricity against a daily demand for 4000-5200 MW on average, according to official estimates.

Solar energy is an ideal solution as it can provide gridless power and is totally clean in terms of pollution and health hazards. Since it saves money on constructing electricity transmission lines, it’s economical as well. Little wonder that it is becoming popular in Bangladesh. The number of households using solar panels has now crossed the one million mark, the fastest expansion of solar use anywhere in the world. In 2002, just 7,000 households in Bangladesh were using solar panels, but now more than one million households, or five million people, are benefitting from solar energy.

The Government of Bangladesh has also grasped the solar agenda, and the Prime Minister now has a 21.6 kilowatt solar power system for her office. Last year the Bangladesh Bank, the country’s central bank, installed a solar system on the rooftop of its main building to reduce pressure on the demand for electricity. This solar system, expected to last about 20 years, has an 8-kilowatt capacity.

The Government of Bangladesh has also withdrawn all the import tariff and VAT (Value Added Tax) on the raw materials of solar panels for the current fiscal year. In his budget speech, the Finance Minister Abul Mal Abdul Muhit said that Bangladesh gets about 250 to 300 sunny days on average per year (rainy days are not included). He added that since the maintenance cost is very low, we could massively increase the use of solar power in the country.

The solar panel providers in Bangladesh are now expecting the price of batteries and accessories to drastically reduce. In fact, solar panels and accessories imported from countries in the developed world like Germany cost a lot, but the same panels manufactured in China cost much less.

The requirements of power in a typical Bangladeshi home are very small – almost 1/10th that of a Western home. The government owned Infrastructure Development Company (IDCOL) has been providing financing for these small solar panel projects in the country.

The Asian Development Bank (ADB) has been at the forefront in funding solar energy in Asian countries like Thailand, India and now Bangladesh. The ADB and the Government of Bangladesh have recently signed technical assistance grant agreements of $3.3 million to provide renewable energy in rural areas with no access to grid electricity.

The grant will provide $25 subsidy per Solar Home Systems (SHS) to a total of 80,000 low-income end-users. The assistance will also promote biomass, biogas, and wind as alternative sources of energy. In addition, the grant will help the state-run IDCOL improve its administrative and monitoring capacities.

‘The assistance will support Bangladesh’s efforts to increase access to electricity in remote rural areas and to reduce carbon emissions by overcoming market barriers for renewable energy development’, said Thevakumar Kandiah, Country Director of ADB’s Bangladesh Resident Mission.

IDCOL estimates that each SHS saves at least $61.80 worth of kerosene every year and reduces carbon dioxide emissions by 375 kilograms annually as a result. Therefore, the 80,000 new SHSs to be installed through this grant assistance will bring a reduction of about 27,600 tons of carbon dioxide emissions a year.

On the other hand the government also plans to implement a mega solar project by setting up a 500 MW solar panel-based power installation with financial support from the ADB. Such a project will require a huge investment of $2-3 billion according topower ministry officials. As the lead agency, the power ministry has laid out a plan involving nine other ministries to implement this highly ambitious plan.

Meanwhile, the Bangladesh Bank has set up a Tk 200 million (US$ 2.70 million) revolving fund for banks and financial institutions to give loans at low interest in the solar energy, biogas and effluent treatment sectors. A top official of the Bangladesh Bank noted that the lack of institutional financing for renewable energy is impeding effective growth and the use of environment-friendly technology.

In the capital city, Dhaka, the power department has set a pre-condition of installing solar panels on buildings applying for new connections. In the villages, solar power is even being used to operate pumps for irrigation.Today both urban city dwellers and villagers in remote areas of Bangladesh are using solar energy.