Executive Summary
Bangladesh has a target of generating 40% of its electricity from renewable sources by 2041, as per the Mujib Climate Prosperity Plan (MCPP). However, as of the publication of the report, Bangladesh ranks 111 out of 190 countries in renewable energy usage; achieved only 4.59% of renewable energy with installed capacity of 461 MW of renewable energy capacity, mainly from solar power, and has planned another 4115 MW of projects in various stages of development. During COP28, country leaders of 123 nations including Bangladesh agreed Global Renewables and Energy Efficiency Pledge (GREEP), committing to a collective goal of tripling global renewable energy targets to double the global average annual rate of energy efficiency improvements from about 2% to over 4% by 2030. They also committed to prioritizing energy efficiency as the “first fuel” in policy, planning, and major investment decisions.
The study conducted revealed the inconsistency in Renewable Energy targets, inequitable approval of Renewable Energy projects in terms of potential of solar radiation and exaggerated tariffs in Renewable Energy projects. The report further analyses the ownership, mode of RE finance, tariff, and implementation of renewable energy projects, highlighting the role of the private sector, potential role of RSF and EIB fundings, the need for transparent and efficient procurement, and the variation in pricing strategies.
According to the report, the private sector plays a significant role in the renewable energy sector, owning 59% of the planned projects and investing 62% of the total funds. Public investment amounts to $312 million, representing 23% of the total investment while joint venture investment of $212 million, makes up to 15% of the overall identified investment for renewable energy generation in the country. It was found that 44.34% of total capacity (2020.30 MW) of solar projects are in the Chattogram Hill Tracts Zone, most solar radiated area while solar projects in Rangpur 18% (with combined capacity of 611.3 MW) and Mymensingh 13% (with combined capacity of 551.7 MW).
Another major point to note from the study is that the tariff rates for renewable energy vary across different owners and capacities, with private projects and unsolicited charging much higher rates than public and joint venture projects. In neighbouring countries, regulatory authorities have predetermined tariff rates based on size and publicly disclose comprehensive detailed cost estimates and tariff rates of various projects. The study revealed that average tariff rates for the private sector is almost three times higher than neighbouring and the top industrialist countries as well. This level of transparency in tariff rate determination is lacking in Bangladesh, where Bangladesh Energy Regulatory Commission (BERC) has been crippled to exercise its authority.
One recent policy shift in Bangladesh promotes “Clean Energy” over “Renewable Energy.” Nevertheless, renewable energy, including solar, wind, and biomass energy, are a safer and more reliable and cos-effective technology within the current scope of this report. Within the context of Bangladesh, these additional the “Clean Energy” sources remain unproven, unreliable, and expensive supply driven.
The study offers the following key lessons learned and recommendations for enhancing the renewable energy sector in Bangladesh. These include maximizing the potential of renewable energy sources, especially in the regions with high solar radiation and wind speed; as well as ensuring the best utilization of available finance for renewable energy expansion, by prioritizing solicited and competitive projects, reducing the reliance on loans and equity, and increasing the access to grants and concessional funds from national and international sources. Measures to address financing needs should include products designed to specifically address risks and credit.
One crucial focus should be assessing and mapping of renewable energy resources, as well as developing a comprehensive renewable energy finance strategy which should be obligatory to follow. It is also important to improve the tariff determination process for renewable energy projects, by adopting a transparent and consistent methodology, benchmarking with regional and global best practices, and avoiding exaggerated or inflated rates. Bangladesh must also implement a strong monitoring system for renewable energy decisions, emphasizing environmental and social standards and ensure compliance and transparency in all stages of RE projects including solarbased irrigation system with the finance from national and international sources e.g. IMF led RSF and EIB funding. Finally, it is important to focus on strengthening stakeholder collaboration on renewable energy promotion, by involving the civil society, private sector, academia, and media in the policy development, implementation, and oversight of the renewable energy sector.
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