Bangladesh Needs to Harness the Potential of Rooftop Solar Energy

Despite challenges, the sector offers a lot of promises

The Bangladesh government raised electricity tariffs yet again in February 2024, following several adjustments in 2023. The government also increased gas prices for selected categories. Consumers, including industries, are now bearing the brunt of high energy tariffs and looking for a probable way out.

However, high electricity tariffs make rooftop solar financially more viable now. This is one area that building owners can explore to reduce their soaring power bills. Yet, the pace of rooftop solar implementation is slow. The encouraging sign is that the rooftop solar sector started to gain traction.

Speakers in a recent webinar titled ‘Scaling up rooftop solar deployment in Bangladesh’ have opined that this momentum needs to be accelerated.

The webinar was jointly organized by Energy & Power magazine and the global think tank Institute for Energy Economics and Financial Analysis (IEEFA). Mollah Amzad Hossain of the Energy & Power magazine moderated the session.

Delivering the keynote presentation, IEEFA’s lead energy analyst for Bangladesh, Shafiqul Alam provided a snapshot of the rooftop solar sector of Bangladesh which has a combined capacity of 166.28MW as of 1 March 2023. While the combined capacity remains at a paltry level, the sign is encouraging as the installation rate in 2023 surged compared to other years. He shared the key challenges that hinder the quick take up of rooftop solar in Bangladesh. Among other things, lack of awareness, difficulty in accessing finance, high import duties on solar accessories, capacity level of stakeholders, and absence of business models for utilities impact the sector.

The rooftop solar systems that were installed to obtain grid connection eventually delivered little or no energy. This also negatively impacts people’s motivation to install rooftop systems in the country.

In the keynote, Alam also highlighted that six key levers can help Bangladesh upscale rooftop solar systems in the foreseeable future.

These are

    • Raising awareness of the stakeholders on the benefits of rooftop solar and recent changes in regulations. SREDA may enhance its efforts in targeted awareness programmes for different stakeholders.
    • Streamlining finance-A new funding scheme to upscale rooftop solar will be important as the available financing schemes of IDCOL and the central bank have limited funding scope. Risk mitigation instruments like a credit risk guarantee scheme will help reduce financial institutions’ perceived risk in providing loans to rooftop solar.
    • Policy and regulatory intervention-The import duties should be waived at least for a limited period. Additionally, the 70% cap on rooftop solar system capacity should also be lifted. SREDA may work with the ministry to streamline these.
    • Quality assurance-Poor quality accessories, particularly in small systems, are still an issue. BSTI should increase market monitoring to ensure the quality of rooftop solar accessories. Testing lab should also be increased.
    • Capacity development of stakeholders -Different stakeholders demonstrate low capacity. For example, some banks are still not used to lending to rooftop solar. SREDA may organise additional capacity development training for banks and other stakeholders.
    • Business models for utilities -To quickly increase rooftop solar capacity in the country, utilities will need to play an important role. However, they do not have incentives. New business models can allow utilities to earn revenue and thus remain sustainable in the long run.

Alam further said that a combined rooftop solar capacity of 2,000 MW could help Bangladesh save money between US$ 0.48 billion and US$1.0 billion per annum by reducing expensive fossil-fuel-based power generation during the day peaks.

Bangladesh should pursue efforts to enhance renewable energy capacity to reduce import dependence and enhance its energy system resilience.

Speaking at the webinar, Engr. Nurul Aktar, President of Bangladesh Solar and Renewable Energy Association (BSREA) said that high import duties and low awareness level of stakeholders affect rooftop solar implementation. The country needs to multiply efforts to enhance rooftop solar capacity.

The CEO of IDCOL said: “Rooftop solar is one of the key financing areas of IDCOL”. However, he agreed with the keynote speaker that IDCOL’s facility would not be enough to the demand for financing in the sector. He feels awareness raising on the benefits of rooftop solar is necessary.

Former Dean of BUET, Prof Ijaz said that due to the Carbon Border Adjustment Mechanism (CBAM) and other international pressure, our export-oriented industries would need to implement rooftop solar. However, only a rooftop will not be enough. Industries will need to implement energy efficiency measures too.

Responding to a question from the audience, Shafiqul Alam said that the current electricity tariffs in Bangladesh are better than the feed-in tariff that influenced the rooftop solar boom in Vietnam in 2020.

Attending as the special guest of the webinar and IEEFA South Asia’s director, Vibhuti Garg mentioned that Bangladesh may look into innovative business models such as virtual net metering and peer-to-peer trading. Blended finance instruments can play a big role in transforming the sector. As the cost of solar technology continues to come down, the attractiveness of rooftop solar will increase further.

Chief guest of the webinar, Director General of Power Cell, Engr Mohammad Hossain said that the solar home systems programme is a success story for Bangladesh. Solar home systems have played their roles. Now, we need to expand rooftop solar as we also have land scarcity. We are internally working on removing the 70% cap on rooftop solar installation capacity. Moreover, we are working on how to initiate corporate power purchase agreements. We are hopeful that we will be able to improve grid quality to accommodate variable rooftop solar systems. In fact, with nuclear power expected to be online soon, the grid will improve by that time.

Source: Energy & Power, Bangladesh

4th Bangladesh International Trade Summit

Bangladesh, a strategically significant country in the Asia Pacific, is emerging as a hotspot of economic growth. The country’s phenomenal economic expansion is fuelled by a buoyant steel sector which is on an expansion spree. This is expected to encourage the participation of more global companies and attract precious foreign reserves for the country.

BigMint Events will be hosting theĀ 4th Bangladesh International Trade Summit on 14-15 May 2024, at Hotel Pan Pacific Sonargaon, Dhaka, Bangladesh. The two-day conference looks to bring together key stakeholders from the steel, cement, and power sectors, including industry stalwarts, policymakers, traders, and investors. It seeks to provide a network for collaboration and an ideal platform for discussion of prevailing industry trends and challenges.