The days are coming soon when buyers will not be interested to buy from firms which are not using carbon-neutral energy. As carbon footprint for fossil fuel is high, manufacturing industry needs to move quickly to solar power. At present, 90 per cent people of Bangladesh have access to electric power with per capita energy generation at around 464 kwh, as per Ministry of Power Energy and Mineral Resources.
Power demand in Bangladesh has increased rapidly in tandem with economic growth. At present the growth rate of power demand is about 10 per cent and for the last nine years compound annual growth rate (CAGR) of the power sector capacity was 10.6 per cent.
According to the Vision 2021, the government has set a target to increase installed electricity generation capacity to 24,000 MW by 2021, 40,000 MW by 2030 and 60,000 MW by 2041. The available power generation capacity till October 23, 2019 was 14610 MW at evening peak and 13390 MW at day peak.
As the country's gas reserves are declining fast and price of imported LNG is expected to be high, renewable energy is increasing as both an affordable and sustainable option. International buyers are stressing on renewable energy and energy efficiency as important components of sustainable supply chains. Bangladesh has substantial technical potential for renewable energy generation. As per Power system Master Plan (PSMP), 2016, the maximum renewable energy generation potential of Bangladesh is up to 3,700MW. Recently, state-owned North-West Power Generation Company Ltd. has signed a MoU with China National Machinery Import and Export Corporation (CMC) to develop 500 MW renewable energy-based power plant which includes solar PV plant, wind base plant and others.
Solar rooftop was a main component in that plan. The RMG and textile sector can be one of the main producers and users of rooftop solar power. According to the Infrastructure Development Company Ltd (IDCOL), 1,500 members of the Bangladesh Textile Mills Association have 42 million square feet of rooftop space, which could be used to install solar photo voltaic system with 400MW capacity. Very recently Omera Solar signed a partnership agreement with a local apparel manufacturer and exporter for installing a 2.6 MW rooftop solar panel. It will definitely encourage other solar developer and industry owners to diversify their energy mix. Rooftop solar will provide a cushion against rising energy costs, create jobs in the energy services sector, and reduce GHG emissions.
The RMG sector in Bangladesh, the country's leading manufacturing and export sector, has an ambitious vision to reach $50bn in exports by 2021. However, to support this mission, it is important to bridge the gap of gas and power supply. The industry at large depends on fossil fuels, such as natural gas and diesel. Textile sector is the biggest emitter among industries, accounting for 38 per cent of GHG (greenhouse gas) emissions. It is imperative to diversify their energy sources including exploitation of available renewable energy potential. Rooftop Solar PV can be a right option to replace some percentage of the usage of fossil fuels. According to the government's Power System Master Plan (PSMP), Bangladesh can generate 635MW (17.3 per cent) from solar rooftop and the annual generation will be 860 GWh. As a result, around 576,200 tonnes of CO2 emission will be reduced.
To meet the targets of renewable energy generation, various short and long term renewable energy projects are being implemented. In addition to renewable energy generation, measures have also been adopted to promote energy efficiency through greener technology. Table 1 below shows renewable energy sources in Bangladesh:
The table shows that solar energy is the main source of renewable energy and next is hydro technology. Bangladesh government has announced several policies for encouraging renewable energy. To develop energy sector and promote renewable energy, Bangladesh enacted Sustainable and Renewable Energy Development Authority (SREDA) Act in 2012 for effective utilisation and conservation of renewable energy both in the public and private sectors.
Two key policies directly relate to solar energy development are Guideline for Implementation of Solar Power Development Programme-2013 and Net Metering Guideline-2018. The former concerns solar power development as a whole, and the latter relates to only those renewable energy or solar projects that connect to the grid to add surplus power to the grid.
There are two main models used for generating solar power in different countries. In the Capex Model, an Engineering, Procurement and Construction Contractor (EPC contractor) develops rooftop solar project and hands it to the rooftop owner. Rooftop owner pays the EPC contractor for the completion of the solar project. In the Opex Model, a developer develops and owns the roof top solar PV projects and supplies the electricity to the factory/rooftop owner against a price through a long term contract.
Till October 2019, around 62 off-grid roof-top solar projects with generation capacity of 14.36 MW and 50on-grid projects with generation capacity of 26.45 MW have been completed and are now run by public and private sectors. Most of the projects, so far, followed Capex model. However, to unleash the potential of rooftop solar in the textile and other industrial sectors, it would be useful to facilitate adoption of Opex model.
For development of the Opex Model which has high potential in Bangladesh, the government has been in the process of revising the Net Metering Guidelines as mentioned above. Net metering is a policy approach designed to encourage distributed renewable energy development by allowing utility customers to generate their own electricity from solar or any other renewable sources and use the electricity produced to offset the amount of energy they draw from the utility grid while any excess generation can be fed into the grid. However, in order to implement the model, policies would need to be streamlined adequately.
According to a study conducted by IFC, with rooftop solar, factories could reduce grid power consumption by 5 to 20 per cent. Development of rooftop solar sector could create jobs as local capacity of private investors and other value chain actors would be developed. Installation of rooftop solar would reduce the GHG emissions, leading to less negative health impact of air pollution.
It is environment-friendly with less carbon emission. According to a IFC study on opportunities for renewable energy solutions in Bangladesh textile sector, the rooftop Solar PV potential across the Bangladesh textile industries will be 109MW for on-grid replacement which will subsequently reduce 98591 tonnes of CO2 emission.
In order to encourage private investors, tripartite agreement with private owners (commercial, residential and industrial), private investors and power distribution company would need to be included in the Guideline for Implementation of Solar Power Development Programme-2013, clause 4.3.6. Only grid areas are explicitly mentioned as project locations for installation of rooftop solar system in the Guideline. But many of the industrial buildings are located in off-grid areas which have huge opportunity for installation of rooftop solar system. Chapter 4, clause no. 4.3 of the Guideline states, "Installing rooftop solar system by private investors based on Build, Own and Operate (BOO) based on IPP models is only for the roofs of Govt. and semi-Govt. buildings". But a huge number of residential, commercial and industrial buildings owned by the private sector can also be used for developing roof top solar system.
This will encourage private investors to invest in residential, commercial and industrial buildings. This inclusion will reduce capital expenditure of private investors and increase renewable energy production.
Solar PV developer should get financial benefits. Financial support will encourage the developers more to generate power from renewable sources. Incentives need to be designed for both large and small industries. Over and above, policies governing generation of solar power should be very clear so that all concerned in this sector can work with confidence.
Ferdaus Ara Begum is Chief Executive Officer, Business Initiative Leading Development (BUILD)