While rooftop solar has struggled to gain traction in Bangladesh, a renewed focus and adding 2,000 MW can help the Bangladesh Power Development Board (BPDB) save up to $1 billion, Australia-based Institute for Energy Economics and Financial Analysis (IEEFA) said in its report on Monday.
The report said that rooftop solar’s economic benefits are more compelling now than ever for Bangladesh, which has suffered energy price spikes, supply disruptions and deteriorating fiscal conditions since Russia invaded Ukraine in 2022.
“Bangladesh must tap the low-hanging fruit of rooftop solar to stave off the energy sector challenges and reduce colossal imports of fossil fuels. The delay in steering the sector in the right direction could result in a missed opportunity,” says Shafiqul Alam, Lead Analyst, Bangladesh Energy, IEEFA.
Based on IEEFA’s interviews with selected experts and stakeholders of the sector, the report recommends pulling six key levers to accelerate the widespread deployment of rooftop solar. These are raising awareness, streamlining finance, policy and regulatory intervention, quality assurance, business models for utilities and capacity development of key stakeholders.
“While investors want to quickly assimilate information on interest rates, net metering guidelines and policy changes, there is information asymmetry within the sector. Another key hindrance to the wider adoption of rooftop solar is the lack of capacity of stakeholders in terms of personnel, quality assurance and project appraisal,” says Alam.
Therefore, the Sustainable and Renewable Energy Development Authority (SREDA) should design and conduct targeted capacity development and awareness programmes, as well as exposure visits to successful projects for stakeholders.
Although the solar helpdesk, hosted by SREDA, shares information on request, stakeholders feel a performance assessment of the helpdesk is essential to upgrade services based on need and relevance.
The report further says that a credit risk guarantee scheme can minimise the perceived risks of financial institutions and increase fund flows to projects. Similarly, a first-loss guarantee can address engineering, procurement and construction (EPC) companies’ challenges linked to repayment from industries and building owners (off-takers).
“While Bangladesh Bank’s green refinancing scheme is the least-cost financing vehicle, all eligible rooftop solar projects will not receive the refinance due to its limited funds of Tk 4 billion (US$36.4 million) and the competition with 69 other environment-friendly projects. Therefore, Bangladesh Bank may pre-approve financing for rooftop solar based on an assessment at the initial stage to eliminate any uncertainty about availing of the low-cost scheme,” says Alam.
The Infrastructure Development Company Limited also has a rooftop solar financing facility, but it will not meet the sector’s demand. The report recommends that local financial institutions explore multilateral agencies, international climate finance, and the local bond market to enhance funds in the foreseeable future.
