Japanese firm building 200MW solar plant at Barapukuria

• The sponsoring company has proposed a tariff of $0.12 – equivalent to Tk13.14 – per kilowatt-hour generated at the ground-mounted unit
• For the floating unit, the proposed tariff is $0.16 – equivalent to Tk17.52 – per kilowatt-hour. 
• The government will purchase electricity from the plant at these rates for a period of 20 years.
• The Power Development Board has agreed to purchase power from this plant as per the proposed rates.
• The Cabinet Committee on Public Procurement is expected to approve the proposed tariffs today.
• Japanese firm building 200MW solar plant at Barapukuria

A consortium of Japanese Sumitomo Corporation and Parker Bangladesh is setting up a 200MW solar power plant – composed of a 50MW floating and a 150MW ground-mounted units – in the Barapukuria coal mine area in the north-western Dinajpur district.

The floating unit will be installed in two reservoirs covering 109 and 95 acres, while the ground-mounted unit will be installed on 448.17 acres of land.

Prime Minister Sheikh Hasina has already approved the plant, according to officials at the Power Division.

Sumitomo Corporation is also constructing a Japanese economic zone in Narayanganj. In addition, it has invested in the Matarbari coal-based power plant, phase 1.

The sponsoring company has proposed a tariff of $0.12 – equivalent to Tk13.14 – per kilowatt-hour (kWh) generated at the ground-mounted unit, according to a summary sent by the Power Division to the Cabinet Committee on Public Procurement.

In the case of the floating unit, the proposed tariff is $0.16 (equivalent to Tk17.52). The government will purchase electricity from the plant at these rates for a period of 20 years.

The proposed tariff rates are higher than those for the country's largest solar power plant, which was approved by the cabinet committee last month.

According to a Power Division official, the technical committee has stated that the proposed tariffs are reasonable, taking into account the commercial, technical and financial aspects of the plant. The Board of Directors of the Power Development Board has also agreed to purchase power from this plant as per the proposed rates.

The proposed tariffs have been included in the agenda of the Cabinet Committee on Public Procurement, which will be presided over by Finance Minister AHM Mustafa Kamal on Wednesday, for their approval.

Due to the negative effects of climate change and environmental pollution, the government has shifted its focus away from coal-based plants and placed greater emphasis on renewables, particularly solar energy.

Last month, the Cabinet Committee on Public Procurement approved the tariff proposal for the country's largest 300MW solar power plant at Rampal in Bagerhat.

The Power Division will purchase electricity from the plant at a rate of Tk11.067 (equivalent to ¢10.20) per kilowatt-hour and will be required to pay power bills totalling Tk10,762 crore over a period of 20 years.

Aqua Power Company of Saudi Arabia and two private sector companies from Bangladesh, Comfit Composite Knit Ltd and Viyellatex Spinning Ltd, will invest $430 million in this plant.

In addition, the premier inaugurated the 200MW Teesta Solar Plant in August, which is Bangladesh's largest solar power plant to date. Beximco Power Limited has built this plant in Gaibandha.

In the summary prepared for the Barapukuria solar power plant, the Power Division stated that the sponsor company will be responsible for completing the project, which includes arranging land resources, constructing transmission lines, and building sub-stations, all at its own expense and under its own management.

Mohammad Jahangir Alam, deputy managing director (Project Planning and Monitoring) of Barapukuria Coal Mining Company Limited (BCMCL), told The Business Standard, "The Bangladesh Power Development Board has leased the land from us to set up this power plant, and they are handling the remaining aspects of the project."

Power Division officials said the sponsor company has also agreed to establish approximately 2.5km of a 132KV double-circuit overhead or underground line from the project area to the grid substation for electricity evacuation at its own cost.

The government is chasing a target of 10% electricity generation from renewable sources, including solar, hydro, and wind, by 2025.

According to the Bangladesh Power Development Board, the country currently generates 2% of its electricity generation capacity from renewable sources. Achieving the Sustainable Development Goals, or SDGs, requires at least 12% of electricity from these sources.

According to data from the BPDB, the production cost per unit of electricity in the country's diesel-powered plants is Tk22.

The cost of generating electricity from LNG is Tk10 per unit; from local coal in Barapukuria, it is Tk4 per unit; from imported coal, it is Tk6 per unit; and from furnace oil, it is Tk12 per unit. However, these sources of electricity are not environmentally friendly. The production cost per unit of solar power in Bangladesh is Tk8-10.

Rezaul Hasanat, chairman and CEO of Viyellatex Group, a vital participant among the quartet of investors driving the 300MW solar power in Rampal, explained the rationale behind the relatively elevated costs of solar power units in Bangladesh.

Hasanat attributed this disparity to a quartet of critical factors: substantial expenses incurred in land leasing and development; reduced solar intensity in comparison to sun-drenched regions like the Middle East; heightened costs of borrowing at 10.10% within Bangladesh versus lower rates in various other nations; and a tax regime that only partially exempts solar power investments, a divergence from the comprehensive tax exemptions extended in many countries.

Elaborating, Hasanat said, "Our project's lifecycle is burdened by land acquisition and development expenses, which account for nearly 30% of the total cost. Moreover, the intensity of sunlight we receive is approximately 40% lower compared to the Middle East."

He said borrowing expenses in Bangladesh are significantly higher at 10.10% compared to numerous other countries. At the same time, while Bangladesh provides limited tax relief for solar power ventures, this stands in contrast to the complete tax exemptions prevalent in various global counterparts.

"In light of these multifaceted factors, the aggregate impact results in a tariff surcharge of 75% to 80%," he added.

If these influencing factors align with those of other nations, the current cost of ¢10.20 per unit could easily plummet to ¢2.50, said the chairman of Viyellatex Group, which is one of the country's foremost garment exporters