Solar home systems spearheaded transformational changes in Bangladesh

In 2003, only 35% of Bangladesh's population had access to electricity, as reported by the Asian Development Bank (ADB). Back then, the country was grappling with a severe electricity shortfall, recurring load-shedding, gas crisis, soaring industrial energy demand and not to mention lagging electricity distribution networks in rural and far-off areas.

Problems were about to pile up and turn out thornier. Therefore, a different but quick approach was felt essential for the rural and far-flung people of the country to illuminate their homes and businesses at night.

Eventually, the World Bank teamed up with the government of Bangladesh and Infrastructure Development Company Limited (IDCOL) to materialise the idea of installing small units of solar home systems (SHS) in the off-grid areas at a time when solar PV was too expensive.

With the impending challenges of having partner organisations in rural areas and developing a suitable business model, many people were sceptical that the programme might end up with small pilots in isolation.

Spanning over 15 years, from 2003 to 2018, supported by the World Bank, ADB and other development agencies, and executed by IDCOL through its partner organisations, the largest SHS programme in the world has helped install more than 4.1 million SHS units, mostly ranging from 40 Wp to 100 Wp capacities, in rural and char areas.

Buy-down grant, under the IDCOL's trademark model, was introduced to make the SHS units affordable to the rural people and thus triggering market demand. The forex risk was covered by the government of Bangladesh. This story of 15 years is something more than remarkable when we see the transformational changes in the lives of 20 million people. 

The SHS programme has provided rural people access to the seemingly elusive electricity, helping them to avoid kerosene lamps, which normally deliver poor illumination. Among the benefits, less pollution, extended period of business and ease of continuing studies at night are some notable examples.

The programme has, in fact, cut down CO₂ emissions in the order of 9.6 million ton and saved huge public money that otherwise would have been channelled to subsidise kerosene.

Additionally, the employment in the solar PV sector of Bangladesh, as reported by IRENA, reached to 1.37 lakhs in 2019, placing her among one of top ten countries which together account for 87% of the global PV work force. And a good proportion of the solar PV jobs in Bangladesh have been created by the SHS programme.

In many forums and high-level policy discussions, one of the major talking points today is how to address the interlinkages among energy and climate change, poverty, health and inequality concerns. In that vein, the SHS programme has been fully successful, to say the least.

The contribution of SHS to the energy sector of Bangladesh

Despite crafting the national renewable energy policy in 2008, stipulating a target of meeting 10% of total electricity demand from renewable energies by 2020, Bangladesh has always found itself locked into problems of land scarcity to undertake large scale grid tied solar projects.

While solar is more competitive in recent years compared to any other fossil fuels -thanks to the policy driven approach taken by other countries and the pricing mechanism, including auction, the high price of solar in the past was another major hindrance to accelerate solar energy promotion in the country.

Among other renewable energies, biomass and biogas have alternative usage in rural areas and on the basis of available information, they have limited potential to contribute to the national electricity. Waste to electricity generation is yet to see the light due to the high cost. The wind energy potential is somewhat limited and/or requires further assessment. 

The solar rooftop systems, supported by the net-metering, could unleash opportunities to bank on, particularly to help meet our renewable energy target. The floating solar is another avenue that Bangladesh could certainly explore

Amidst such problems, Bangladesh, as of now, has 722 MW of installed renewable energy-based power capacity, representing approximately 3% of the installed power capacity. Of the total renewable energy-based capacity, 230 MW is harnessed from hydropower plants installed and commissioned between 1962-1988.

However, 488 MW, i.e., 68% of the renewable energy-based installations, comes from solar energy of which off-grid solar systems contribute to over 346 MW. In fact, this off-grid capacity is dominated by SHS excluding some solar mini-grids.

In all sincerity, there has fairly been a constant gap between the renewable energy target of Bangladesh and the progress. Yet, during the last two decades, the moderate achievement or success in the renewable energy sector, whatever we call it, has been largely hinged on the SHS programme. 

What's next for Bangladesh

While the sustainable development goal no-7 seeks the leadership, commitment and actions on the ground across the world for universal access to modern, reliable, and affordable energy by 2030, Bangladesh is on the verge of ensuring 100% electrification by this year.

Of course, ensuring quality of electricity, increasing share of renewable energy, enhancing energy efficiency, making clean energy available in areas, for instance, in cooking, is still work in progress, but the demand for new SHS is unlikely in the foreseeable future. Nevertheless, solar PV projects for irrigation and access to water should continue. 

And the increasing focus shall be on rapidly mobilising actions to utilise the rooftops of the industries, commercial buildings, and residential buildings of 3 phase connection. The framework conditions and market are more favourable than any time before.

The solar rooftop systems, supported by the net-metering, could unleash opportunities to bank on, particularly to help meet our renewable energy target. The floating solar is another avenue that Bangladesh could certainly explore. While cost-effectiveness is important, we still need to consider a just energy transition with enhanced competitiveness. To these fronts, solar power could contribute much.

On the other side of the coin, the demand for electricity over the last year has not increased as projected, largely due to the pandemic led disruptions. The demand for electricity would not rise considerably soon either as the pandemic is slowing down economic activities again.

The economic activities will rebound, but with time. Hence, the presence of surplus electricity capacity would provide a leeway to transit to a cleaner power generation system. With discussions heading towards scrapping of some future coal power plants at the policy level, the time is ripe in putting more efforts for renewable energy system-based capacity expansions in Bangladesh.

Shafiqul Alam is a Humboldt Scholar and an Environmental Economist.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.