AFD grants €12m for smart grid project

The French aid agency, AFD, has provided EUR 12 million to the Bangladesh government to support advanced digital solutions in the power and energy sector of the country.

A grant financing agreement was signed between the AFD and the government of Bangladesh in this regard, the European Union (EU) mission in Dhaka said on Friday.

This agreement is part of a larger multi-donor project involving the joint commitment of AFD and the EU for a total investment of EUR 112 million.

The project, called “Power Factor Improvement and Smart Grid under Dhaka Power Development Company (DPDC) Dhaka, Bangladesh” is the first-ever smart grid project in Bangladesh and will be implemented over the next 5 years.

EU Ambassador in Dhaka Rensje Teerink said they are committed “to supporting Bangladesh in adopting advanced digital solutions in power distribution, in view of a sector decarbonisation, thanks to the joint effort with one of our Member States, France.”

“This project is also relevant for the Team Europe Initiative on Green Energy Transition, which involves the EU, its Member States and like-minded partners. It aims at supporting Bangladesh in its transformative, low-carbon development, through an increased use of renewable energy and energy efficiency enhancement,” she said.

Through this project, 1,141,000 people will benefit from a significant improvement in the quality of electricity service. It will also prevent an accumulated 104,000 tons of CO2 emissions per year, thereby contributing to Bangladesh’s climate goals.

“With this project, AFD and the EU are reinforcing their role in supporting the government of Bangladesh in the search for and use of advanced digital solutions in distribution stations and in medium-voltage grids,” said the statement of the EU mission.

“The goal is to equip existing infrastructure with these new, innovative and reliable technologies in order to ensure services are prepared for the future.”

The digital presence at all levels of the network allows for better knowledge of the network and anticipation of outage-related events. The smart grid gives a more reliable, accessible grid. Improving its grid performance will consequently eliminate the pollution caused by the diesel generators which are used as back-up during grid outages.

“For AFD in Bangladesh, 2020 was an opportunity to amplify existing commitments to modernize Dhaka’s power grid. This is the first ever initiative in Bangladesh to equip the existing grid with reliable, cutting-edge new technology, allowing DPDC to optimize energy distribution without making an unnecessary additional heavy network capital investment,” said Benoit Chassatte, AFD Country Director.

“In addition, AFD has increased its commitment in the energy and power sector in Bangladesh by financing (EUR 151.56 million) in 2020 the Infrastructure Development Company Limited (IDCOL) and the Bangladesh Infrastructure Finance Fund Limited (BIFFL), both public financial institutions specializing in the financing of infrastructure and renewable energy projects, and the promotion of green initiatives.”

The AFD is the world’s oldest development agency. It is a public and solidarity-based development bank that aims to help build ‘a world in common’.