Govt moves to protect solar mini-grid investors

The government has asked the power distribution companies recently instructing the latter to purchase electricity from solar mini-grid projects at a tariff settled through negotiation to save the private investors.

The Power Division has already sent letters to the distribution companies on the matter.

Once the distribution entities start purchasing electricity from solar mini-grids, subscribers will then pay power tariff similar to that of the rate applicable in the national grid, lessening burden on the mini-grid operators, sources at the Power Division said.

President of Bangladesh Solar and Renewable Energy Association (BSREA) Dipal Chandra Barua hailed the government’s move saying it “will save the investors.”

Citing subscribers will get electricity at a reasonable tariff, Barua said, “It’s a temporary solution and requires a separate policy to expand solar mini-grids. Otherwise, entrepreneurs won’t invest further in the sector.” Solar photovoltaic (PV) based mini-grid projects are installed in the country’s remote areas where possibility of grid expansion is afar in near future. These projects provide grid quality power to household and small commercial subscribers.

State-run clean energy body Infrastructure Development Company Limited (IDCOL)financed the installation of 27 solar mini-grids with cumulative generation capacity of 5.656MW.

These projects have successfully created access to low-emission electricity for more 16,000 beneficiaries in rural Bangladesh and will contribute an estimated reduction of 29,300 tonne CO2 during the project lifetime.

The World Bank, KfW, GPOBA, JICA, USAID, ADB and DFID provide the fund to IDCOL's Solar Mini Grid Project.

Under the Remote Area Power Supply System (RAPSS), private investors set up solar power plants and install mini-grids for a tenure of 20 years where IDCOL contributed80 percent of the finance and private investors made it to 20 percent.

The operators sell power at a rate settled under the RAPSS where tariff is about Tk 30 per unit.

During implementation of the projects, the government committed that the power distribution companies would not be allowed to operate in these areas during the project lifetime.

But, the government moved away from its commitment after a sharp rise in electricity demand as well as its generation appeared.

When the government utilities moved to these areas, users backed off from mini-grids and opted for the government’s connections putting IDCOL and private investors in trouble.

Against this backdrop, the Power Division instructed the distribution companies to purchase electricity from the solar mini-grids to save the investors like the Bangladesh Power Development Board (BPDB) does. The BPDB purchases electricity from independent power producers (IPPs).

Besides, the government has taken initiatives to increase the renewable energy generation to ensure energy security keeping carbon dioxide emissions at low level.

Bangladesh now generates 647.51MW of electricity from renewable sources.