The demand for energy is increasing rapidly indifferent sectors of Bangladesh. As the country is flourishing with more industries, mitigating the demand formore power is becoming a challenge.At present 97 percent of total power is generated by using fossil fuels in Bangladeshwhich isdetrimental for the environment. As a tropical country, Bangladesh is enriched with solar energywhich is a dependable, economical and effective energy source for the country.
Because of its low manufacturingcost, large scale production and durability, solar energy can be addressed as a propercompetitor to the conventional energy. Bangladesh government has already planned some solar projects forproducing electric power by utilizing solar energy potential. Due to dearth of land availability, Bangladesh holds massive rooftop solar potential. If this solar rooftop potential can be used efficiently in various industries, the energy efficiency will be enhanced significantly.
Rooftop solar system has a number of advantages. Solar energy does not make any harmful effect on the environment. Thus it reduces a substantial amount of greenhouse emission.Rooftop solar system reduces the electricity cost – no matter which of solar panels consumers install, it brings a dramaticdecrease in electricity charge.
Rooftop solar system is cost-effective. Once a consumer installs it, he will notice how much money he spent on electricity all these years. Rooftop solar system can take the full benefit of the free energy that we are gifted with.Rooftop solar system is absolutely a safe investment that can help consumers make some extra revenue. Also, it has the advantage of utilization of vacant rooftop space of industrial, residential commercial and government buildings.
World renowned fashion brands are targeting to use 100 percent
renewable energy so that greenhouse gas emissioncan be reduced
significantly by 2030. In order to achieve the target and create more
business opportunities, our local RMG factories should come up with
a positive mindset for utilizing the available financing options to setup
the rooftop solar panel in their factories
The textile and garment industry is considered to be the driving force behind Bangladesh’s impressive export growth and economic development. Bangladesh is the second largest apparel exporting country in the world. According to Bangladesh Bank, the textile and garment sector represents about 13 percent of the country’s GDP, accounts for more than 80 percent of all exports and provide employment opportunities for over four million people. However, majority of the factories still depend on the fossil fuel for mitigating their demand for power. As the conventional source of power iscostly, the RMG industries should concentrate on other feasible alternatives like rooftop solar panel for fulfilling their requirement of power.
If any garment factory in Bangladesh installs a rooftop solar system at its own cost to meet its power demand, its electricity tariff will be lower. The tariff of electricity will be maximum Tk7.50 per kilowatt-hour if a solar rooftop system with a 20-year lifetime is set up in a factory by a third party operator, taking a soft loan from financial institutions. The factories are now paying Tk8.53 per unit at the industrial rate. If the factory owners set up the system on their own, the tariff will be Tk3.10 per unit – less than half of the existing rate. The government recently introduced the net metering system (NMS) to encourage the use of green energy in industries under which the industry owners can sell their surplus or unconsumed electricity to the grid and adjust their monthly bills.
An increasing number of banks/ NBFIs are going green by providing innovative products that cover financial services to support the activities that are not hazardous to environment and help conserve environment. Such activities are popularly known as ‘Green Banking Activities’. Green Banking (GB) is conducted in such areas and in such manners that help overall reduction of carbon footprint and other pollutions and help preserving scarce resources for future generation. Especially, a sound green banking framework could bring notable beneficial impact in the country in the form of offering greater access to energy with remarkable positive impact on the economy, the social lives and environment. Financing rooftop solar panel is one such initiatives which helps the RMG factories to undertake an energy efficient solutions.
RMG factories can avail financing opportunities for implementing rooftop solar panel in their factory. In this regard, two financing options are available. The first one from Infrastructure Development Company Limited (IDCOL) where funds are provided by World Bank, Kfw Development Bank and IDCOL itself. The second one is from refinance scheme of Bangladesh Bank where funds will be used from ‘Green Finance Scheme’ through commercial bank. The RMG factories can take 70 to 80 percent of their total project cost in the form loan either from IDCOL or from commercial bank. The remaining 20 to 30 percent must be their own contribution in order to make the project a viable one.
The tenure of the loan is around 10 years with a grace period of 1 to 2 years. The interest rate varies from 6 to 9 percent. Bangladesh Bank will provide necessary refinancing at 5 percent rate to the commercial bank. There is no formal limit of the project size but can fluctuates from 300 kWp to 1.5 MWp. The accepted securities are fixed and floating assets, personal guarantee of the shareholders, corporate guarantee and so on. Technical standards are set by an independent technical committee to ensure the quality of the equipment. The beneficiary will get the loan after signing of the financing agreement and injection of the necessary equity in the project.
Bangladesh has the most LEED certified factories in the world. So far 112 factories have this certificate and 519 have registered for LEED certification. Rooftop solar is an effective measure to achieve LEED certificate and climate change targets. World renowned fashion brands are targeting to use 100 percent renewable energy so that greenhouse gas emission can be reduced significantly by 2030. In order to achieve the target and create more business opportunities, our local RMG factories should come up with a positive mindset for utilizing the available financing options to setup the rooftop solar panel in their factories. This will not only help to reduce their energy cost significantly but also help to build a “Green Bangladesh” through reduction of carbon emission.
Md. Nehal Ahmed is a Professor and the Director of DSBM, Bangladesh Institute of Bank Management (BIBM)