Renewable Energy Implementation Action Plan

Speeches Shim

Recommendations for Bangladesh

This white paper analyzes Bangladesh’s future power generation capacity plans, examines targets in policies that promote utility-scale renewable energy, and proposes an alternative development path that leads to energy security.

Bangladesh is on a path to become a middle-income country and is striving to become a developed nation by 2041. Before the COVID-19 pandemic, forecasts pointed to increasing national demand for electricity resulting from economic and population growth. Transitioning to clean energy would allow Bangladesh to diversify its power mix, reduce the risks associated with the volatile prices of fossil fuels, and decrease the negative environmental impacts of thermal power generation.

Future Energy Demand in Bangladesh

Between 2010 and 2019, Bangladesh’s average gross domestic product grew by more than six percent annually. Based on this rate, Bangladesh needs to plan for an eight percent growth in electricity demand each year. Bangladesh’s Power Sector Master Plan (PSMP) 2016 estimates that the country will need to bring 60,000 megawatts (MW) of new capacity online by 2041 to meet this demand.

Renewable Energy Development Plans

Studies estimate that the potential capacity in Bangladesh for solar power is as high as 240 gigawatts (GW) and for wind power (including offshore wind) it is as high as 150 GW. While other countries are increasing investment in renewable energy, Bangladesh has been slow, partly due to a lack of planning and support for developers. Current procurement plans provide little detail on how much renewable energy capacity will be procured, and by when. There is also a risk that future bilateral agreements and trade will be influenced by other countries’ emission reduction commitments, with capital inflow and investment becoming contingent on Bangladesh meeting emissions targets.

In order to accommodate a larger share of utility-scale renewable energy, the government has announced various policies that set targets intended to drive up installed generation capacity from clean energy. It has been difficult to make progress.

The updated PSMP (published as Revisiting PSMP 2016) is considered the main development roadmap for the power sector. However, it was developed during a time when renewable energy was considered to be less competitive. Projections are now outdated and as a result, the PSMP conflicts with other policy objectives and hinders Bangladesh’s ability to meet its nationally determined climate commitments. For example, the PSMP is misaligned with the Renewable Energy Policy 2008, which calls for ten percent of energy supply to come from renewable energy by 2020. These unrelated targets make it difficult for decision makers to plan a path forward, which creates uncertainty in the market about government intentions and investment opportunities. This in turn affects the downstream value chain, such as investment in local manufacturing and local industrialization potential.

Proposed Renewable Energy Development Plan and Implementation Guidelines

Studies find that Bangladesh can achieve much higher levels of renewable energy and meet its policy targets by using least-cost planning and removing technology constraints. The country needs a new development path that will allow it to meet its international climate commitments at the lowest cost, maximize the use of local renewable energy resources, attract private financing, and ensure a future less dependent on imported gas and coal.

Listed below are recommendations for a development plan, particularly for large-scale renewable energy:

  • In the short term, the plan will need yearly targets for capacity and activities such as a resource assessment, zone identification, a project feasibility analysis, policy and regulation updates, development of a suitable renewable energy competitive procurement system, pilot projects, and interventions to address infrastructure challenges such as land acquisition and land development, grid extension, connecting roads, etc.
  • In the medium term, the main constraints and challenges will have been addressed, allowing Bangladesh to increase large-scale renewable energy project development. The midterm development plan should fix yearly development targets.
  • To achieve long-term sustainability, the Government of Bangladesh needs to create opportunities for local manufacturing. The government can slowly escalate local content requirements established during bidding and ensure enough annual procurement to sustain local manufacturing capacity.

Conclusion

It is now clear that it is technically possible and potentially cheaper for Bangladesh to implement a higher share of renewable energy in its energy mix. The GoB needs to establish a transparent and publicly available RE development plan that provides clear direction for both public and private energy stakeholders.

The Government of Bangladesh can achieve an estimated 31.32 GW of installed capacity through solar photovoltaic (PV) and wind power and meet its nationally determined contribution target of five percent emissions reduction in the power sector by 2030. To do so, the GoB can adjust the installed capacity targets for solar PV and wind, improving the Revisiting PSMP 2016 trajectory for renewable-based generation. The GoB can target ten percent of total electricity demand to be met by renewable energy beyond 2020 and maintain this share until 2041 with a realistic rate of increase. Solar PV installation capacity is proposed to account for between 70 and 80 percent of total renewable energy capacity and wind between 20 and 30 percent of the total to be installed.

Private sector investment will be needed to reduce the investment gap from a shortfall of public sector financing capabilities. The private sector has been active in Bangladesh for many years and has been instrumental in the development of its conventional power plants.

Photomontage of wind turbines in front of the flag of Bangladesh
USAID supported the Government of Bangladesh to enhance private sector engagement, energy security, competitive and transparent renewable energy procurement, and institutional capacity to integrate affordable renewable energy.
© Антон Медведев / Adobe Stock

USAID, through its Scaling Up Renewable Energy (SURE) program, supported the Government of Bangladesh to enhance private sector engagement, energy security, competitive and transparent renewable energy procurement, and institutional capacity to integrate affordable renewable energy.

Mother holding her son in nature. Wind turbines in the background.
Through the Scaling Up Renewable Energy program, USAID helps partner countries power economies with renewable energy, meet international climate commitments, and open markets to private investment and competition.
© Viktor Pravdica / Adobe Stock

2017–ONGOING, GLOBAL – USAID’s Scaling Up Renewable Energy (SURE) program helps partner countries meet bold climate commitments by accelerating their transition to more affordable, reliable, and accessible energy that spurs growth, powers health systems, and reduces emissions.

Through SURE, USAID provides a variety of services to help policymakers, utilities, and regulators plan, procure, and integrate renewable energy, modernize energy sectors, and create policies that enable sustainable energy markets to flourish. As more countries aim to achieve net-zero emissions by 2050 and reduce hazardous waste, SURE’s Innovation Fund supports clean energy technology, energy efficiency innovation, and a circular economy for renewable energy equipment.

Date 
Friday, September 3, 2021 - 2:15pm

Last updated: May 17, 2022