Draft
THE GOVERNMENT OF THE PEOPLE’S REPUBLIC OF BANGLADESH
&
UNITED NATIONS DEVELOPMENT PROGRAMMEME
PROGRAMME FRAMEWORK
Sustainable Energy Programme
Brief Description
The Sustainable Energy Programme (SEP) is aimed at enhancing equitable access to appropriate, reliable and affordable
renewable energy services to reduce human and income poverty. It is designed as a pro-poor application of sustainable
energy service delivery systems, with greater market orientation, which will demonstrate renewable/clean energy and
energy efficient projects and energy conservation measures for the poor and low-income communities and also for the
industrial and commercial sectors of Bangladesh. The SEP is expected to raise the income of the targeted rural
communities, diversify their livelihood options and significantly improve their quality of life.
The SEP will provide policy support to the Power Division of the Ministry of Power, Energy & Mineral Resources for
reviewing and formulation of appropriate policies for the future for development and expansion of pro-poor sustainable
energy options, technologies and practices in Bangladesh in line with national priorities expressed in the PRSP and
MDGs. Institutional support to the public and private sector is also envisaged under the programme for building their
capacity for pro-poor service delivery. In order to reduce dependence on external funding, the programme aims at
developing a linkage between the financial institutions and grassroots energy clients through building a service delivery
mechanism in this sector with information dissemination and capacity building.
The SEP will also assist in mainstreaming Sustainable Energy Technologies (SET) with conventional project
development and financing norms in the power sector in the long run and help determine and demonstrate the appropriate
technology options (best practices) available regionally/internationally for replication in areas of Bangladesh not covered
under the grid power system.
Page 1 of 33
I.
THE ENERGY SECTOR IN PERSPECTIVE
Background
Bangladesh is in the process of transition from a predominantly agrarian economy to an industrial and service
economy. Post liberalisation in the 1990s, the private sector has been playing an increasingly active role in the
economic sphere, while the public institutions are putting greater emphasis upon the setting up of social and
physical infrastructure. The growth trend of the Bangladeshi economy is be clearly observed through a series of
indicators such as a ten-fold rise in the export earnings from 1991-92 (US $ 627 Million) to 2001-02 (US $ 5,
987 Million), which is an indicator of the level of growth of the local economy as well as the liberal external
economic policies pursued by the country1. The country has a proactive policy towards Foreign Direct
Investments (FDI), which has promoted the inflow of foreign exchange into the country and helped it build up
formidable forex reserves of US $ 1,587 Million 2. The rate of growth of GDP of Bangladesh has been around
4.7%, which compares well with the overall experience of South Asia. Typically, this rate has not, like the
general South Asian experience, been able to sustain a rate of growth above 5%, and has therefore remained
well below the targeted growth rates in the different Plan Documents aimed at 6% - 7%.
With the domestic economy poised for growth, one of the critical infrastructure services that need to be
provided is energy, which remains among the key developmental priorities for any developing country. The
electricity consumption per capita (kilowatt-hours) in Bangladesh is 155, which is far below that of India (561)
and Pakistan (479)3. In the case of Bangladesh, there is a felt need to improve the energy intensity of GDP (kWh
consumed per capita), the need for which has been brought out in various documents that have been prepared by
the state.
National policies and plans
The low per capita intensity of electricity production (and consumption) implies that the overall energy
consumption level in Bangladesh, of which electricity consumption is a major share, is also low. The National
Energy Policy, (in its original version) estimates 56 KgOE as the per capita energy consumption in Bangladesh
as on 1990, making it one of the low energy consuming nations in the world. The more recent revision of the
Energy Policy in 2004, the Draft National Energy Policy4 recalculates the per capita energy consumption at 200
KgOE and the electricity consumption at 120 kWh per annum, as of 2000. The effective annual rate of growth
of electricity consumption, assuming linear growth trend, is 5.2% per annum. This is considered lower than
optimal, especially in the current context of reaching an overall economy growth rate of 6% - 7%. The Private
Sector Power Generation Policy5, specifically identifies the low energy intensity of the economy (electricity
generation6 of 95 kWh per capita per annum in 1996) as the reason for a more dynamic and private – oriented
power policy. The document pegs the desired optimal rate of growth of energy generation at 10% per annum7.
There are estimates that point to the fact that electricity has reached roughly 30% of the population as on date,
which has been quoted in several documents. The Fifth Five Year Plan document (drafted 1997, probably
quoting numbers from a 1995 estimate) puts the same figure at 15%. This leaves a very high demand – supply
gap for Bangladesh, even by South Asian standards. The issue at hand therefore is more to do with poor energy
access, rather than one of its affordability, which is often made out to be the case.
Historically speaking, response strategies to combat the situation started coming through from 1995. Efforts
took the form of various policy documents that were drafted between 1995 and 1998. These included the energy
policy, the private power generation policy and the guidance for small power plants. However, concern for the
overall health of the sector was expressed in the Fifth Five Year Plan Document (FFYP). The FFYP (1997 –
2002) makes some potent observations on the power sector. In terms of the context, the Plan Document rides
upon the spate of regulatory and legal reforms introduced in the power sector in 1995-1996, such as the National
Energy Policy and the Private Sector Power Generation Policy (1996). The Plan provides ample indication on
the need to introduce changes in the policy or regulatory structure of the energy sector.
1
Source, Bangladesh Economic Review, Ministry of Finance. Information extracted from Exhibit 1, Page 11, of the Bangladesh Country
Information Document
2
As on June 2002, Source: Economic Review document of Bangladesh.
3
Human Development Report 2004, UNDP.
4
A copy of the National Energy Policy can be downloaded from www.petrobangla.org
5
Private Sector Power Generation Policy of Bangladesh (October 1996)
6
Effective electricity consumption is expected to be at least 20% lower than this, given the high losses due to transmission and distribution.
7
Introduction (paragraph 1.1) states that power sector growth should be around 10% pa to sustain economic growth at the desired level of
6% - 7% pa.
Page 2 of 33
Focusing on this need for reform, the Fifth Five Year Plan Document made a series of specific observations and
projections for all areas within the energy sector. Among the primary observations cited in the Plan Document,
it observes that the performance of the state-owned utilities has ‘remained far from satisfactory’, and therefore
there was a felt need for institutional reform. It also observed that the Inter-Ministerial Working Group made a
recommendation (1993) to the effect that private sector investment in power generation alone was not the
solution to the deficiencies affecting the power sector, but a whole slew of structural reforms in the sector were
required for greater and more co-ordinated action. Possibly as a response strategy, the Power Cell was
introduced as an independent regulatory body to operate in the energy sector efficiency improvement and also
suggest ways and means to make the sector more alive to the development needs of the country.
Energy crisis and its effects on environment
A more serious form of the crisis emerges when one considers that a large segment of the population without
access to any electricity puts an excessive pressure on biomass reserves in Bangladesh, with the outcome of
accelerated deforestation. This may lead not only to lower forest cover area, but also to increased frequency of
extreme events, especially flash floods, due to the absence of forest cover. Localised greenhouse gas effects,
and the Asian Brown Haze, may also have an indirect causal linkage with rapidly depleting forest area, which is
an alarmingly low 7% in the case of Bangladesh8. The National Energy Policy (1996) made an observation on
the need to assess the local demand and regenerative supply of different biomass fuels specific to different
locations. On the response side, the document mentions that costs involved in aiming at direct and total
replacement of biomass by commercial energy will be prohibitive, and pose financial and infrastructure
constraints, and therefore biomass fuels may continue to play an important role in the energy scene “for many
years to come”. Surprisingly, however, the document falls short of clearly defining the role on how biomass
utilisation as a fuel may be further improved, for example through improved cooking stoves, energy recovery
systems and so on.
The need for sustainable energy
In roughly over 8 years ( 1995-2004) since the drafting of the National Energy Policy (NEP) and the setting up
of the Power Cell, the country has progressed on the road to energy security and sustainability. However, a lot
still remains to be done. For one, the presence of renewable energy in the country is still negligible, when
compared with that of a comparable economy such as that of Thailand and Malaysia. Second, the sector is
marked with an utter absence of any process for the development and sustenance of sustainable energy
initiatives, whether through the market route or through the donor route. Third, several institutions, in
academia, government and civil society seem to be replicating one single project, without trying any variants of
it - examples being those of biogas plants and solar PV home systems. Importantly, the government apex body
for policy setting - the Ministry of Power, Energy and Mineral Resources (MPEMR) - also has two Divisions
who have prepared the same policy document, the Renewable Energy Policy for Bangladesh9.
On the other hand, the sector has failed to capitalise the modern energy conservation and efficiency initiatives
for effective demand management. Energy efficiency offers a number of obvious benefits, including improved
use of national resources, reduced energy imports, improved balance of trade, conservation of foreign exchange,
reduced capital requirements for new energy production facilities, and reduced environmental pollution from
energy use and production. By using energy more efficiently Bangladesh can take the advantages of carbon
trading and help to reduce global carbon dioxide emissions, reducing the rate of climate change and the damage
to the environment. On the commercial scale, increased efficiency generally means improved profitability for
companies. As firms expand beyond their border to compete in world markets, factors such as production costs,
product quality and price become increasingly important. Under these conditions of increased competition,
efficiency improvements are an important key to long-term competitiveness.
In the field, the sector suffers from short-sighted planning. Bangladesh today has reached a stage, where the
majority of its areas are integrated with the national grid. REB officials put this number at more than 65%10.
While this is commendable, electricity connectivity is yet to reach 33% of the population, of which the share of
Dhaka is an astonishingly high 52.8% as per the latest statistical data. In the rural areas, more than 75% of the
population is still to be connected with the grid. Obviously, poor communities do not have the means to pay for
the services, which is an indication of the fact that livelihoods are at stake and needs to be addressed. However,
8
Fifth Five Year Plan; 1997 – 2002
The Power Division has prepared a draft, which is yet to be even approved, while the GoB has approved the National Energy Policy
prepared by the Energy and Mineral Resources Division.
10
Stakeholder interaction with REB conducted by the SEU
9
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the government, or REB as the nodal agency in charge of rural electrification have not made this attempt to
match livelihood security with energy needs, which would have led to not only greater electricity access for the
rural population but also livelihood security.
The long-term vision of the government of Bangladesh (GoB) is embodied in its target to provide affordable and
reliable electricity to all by 2020, which has been duly backed up by a number of reforms. Further, state
commitment to the Millennium Development Goals, especially that of reducing poverty by half by 2015, stresses
upon the need to provide affordable access to power for the rural population, the majority of which are not yet
connected to the national grid. The Power Development Board estimates only 20% of the rural population to be
covered by grid-powered electricity (http://www.bpdb.gov.bd/vision statement.htm). All of this points to the
fact that there is a definite need for collaborative action in the energy sector which can be addressed through
pro-poor energy initiatives and participation of the rural communities and urban as well. For this to happen,
there has to be a powerful mechanism for bringing the un-electrified and off-grid communities into the folds of
mainstream energy through a mechanism that seeks to sustain itself, as far as possible, on its own.
II.
PAST AND ONGOING PROGRAMMES / PROJECTS
As discussed above, Sustainable Energy, in its right perspective, has not yet been institutionalized in the
mainframe of energy development plans and programmes in the country in spite of several energy policies
available in the country which make mention of Sustainable Energy interventions for the future. However,
without any nationally coordinated or unidirectional efforts, a number of interventions or projects have
happened in Bangladesh, initiated by different bodies/agencies and dependent on funding made available by
different donor agencies. These efforts cannot be categorised as parts of any national Sustainable Energy
approach for the country, but as individual efforts by Government bodies as thought appropriate by the project
proponents. Never-the-less, these initiatives brought about a reasonable level of understanding of sustainable
energy technologies, the important issues of environment & Climate Change related to it and the benefits that go
with the installation of sustainable energy systems in a developing country like Bangladesh. The donor agencies
encouraged and supported these efforts not only to demonstrate sustainable energy possibilities but also to
expose the country to Climate Change issues. Some of the initiatives taken in these directions are shown in the
table below and discussed in detail.
The Rural Electrification Board (REB) Initiative
The sustainable energy initiative of the REB focuses primarily on solar power in the renewable energy side, and
the attainment of distribution efficiency improvements through Pally Bidyut Samities (PBS), which are
electricity user co-operatives created by them.
The first solar electrification project of the REB started in 1993 and continued upto 1997 involving Solar Photo
Voltaic (SPV) based power system in a river island covering about 29 sq. km, under Karimpur and Nazarpur
unions of Narsingdi Sadar Thana. Total installed capacity was around 30 kWp. The system was catering to 806
different categories of consumers including health centres, market places and sports clubs. They were
subsequently connected to the main grid by DESA and the PV installations were disconnected and handed over
to the Pally Bidyut Samiti at Norshingdi (2) for installation in some other remote villages, details of which are
not yet known. Among its other programmes, a 22,000 strong SPV Programme is currently in operation. Other
project ideas for electrification of off-grid areas are under consideration now.
Preliminary discussions with REB (the solar energy management team) revealed that as a part of their mandate
to extend electricity facility in the rural areas, there is a definite need for capacity building and knowledge
upgradation perhaps by sustained training & development and also by exposure to best practises around the
world. Exposure and orientation to other forms of sustainable energy technologies would also be very necessary
to choose viable options to meet rural energy needs in the future in line with their mandate to extend the energy
services to the rural population of Bangladesh.
Role of Palli Biddyut Samities (PBS) in distribution efficiency improvement.
In order to improve the distribution efficiency in rural areas, REB introduced the Palli Bidyut Samities or PBSs,
as a concept of Area Coverage Rural Electricity Programme. A PBS is owned by the member consumers and the
affairs of the business, is managed by the board of directors elected by the member consumers on the basis of
one-member-one-vote. As the Chief Executive of a PBS, the General Manager is responsible to administer the
business of a PBS following the instructions and by-laws of PBS/REB issued by the Board of Directors. The
Board of Directors place the financial conditions of the PBS to member consumers at the Annual General
Meeting held as per PBS by-laws.
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With a view to ensuring sound management practices, coupled with extending a strong financial base, REB has
introduced the concept of Performance Target Agreement (PTA) a few years back. The concept of PTA has,
within a short span of time, proved to be a unique system of accountability of the PBS’s performance as a
whole. Under this system, a PBS’s performance, in as many as twenty-one key performance areas, are evaluated
on an annual basis, based on which reward or penalty is decided. However, the performance of the PBS is
largely dependent on the geographic location based on the load density available in the area. It has been found
that wherever industrial load is more, the PBS is profitable and performing well. This is perhaps a major reason
behind the fact that 75% of the 52 odd PBSs are presently under performing. There is a felt need to streamline
the operational areas of the PBSs on a national level, keeping in mind that there are a number of power utilities
in the country and if the operating areas are not clearly defined, there will be inadequacies in the distribution
system which will affect performance. A case in point is the performance rating of Narsingdi Palli Bidyut
Samity-2, which is presently poor largely because it happens to be in an area where load development per year
is extremely inadequate and also the fact that DESA has commenced operation in many of their areas, affecting
the PBS’s coverage quite considerably. The whole concept of Area Coverage Rural Electricity extension
Programme needs to be re-examined and the gaps identified, for taking action as necessary for improved rural
electricity distribution.
The Bangladesh Power Development Board (BPDB) Initiatives
The BPDB launched activities in the sustainable energy sector, after REB had conducted a “Feasibility Study for
Solar PV in the Chittagong Hill Tract Region”. The target areas of BPDB for implementing the Solar Home
Systems were three upazilas of the Chittagong Hill Tract Region, viz., Juraichari, Bilaichari and Borkal. One of
the strengths of this project is that it has introduced solar PV technologies in a variety of applications, including
vaccine refrigerators, street lighting systems, agricultural pumps, mini grids and railway signalling stations.
The BPDB has also initiated a 1.8MW wind energy project, which is presently under implementation in a
location near Feni. However, since the national wind map is not yet being available in the country, it is perhaps
a bit premature to enter into large scale wind projects at the moment. If due consideration has been taken with
regard to wind availability in the chosen location, then this could be a path breaking project in the country.
Energy Efficiency & Conservation initiatives of the Power Cell
The Power Cell under the Power Division of the Ministry of Power, Energy and Mineral Resources, has initiated
some energy efficiency and conservation measures which should be able to off-set 500 MW of peak power
requirement. Some of these measures include:
- Introduction of high energy efficient appliances like compact fluorescent lamps, electronic ballasts etc.
Introduction of energy audits in selected industries.
- Scientific load management system in city areas.
In order to facilitate the above, the government, as a first initiative, considerably reduced the import duty on the
import of compact fluorescent lamps (CFL), to facilitate availability at affordable prices. However, the impact
of this could not be felt on the ground because of low quality CFLs flooding the market at almost the earlier
prices. Product specification standards will need to be enforced to ensure that the right products enter the
country. The well intended initiatives of the Power Cell are yet to yield positive impacts, but would perhaps do
so over a longer period of time and the right enabling environment.
The LGED (SRE) Initiatives
LGED was entrusted with the responsibility of handling the UNDP funded Sustainable Rural Energy (SRE)
project under a 7-year programme of the Ministry of Environment & Forest called the Sustainable Environment
Management Programme (SEMP) starting in 1998. The objective of the SRE project is to bring sustainable
energy to the rural population of Bangladesh through a process of demonstration of a reasonable number of
renewable energy technologies and in the process empower the rural poor, to the extent possible, towards
sustainable livelihoods.
This project provided a platform for the promotion of renewable energy at the field level for demonstration and
local level awareness building. A good number of demonstration installations were initiated in this project,
some of the significant ones being:
1. A 5 KWp SPV mini power house for a fishermen’s village in Chokoria, near Cox’s Bazar with distribution
lines to individual households within a cluster in the village. This is a good example of distributed generation in
a non-grid area where the local people have been trained to operate and maintain the system and do after sales
service as and when required. The inhabitants pay for the power given and have themselves instituted penalty
Page 5 of 33
systems for any default in the monthly payment. It is a true example of collective efforts and a good example of
how these small interventions can improve the quality of life of the marginalised people. Stakeholder interaction
at the location revealed that considerable social benefits have been achieved consequent to the intervention.
These are in the form of improvement in income from additional income generation activities in the evening
hours, better education opportunities, better heath facilities, social harmony and many others. This is a good
example to replicate in other similar locations in Bangladesh.
2. A 1.8 KWp SPV centralised system for a rural market in Jenaidah provides lights to shops and commercial
establishments in the evening hours. This is another example of distributed generation in off-grid areas for the
benefit of the rural masses. The social impact of such interventions is seen from the extension of market hours
into the late evening thus increasing rural economic activities, the security felt by the shop owners and shoppers,
convenience of coming to market in the relatively cool hours of the evening by villagers in departure to their
earlier habits, etc. This can be replicated in other remote areas.
3. A 10 KWp Solar Wind hybrid at St. Martin’s Island is a landmark initiative in the country towards
introducing the latest in the hybrid technology which might be the vogue in the future. However, this being a
one-off project, the economic viability of the same needs to be carefully understood prior to replication of such
projects in other locations in the country. The initiative is providing power to a complex of the Forest
Department on the island.
4. A 20 KWp Hydro generating unit at Bamachora is a good example of harnessing hydel energy in the country,
which could be replicated in many locations in the Chittagong Hill Tracts of Bangladesh. The power being
generated will be used for a park under development at the location.
5. A total of 4 solar submersible pumping systems ( 4 X 1800Wp ) are underway at Barendra area in Rajshahi
complementing another SEMP project of the Barind Multipurpose Development Authority (BMDA). This will
be completed within 2005. This will probably be the first introduction of solar pumping of water primarily for
drinking water purposes for the village communities, definitely replicable in many other locations in
Bangladesh.
6. Two 250 KW Biomass Gasifiers from rice husks in Dinajpur and Sherpur are to be made operational within
2005. Site surveys have been completed and implementation details are under finalization. This will be an
unique first time initiative in the biomass energy arena in Bangladesh and perhaps the beginning of many such
replications in the future as the projects are viable with a fair percentage of equity participation by rice mill
owners.
Grameen Shakti
Over the last 4/5 years Grameen Shakti has played a major role in the dissemination of solar home systems in
the country. They have installed about 50000 of these systems under different programmes. Grameen Shakti is a
private organization supported by their mother NGO establishment, Grameen Bank. Due to the enormous
potential in the solar home systems business Grameen Shakti is gearing up its rural infrastructure to meet the
demand of 100000 units of solar home systems in the next 2/3 years. It is reported that it has 160 rural outlets
for the purpose with a very large contingent of field personnel engaged in installation, providing after sales
service and collecting the monthly instalment payments. They have also commenced assembling of charge
controllers and luminaries, which is a step forward in enterprise development in the country. They are presently
the largest player in the IDCOL initiated solar home systems programme. Grameen Shakti is also considering
large scale entry into the business of bio-gas systems, which it feels has enormous potential in Bangladesh. A
team of experts has been engaged for the purpose, which has commenced work in this area.
BRAC
Endowed with a very effective rural infrastructure, BRAC entered the field of solar energy systems
dissemination about 2/3 years ago. Under the IDCOL programme, they have installed till date, 8500 units of
home systems and they plan to scale up this activity substantially in the very near future. However, BRAC has
to undertake considerable capacity building measures to train their field personnel in the technical aspects of the
business, without which, sustainability over the longer term will not be possible.
The IDCOL Initiative
Infrastructure Development Company Limited (IDCOL), a Government owned financial Institution initiated the
solar home systems programme involving NGOs, manufacturers and system integrators to bring light in the
lives of the rural population. Micro-credit institutions or NGOs offer deferred payment schemes to the users,
Page 6 of 33
thereby enhancing their accessibility to the facilities. Over 25000 of these home systems have already been
installed and it is expected that the figure will soon cross 50000. This is a commendable effort in the
dissemination of solar home systems to the rural population. But, before proceeding at the targeted level of
speed as indicated by IDCOL, a mid-term technical and commercial evaluation may throw light on
understanding the impact of the programme on the ground, especially in the aspects of technical back-up support
and the capability of the NGO personnel to provide the same, the effectiveness of the technical standards set
with respect to the specifications of the systems and their adherence in the field, the effectiveness of the
monitoring mechanism, the technical orientation of the users, the financial capabilities of the involved NGOs
and the help & support of the manufacturers and system integrators in this regard within the limitation of their
financial capabilities, the effectiveness of the funding and lending mechanism and the effectiveness of the
micro-credit mechanism presently in place. Limited stakeholder interactions have revealed that the said
programme has probably not touched the rural poor or those living below the poverty line, for whom a different
line of action will need to be thought of.
Project
Name
Donor
Implementing
Agency
Time
Frame
Project
Cost
(indicative)
Focus
Area
Financial
Arrangement
Institutional
Arrangement
REB
infrastructure
Diffusion of
Renewable
Energy
Technologies
(pilot phase)
Diffusion of
Renewable
Energy
Technologies
(2nd. Phase)
Rural
Electrification
through solar
energy
France
REB
1993
to 1998
US$ 1.77
million
SPV battery
charging
centre
Aid: US$
1.14 million
Local: 0.63
million
KFW
REB
1999
to date
US$ 6.04
million
Aid: US$
3.35 million
REB
infrastructure
GEF
REB
2002
to
date
US$ 8.49
million
Aid: US$
6.53 million
REB
infrastructure
Solar home
system
programme
IDCOL
initiated
Grameen
Shakti
1995
to date
GEF aided
Grameen
Rural
Infrastruct
ure
Solar home
system
programme
IDCOL
initiated
BRAC
1996
to date
GEF aided
Solar home
system
programme
IDCOL
initiated
7 different
NGOs
2002
till date
BRAC
rural
infrastruct
ure
NGO rural
infrastruct
ure
Solar Energy
Programme
GEF
BPDB
2001
to 2003
Total of 147
KWp
Sustainable
Rural Energy
Programme
UNDP
(SRESEMP
project)
LGED
1998
till date
US $ 1.97
million
Solar home
systems for
remote
area
households
16000 solar
home
systems for
remote
area
households
on microcredit
30,000
thousand
solar home
system
completed
till date
8500 home
systems
completed
till date
About 6000
home
system
completed
Solar home
system,
vaccine
refrigerator,
street lights
and SPV
pump
Different
demonstrati
on units of
renewable
energy
technologies
Page 7 of 33
GEF aided
GEF aided
BPDB
infrastruct
ure
LGED
rural
infrastruct
ure for
implement
ation and
monitoring
The interventions described above are the key ones in the area of sustainable energy. Besides the above, there
have been a few interventions in the country, perhaps not significant enough for mentioning.
Others
A number of other projects are understood to be under way or undertaken like GTZ sponsored Promotion of Use
of Renewable Energy(PURE) programme, Solar and Wind Energy Resource Assessment (SWERA) project of
Bangladesh University of Engineering and Technology (BUET), Wind Energy Study project of Bangladesh
Centre for Advanced Studies (BCAS). There status is not known.
III.
LESSONS LEARNED
There is a need to focus on poor people’s energy needs and frame energy accordingly in the development
process. In the past, there has been greater emphasis on technical and economic issues and, more recently, on
the environmental aspects of energy with social concerns receiving less attention. Over the past few years,
lessons learnt from sectoral-based projects have resulted in the shift from sectoral and capital intensive mega
technology-driven approaches to one which embodies energy as a basic need for the poor. The programme will
thus focus on improving access to energy services that meet peoples’ needs and priorities focusing on the “unserved” and the poor.
An analysis of the past and ongoing projects on sustainable energy in Bangladesh provides an insight into some
of the key features that need to be incorporated into a holistic programme designed to effect sweeping changes
in the sector. These are summarised as the lessons learnt as follows:
1.
While designing community level energy distribution systems, the basic development needs of the
people as defined under the MDGs (poverty eradication, hunger, education, gender equality and
empowerment of people) should be addressed.
2.
The sustainable livelihoods priorities of the community need to be integrated into the design process.
3.
For all energy efficiency improvement projects, contribution from the beneficiary is required as
highlighted in the Palli Biddyut Samities (PBS) and Strategic Business Unit (SBU), Power Cell
experiences.
4.
3. The project has to be designed in a manner that it may be operated without any external assistance in
the long run.
5.
Improving the energy utilisation among Small & Medium Enterprizes (SMEs) would have a high
impact on poverty, as they are mainly family-based and linked to the rural communities. Considerable
energy efficiency gains can be made in this sector, either by increasing efficiency of the current locally
available renewable resource utilisation or by switching over to modern fuels. These actions would lead
to energy savings which would increase the energy supply and therefore be able to contribute to
increasing the access to energy services. For this reason, the programme will focus on energy
efficiency in SMEs.
6.
The level of funding sources available from multi-lateral and bi-lateral institutions under soft loans and
grants have become increasingly competitive over the years. Coupled with this, financial gap in terms
of development needs and requirements is also widening. In this context, there is a need to tap the
emerging opportunities under UNFCCC’s (United Nations Framework Convention on Climate
Change) Climate Change Adaptation and Clean Development Mechanism (CDM), as well as resources
under the Global Environment Facility (GEF), besides building strong private and public sector
alliances to fund energy related interventions that addresses poverty reduction and promote
environmental sustainability.
7.
There has been some success in engaging the financial sector in energy services in some countries in
the region. However, these have mainly been for the larger industrial sectors. There are missed
opportunities of not effectively engaging the financial sector on a micro-financing scale, which would
permit smaller enterprises to access financing. Hence, this programme will explore with regional
Page 8 of 33
micro-finance facilities to see if their existing rural and mainly agriculture based services can be
expanded to include financing for energy services in the rural areas.
8.
IV.
The World Energy Assessment of 2000 concluded that further attention is needed in the policy arena,
as “we do have the resources and technological know-how to rise to the challenge of energy that
support sustainable development”. Thus, the provision of energy services is crucial to sustainable
human development as the latter is highly influenced by the income levels of people, access to
technologies, and improved quality of life.
KEY CHALLENGES FOR THE FUTURE
The challenge in general for Bangladesh is to ensure “universal access” to cleaner, affordable and reliable
energy services for those areas and communities that remain unserved, while accelerating transitions to more
sustainable energy systems in a rapidly growing economy. However, the key challenges facing the country in
the sustainable energy sub-sector are as follows :
-
-
-
V.
Limited knowledge on renewable energy market potential, which leads to lack of greater and wider
private sector presence in the sustainable energy scenario in Bangladesh.
Market distortions by the subsidised or grant based hardware installation programmes.
Absence of financial incentive policies to encourage renewable energy development.
Poor capacity in the sustainable energy sector in Bangladesh, especially in the renewable energy sector.
This is clearly visible in the fact that the average size of power plant in the sustainable energy sector is
around 5 kW (or its equivalent);
Lack of financial sector involvement in the sustainable energy sector and capacity within the financial
institutions to appraise sustainable energy proposals for loan is non-exiting. The financial sector would
need to be exposed to viable investment opportunities in the sector.
Poor quality of technical support entities involved in the sector, such as engineering firms, contractors
and other individual technicians.
Limited empirical knowledge on the costs and benefits of the range of technologies available for
providing sustainable energy options.
Lack of awareness on rural energy and livelihood linkages among service providers.
Interventions are not directed suitably to address sustainable livelihood and development issues.
Weak regulatory environment in the energy sector and in the sustainable energy.
GAPS EXISTING IN A NATIONAL APPROACH TO SUSTAINABLE ENERGY
The following summarises the existing gaps nationally and the key problems to be addressed under the
Sustainable Energy Programme in order to overcome the challenges described above:
a)
Lack of an institutional platform for SET expansion - As has been mentioned often in this
document, the single most important issue endemic to the energy sector in Bangladesh is the
absence of any institutional platform for the promotion of sustainable energy technologies
(SET) in Bangladesh. This brings in its wake several other shortcomings as well. A holistic
programme that would address among other things promotion of an institutional platform for
the expansion of SET in Bangladesh is required immediately.
b)
Lack of a harmonized policy and regulatory environment - A number of policy documents on
the energy sector in Bangladesh may lead to confusion and weaken the regulatory environment.
The formulation mission of the Sustainable Energy Programme (SEP) has identified this as a
key problem and earmarked the convergence of policy documents in line with the PRSP and
MDGs as a key area of focus. The renewable energy initiatives should also enjoy fiscal
incentives like tax holidays, accelerated depreciation of equipment and low cost funds for a
certain period.
c)
Financial sector largely missing in the Sustainable Energy project development and
implementation process - With the exception of IDCOL, no other financial institution has
invested in the sustainable energy sector in Bangladesh. The formulation mission has identified
greater involvement of the financial sector as a key success factor for SEP.
Page 9 of 33
VI.
d)
GoB appreciation of Sustainable Energy needs to build substantially - Building linkages within
key institutions of the GoB to promote sustainable energy should be a key programme
component.
e)
Lack of Technical Knowledge among Stakeholders - The intellectual know-how and human
capital element with regard to the power sector in Bangladesh is among the lowest in the world.
Till date, not a single plant has been locally fabricated. All plants and machinery are imported
leading to high import costs and duties being added to plant capital costs. In addition, local
technicians are inadequately equipped with knowledge to handle plant operations, with the
effect that plants wear out before their rated life comes to a close. This could be an issue of
grave concern in the context of sustainable energy also where budgets are limited. Such cost
overruns could threaten any project and cause damage to the image of the technology, which
has already started to happen with solar PV. Therefore the SEP has to build in a strong
technical assistance component that would provide adequate knowledge support in the form of
specific capacity development of different actors in the programme life cycle. This includes
consultants, engineers, banking and FI sector professionals, contractors and communities for
future Sustainable Energy ventures.
f)
Lack of stakeholder appreciation of rural energy demand - In spite of setting up of the Rural
Electrification Board (REB) and a number of solar systems installed in the country, the existing
machinery for extending rural energy have not been able to provide a livelihood focus to their
energy access projects. There is a felt need to provide energy to rural households for income
generation. The SEP would consider the integration of energy and livelihoods as one of its key
features for pro-poor growth in keeping with the MGD goals. The economic viability of
individual projects would first need to be understood in the light of their social acceptability as
much as their ability to generate revenues for the community.
g)
Low level of technology transfer and application - From the first solar PV programme in 1993
till date, there has been no attempt to upscale or diversify technology applications, with
operations concentrated around solar and biogas technologies. The SEP would have a strong
technology transfer component to overcome this by introducing new commercially viable
technologies in Bangladesh.
RATIONALE FOR A SUSTAINABLE ENERGY PROGRAMME
The draft Poverty Reduction Strategy Paper (PRSP) of the Government of Bangladesh mentions that, “ Given
that efficient utilization of renewable energy resources in Bangladesh is yet to assume commercial dimensions,
rational policy dissemination on renewable energy usage is essential”. “ The Government’s vision of electrifying
the whole country by 2020 through grid expansion may not be viable due to the in accessibility and low
consumer density in certain areas. It is an established fact that renewable energy is an environmentally
sustainable and socially acceptable option in the off-grid area”. The PRSP document also states that, “Prior
attempts to develop renewable energy in Bangladesh have met with limited success due to technical and market
related reasons”. In order to address the poverty situation within the MDG deadline, the Government has to
take urgent actions in some key areas of which Energy is one of the most critical areas for leapfrogging the
technological and economic divide. The PRSP recommends establishment of a “Renewable Energy Trust Fund
to finance renewable energy projects and Research and development activities”.
As a signatory to the Millennium Declaration agreed at the United Nations General Assembly Millennium
Summit in New York in 2000, Bangladesh is committed to halving its poverty level by 2015 - the overarching
aim of the Millennium Development Goals (MDGs) set in the Summit. The MDGs are to address the challenges
faced by the developing nations in poverty, hunger, health, gender, education and sustainable environment.
Although there is no MDG on energy per se, the relationship between availability of energy services and
economic and social growth is however recognized in the MDG framework “as it will be impossible to achieve
the MDGs without improving the quality and quantity of energy services in the developing world. In fact, access
to energy services affect practically all aspects of sustainable development, including access to water,
agricultural productivity, population levels, health care, education, job creation, gender equality and climate
Page 10 of 33
change impacts”11. In view of that, one of the themes for the 2006-2007 cycle of the Commission on
Sustainable Development will be Energy for Sustainable Development.
Bangladesh currently produces 3700 MW of conventional power against a national energy need of 4200 MW.
With rapid urbanization and construction of infrastructures including housing, the energy need is burgeoning
day by day. Experts believe that by coupling increased efficiency with conservation in the power sector a
significant amount of energy can be saved for enhancing the service coverage. However, it is recognized that
this will not solve the overall problem of the need for greater generation and distribution, which cannot be
supported through ADP alone due to lack of resources.
The past initiatives on sustainable energy in the country were few and uncoordinated. At the national level, the
Government has been too preoccupied with the conventional power mostly, while countries in the region have
moved forward in building viable sustainable energy plans and implementing them. Therefore, there is a need to
build the focus on sustainable energy at the national level. The Government would need to be at the centre of
coordination of a national effort for gearing up sustainable energy initiatives in the country through stakeholders
at all levels. The key to the success of such a national programme would lie in the Government playing the role
of a catalyst by bringing forth an enabling environment through supportive policy interventions. The other key
intervention would be to increase the potential of rural energy which would drive the rural economies and thus
fast-track poverty reduction through increasing the rural enterprises, employment and income while at the same
time improving the quality of life of the rural poor in terms of education, healthcare, entertainment, etc. Another
key consideration would be to raise the awareness of the financial sector on the potentials of investing in
sustainable energy interventions, particularly in the area of rural energy for the poor. To meet sustainable
development objectives, conventional approaches to energy must be reoriented to promote energy efficiency and
conservation side by side with renewable energy and cleaner fossil fuel technologies.
The above calls for an integrated approach to development of a Sustainable Energy Programme which will
provide opportunities for policy review and harmonization, capacity development of key stakeholders including
the financial sector, coordination and support, awareness raising and advocacy at all levels, technology
demonstrations and rural energy initiatives. The basic premise is to enable the market mechanisms to take over
and support small scale local level rural and urban energy initiatives that will free up the demand on the
conventional power and be a clean and renewable source of energy as well. Formulation of appropriate policies
will be the key to future development and expansion of pro-poor sustainable energy options, technologies and
practices in Bangladesh in line with national priorities expressed in the PRSP and MDGs.
VII.
METHODOLOGY FOR FORMULATION
The national programme on sustainable energy is premised on needs analysis conducted by the formulation
mission in the Bangladesh context. In this respect, the mission looked into the current scenario of the
sustainable energy sector in the country, including past and on-going projects/initiatives undertaken by various
national bodies, and tried to draw on the lessons learnt from them. A wealth of national level policies, studies
and analysis that exist were reviewed by the mission. Extensive stakeholder interactions and consultations at
various levels covering concerned national agencies, civil society, private sector bodies and focused grassroots
groups were held. The mission identified the key challenges facing the rapid development of the sustainable
energy sector in Bangladesh. Regional and international best practices were reviewed and adjudged for
suitability in the country context for adaptation or replication. Visits to some key sustainable energy initiatives
in a neighbouring country in the region was done in order to assess first hand their replicability potential. Market
potentials were looked at, particularly in terms of rural energy services and economies.
In order to ensure that this sustainable energy programme supports efforts to achieve the MDGs, the following
three operational principles are considered while formulating the programme :


11
To adopt a ‘people-centred’ approach, reaching beyond the technical issues, to deliver energy services that
meet people’s needs and priorities and to ensure that communities have a voice in the decision-making
process on how to meet their energy needs.
To work across sectors to integrate energy more fully into the development processes (building a deeper
understanding of the linkages among energy, poverty reduction and gender issues) and to take a holistic
programme based approach to energy sector rather than a project based approach.
Energy for Sustainable Development, UNDP, Dec 2004
Page 11 of 33


To take from local, national, regional and international best practices, in order to develop energy policies
that are pro-poor, pro-women and pro-environment.
To address the gaps identified, it is also imperative to consider the fact that: (a) participation is the key to
successful delivery of modern energy services in rural areas; (b) technology options must remain open and
be development-needs driven; and (c) that policies to promote energy services for productive applications
can maximize development effectiveness.
VIII.
OVERVIEW OF SUSTAINABLE ENERGY PROGRAMME (SEP)
Overall development objective
To enhance equitable access to appropriate, reliable and affordable sustainable energy services to reduce human
and income poverty.
Overall outcome
Energy access to targeted rural and urban poor and remote communities in Bangladesh enhanced and develop a
commercially sustainable delivery mechanism supported by enabling policies and a judicious mix of renewable
energy, energy efficiency and energy conservation technologies and measures.
Overall output
The proposed energy programme will focus at the macro-level on the enabling environment and policies needed
to support the enhancement of energy options for poverty reduction leading to sustainable human development.
At the meso level, private sector financing of energy options will be promoted through partnership with all
stakeholders. At the micro-level, activities will concentrate on integrated energy solutions addressing social,
economic and environmental objectives to address energy needs linked to poverty reduction. Actions taken to
support the development goals is expected to generate win-win outcomes in energy, environment and human
development. The following three strategic services are identified to address the three level of activities as
indicated above.
Programme Management Structure
Executing Agency
: Power Division, Ministry of Power, Energy and Mineral Resources
(MoPEMR)
Implementing Agency:
: Sustainable Energy Unit (SEU), Power Division, MoPEMR
UN Implementing Agency
: United Nations Office of Project Services (UNOPS)
Names of Additional Partners
: Rural Electrification Board (REB), Power Cell, Local Government
Engineering Department (LGED), Bangladesh Power Development Board
(BPDB), Bangladesh Standards and Testing Institution (BSTI), Private Sector
Agencies, Banks and Financial Institutions, Industry Associations , NGOs
and CBOs
Number
and
Programme
: Sustainable Energy Programme
Title
Duration of the programme
of
2005-2012
Strategic Focus
Attainment of the objective through a delivery mechanism that involves an enabling policy environment, greater
participation of market forces including banks and financial institutions aimed at commercialisation of
sustainable energy technologies (SET) in the country, and adoption of regional/international best practices for
increasing the replication potential and for easier and wider coverage.
Page 12 of 33
Strategic
Direction
SubProgrammes
Partners
Activity Focus
o Strengthening of SEU as
the focal point of the
Ministry for all matters
pertaining to Sustainable
Energy
Policy
convergence on
sustainable energy
issues and
dedicated agency
for promotion of
Sustainable
Energy
I.
Policy &
Institutions
MoPEMR ,
Power
Division
and SEU
o Review and
harmonization of SE
policies with PRSP and
MDGs
o Development of a longterm plan for conversion
of SEU into Sustainable
Energy Development
Agency (SEDA) within
the GoB as an
independent autonomous
body
o Institutional Support to
key public and private
sector bodies involved in
the energy sector in
Bangladesh for catalysing
pro-poor services
Strengthening of
key stakeholders
in the Sustainable
Energy sector in
Bangladesh
II.
Capacity
Development
SEU, REB,
LGED,
BPDB,
Power Cell,
Banks / FI,
private
sector and
civil society
o Strengthening of civil
society (NGOs) or
community based
organizations (CBOs)
working with rural poor
to provide energy related
services
o Ensuring community
stakeholders ownership
and maintenance of
various technology
options
o Financial Sector capacity
building to increase
exposure to Sustainable
Energy issues and
financing for the sector
Page 13 of 33
Expected Outcomes
o SEU’s management
and coordination
capacity for SE built
o Comprehensive
policies to address
future needs of the
country on
Sustainable Energy in
place in line with
national priorities
o
SEDA formed to
coordinate all
Sustainable Energy
initiatives in
Bangladesh
o Key Public and
private sector bodies
mainstreamed and
enabled for providing
SE related services to
rural poor
o Local level technical
and social support
enhanced for training
of rural poor
communities on SE
o
Participatory
mechanisms developed
for community operation
and maintenance of SE
o Market orientation of
financial institutions
changed towards
financing of SE
initiatives of rural
poor communities
Strategic
Direction
Institutionalisation
of SEU/SEDA as
nodal agency on
Sustainable
Energy
SubProgrammes
III.
Coordination
&
Management
Partners
SEU, other
SE projects
and their
partners and
donors,
private
sector,
financial
sector
Activity Focus
o Coordination of
Sustainable Energy
Programme (SEP)
implementation by SEU
o SEP managed
effectively by SEU
o Effective co-ordination
with other programmes
related to sustainable
energy sector in
Bangladesh, their partners
and concerned agencies
o SEU’s role expanded
over time to include
coordination of other
SE projects &
programmes
o Effective information
collection and sharing
with all stakeholders
o Application of ICT for
sustainable energy
governance
o Emergence of SEU
(ultimately SEDA) as the
“one-stop shop” for a
fully market based
sustainable energy
interventions
management in
Bangladesh
IV.
Build critical
resource bank for
large scale
dissemination and
commercialisation
of Sustainable
Energy options
Integrate
livelihood
priorities within
energy access for
economically
disadvantaged
communities
Studies,
Assessment,
Research &
Development
of
Sustainable
Energy
Options
V.
Promotion of
Rural Energy
Economies
through
targeted
inteventions
Stakeholders
involved in
sustainable
energy
project
promotion
Communities located
in remote
areas and /
or living
below
poverty line
Expected Outcomes
o National database on
SE established in
SEU and national SE
Network developed
o SE governance
through MIS
established in SEU
o Capacity built for
SEU to convert to
SEDA
o A few focused surveys
and assessments critical
for the long term success
of the Programme
o Preparation of state-ofthe-art tools for assistance
in the community based
project development and
financing processes
o Sustainability of SEP
ensured through an
“Exit Strategy” based
on focused studies
o Ensuring a clear
understanding of
livelihood issues related
to sustainable energy at
the community level for
sustainable development
o Community
orientation on
benefits of SE for
economic and social
development effected
o Energy interventions for
hard-core poor analysed
and interventions
designed on a need-based
participatory consultative
process aimed at poverty
reduction
o Community oriented
“Tool-kit” developed
for SE assistance
o Communities
empowered for selfassessment of SE
initiatives based on a
participatory process
and extreme poverty
reduced
o SE mainstreamed in
Page 14 of 33
Strategic
Direction
SubProgrammes
Partners
Activity Focus
o Sustainable energy
technologies introduced
in rural industrial
enterprises and micro
enterprizes
o Energy efficiency
introduced in existing
power systems
Promote energy
efficiency &
conservation, and
commercialise
Sustainable
Energy
Technologies
(SET) to increase
the power base
o Conservation of power
introduced in existing
power systems.
VI.
Technology
Applications
All
stakeholders
involved in
project cycle
o
Energy Market based
commercial instruments
applied for the promotion
of sustainable energy
technologies
o Non-market interventions
executed with a focus
towards future application
of SET for poorest
communities
o Advocacy and awareness
through media
Increasing the
knowledge and
awareness of the
people of
Bangladesh on
Sustainable
Energy
Page 15 of 33
VII,
Advocacy &
Awareness
Media
GOs (DOE,
NCTB)
NGOs
CBOs
o Advocacy and awareness
through non-formal
education system
o Inclusion of SE in
primary and secondary
school curriculum
Expected Outcomes
rural industrial
enterprises (SMEs)
o System loss reduced
significantly
o Additional power in
the conventional
system saved for use
o Mainstreaming of
SET through market
mechanisms achieved
o Dependence on donor
funding reduced
o Leverage created for
poorest communities
to avail SET to
increase livelihood
o Knowledge and
awareness of people
in general on SE
increased through
exposure from the
print, radio and TV
media
o Knowledge and
awareness of rural
poor communities on
SE raised through
non-formal education
channels
o Knowledge and
awareness of school
children raised
through curriculum
development on SE
IX.
PROGRAMME DETAILS
National Programme
With the need for a well-coordinated and holistically approached national programme established, the
Sustainable Energy Programme is envisaged to provide just that set up. The overriding priority shall be to
facilitate interventions that are designed and executed, as far as possible, with private initiative and on
commercial terms, without compromising the overall focus of a pro-poor clientele. With the realisation that not
all projects may be fully commercially viable, the focus shall remain on ensuring that project components shall
aim at the setting up of an appropriate delivery mechanism for the immediate and mid-term initiatives. As a key
milestone, the Programme aims at institutionalising the service delivery mechanism. This has been proposed
through strengthening of the Sustainable Energy Unit (SEU) to spearhead the sustainable energy agenda in
Bangladesh with the ultimate aim of converting it into the Sustainable Energy Development agency (SEDA). It
is aimed to enable SEU/SEDA to become a “one-stop-shop” for providing consultative services on sustainable
energy interventions in Bangladesh and eventually turning into a “centre of excellence” for the sector.
Individual components will address the central theme of developing investment programmes for promotion of
renewable energy and energy efficiency projects to meet the country’s power shortage, while strengthening
community level livelihoods security through increased access to energy services. The policy interventions at
the national level will be aimed at enhancing that capacity. Focused research, studies and assessments will
support the policy harmonization with the PRSP. Replication through demonstration effects will be a central
part of the Sustainable Energy Technology (SET) applications. The outcome of the Programme shall contribute
to poverty alleviation and climate change mitigation through Green House Gas (GHG) emission reduction, thus
contributing to Millennium Development Goals and the Government of Bangladesh target of “Power for All by
2020”.
Rationale for a Programme Approach
The SEP has to adopt a Programme Approach that encompasses all aspects a sectoral intervention for enhancing
policy support, increasing national capacity at all levels, creating linkages between communities and sustainable
energy service deliveries, promoting community based sustainable energy access and management, action
research, studies and selection of appropriate technology options, and enhancing advocacy and awareness.
From an efficient and environmentally sound energy supply system to the design of a robust framework for
project operation and maintenance including the use of performance based contracts, which ensure project
operation beyond project life, the programme approach is expected to take care of all aspect of the thematic
areas under coverage under the sub-programmes. The strategy to be adopted under the programme is consistent
with GoB’s vision for a more comprehensive approach to solving the energy crisis of Bangladesh. The
advantages from adopting a Programmatic approach are the following:
a.
b.
c.
d.
e.
f.
g.
It involves all strategic partners in a collaborative manner, and opens the platform for more
informed decision-making;
It ensures broad-basing of decision-making, and therefore the inclusion of all possible factors
affecting that decision. For a sector such as power, and for an issue so broad-based as livelihoods
security, a broader decision platform is necessary for achievement of optimum results;
It ensures that the Programme targets the most rural, remote and economically vulnerable sections
of society and industry, and aims to empower them through better and affordable energy options;
urban poor may also be addressed where appropriate.
It maximises efficiency of utilisation of donor support resources through use of revolving funds (
grant), which is duly strengthened by co-financing from banks / financial institutions (Fis) on one
hand and promote equity on the other;
It also ensures optimum use of precious GoB resources to be invested on sustainable energy
projects;
It is completely driven by the community, whether social or industrial, whose task it is to identify
their livelihood, development priorities and highlight their energy needs to meet those needs.
Lastly, it meets the development goals and strategies of the Government for overall poverty
reduction.
In several ways, this Programmatic approach provides avenues for further bi-lateral and / or GoB resource
investment into this Programme or any of its components, so as to increase its scope and effectiveness, to
Page 16 of 33
expand it in other areas or to take any measure through which the Programme may be more effectively
implemented. Therefore, it leaves scope for improvement as the programme progresses and has the flexibility to
accommodate newer dimensions and emerging challenges during its implementation period.
Specific Objectives
The long-term vision of the Sustainable Energy Programme (SEP) is “to extend access to energy to reduce
livelihoods vulnerability in rural and remote areas”. This can only be effectively achieved when the host of
issues affecting livelihoods security are understood, assessed and addressed through greater energy access, not
only at the household level, but also at the entrepreneurial levels. The Programme seeks to achieve this vision
statement through a series of Sub-Programmatic objectives and milestones to strengthen the role of the private
commercial sector in the promotion of distributed generation of power through a number of decentralised energy
systems set up using renewable energy and energy efficiency technology applications. While community level
interventions shall comprise of renewable energy, energy conservation and power distribution reform based
applications, it is envisaged that industrial and commercial units shall make use of energy efficiency options for
waste heat recovery and other process applications. The programme also seeks to strengthen the capacity of the
public and private sectors to play a catalytic and support role in the whole process of transformation as
mentioned above. The specific objectives related to the sub-programmes are :
i.
To harmonize the policies on sustainable energy in line with the PRSP and MDGs and build the
capacity of the Government for sectoral coordination through establishment of the Sustainable
Energy Development Agency ( SEDA).
ii.
To build the institutional capacity of stakeholders - GOB institutions, private sector, financial
institutions, non-government organizations (NGOs), civil society organizations (CSOs) at the
grassroots, community based organizations (CBOs) - at all levels national, sub-national and
grassroots.
iii.
To build the capacity of the Sustainable Energy Unit (SEU) of the executing agency for
coordination and management of the programme and eventual conversion to SEDA.
iv.
To transfer clean energy technology to the poor rural and urban communities for increasing
economic and social benefits.
v.
To assist rural communities including small and medium size enterprises in developing and
designing community based SET interventions and development of appropriate
toolkits/mechanisms for community use through market based financing mechanisms.
vi.
To conduct action research and assessment of Sustainable Energy Technology ( SET) options and
link with CDM potentials where possible and promote market based commercial SET applications.
vii.
To increase the knowledge base of the people in general on sustainable energy and advocate for
mainstreaming of clean energy development.
Programme Implementation Priorities
The Sustainable Energy Unit (SEU) will be required to address many issues during the first two years of the
Programme (2006-2007), as it attempts to put in place critical support mechanisms to start up the programme at
all levels and facilitate the effective delivery of services as mandated to it. In addition to institutional support
issues, the key programmatic outputs envisaged during 2006-2007are outlined below.
1.
2.
3.
4.
Strengthening and structuring of SEU for taking immediate responsibility of managing
programme implementation.
Begin policy level dialogue at the GoB level for the convergence of various policy documents on
energy and power, such as the National Energy Policy, Private Power Generation Policy, Policy
Guidance for Small Power Plants, Petroleum Policy and the Draft Renewable Energy Policy into
a harmonized policy for sustainable energy.
Capacity development of all concerned stakeholders .
Advocacy and awareness raising nationally.
Page 17 of 33
5.
6.
7.
8.
9.
Development of public-private partnerships for mainstreaming sustainable energy technologies.
Initiating the process of Clean development Mechanism (CDM) – Certified Emission Reduction
(CER) and Verified Emission reduction (VER) trading.
Few focused studies such as District – Level Biomass Inventory Development for Bangladesh
and wind mapping.
Audio Visual Tools in local language for Promotion of SE technologies.
Preparation of feasibility studies and financing of first stage renewable energy and energy
efficiency projects (3 to 4 demonstration projects), in partnership with local banks and financial
institutions.
In is expected that in subsequent stages the Sustainable Energy Unit, designed as an independent body within
the GoB to promote and proliferate sustainable energy technologies, is given legal sanction as the Sustainable
Energy Development Agency (SEDA), an independent authority entrusted with the promotion of sustainable
energy in Bangladesh and coordination of the sub-sector. The operations and functions of SEDA are explained
later in the document. It is expected that the capacity of the SEU will be fully built by the 5th year of the
programme or even earlier, and it will be ready for conversion into SEDA before the end of the 7-year
programme.
The current Steering Committee should continue to function during the programme period for proving policy
guidance to the programme. It is appropriate that an early priority be directed towards obtaining Steering
Committee approval on projects and programmes as mentioned above. The Steering Committee would need to
keep in mind that the programme is designed not just as a regular donor-funded initiative but a broad-based
initiative founded on strategies to make it a community oriented and market supported development effort. This
initiation should also form the basis of the broader policy advocacy and institutional support process. It is
expected that the dependence on donor support in this programme will gradually decrease as the mechanisms
put in place gear up and run independently by the end of the programme.
Programme Implementation Strategies
The tenure of the Programme is 7 years. However, there are several elements that are being proposed to be
introduced, for the first time, in Bangladesh, in the context of the sustainable energy sector. For example,
renewable energy or energy efficiency projects have not been bank financed till date. Neither have rural
electrification projects been grid-tied on a commercial basis. Due to the presence of several innovations in the
Programme, there is a need for monitoring and adjustment. Therefore, the Programme must have the ability to
adapt to mid-course changes. As such, the Programme has been divided into 3 distinct phases. The Programme
literally transcends from one level to another, as the process towards commercialisation progresses. It has to be
noted, however, that these phases are mostly notional. Some technologies may transcend to phase 2 in the first
year itself, while others may do so only at the end of the Programme or even later, based on field conditions.
The 3 phases of the programme are described below :
Phase I : The first 2 years will be mainly for setting up the mechanisms, capacity building on a broader base,
advocacy and awareness raising, community mobilization and policy harmonization. While other activities are
expected to start during this phase, it is recognized that they may not be in their full capacity. However, these
interventions shall possess all the elements of a project that is funded on commercial terms. These will include
the presence of a bank or financial institution to provide the debt component, equity contribution from the
promoter and the application of commercial instruments such as the use of performance contracts, power
purchase agreements, provision of EPC and O&M contracts and an overall focus towards making the venture
feasible and viable to the extent possible, without sacrificing the social component of the project.
Phase II : The second phase of 3 years will be for increasing the market interventions and technology
adoptions, moving SEU towards conversion into SEDA, further capacity building and community managed
initiatives. Subsequent to the first phase, the following two phases of development shall build up on the roadmap provided by the first phase. In particular, the last two phases shall attempt to bring about an integration of
renewable energy and energy efficiency projects into the fold of commercial project development and financing
processes, with increased participation of the banks and financial institutions. Side by side, donor interventions
will continue in the areas where support may be needed, such as for remote and poor community development
programmes.
Page 18 of 33
Phase III : The third and final phase of 2 years will be for consolidation of coordination and management of all
sustainable energy activities in the country under SEDA and building up programme intervention independence
from donor support. The overall focus shall however be to ensure that communities are empowered, both
through technical training and economic and social benefits from increased energy access, to operate their own
energy supply system without external support.
The primary focus of programme interventions is to facilitate the transition of the existing sustainable energy
sector into a more professionally oriented and comprehensively managed sector with well-established roles and
responsibilities of various private and public sector organisations. The strategies for achieving this goal evolve
around 5 key areas:
i)
ii)
iii)
iv)
v)
vi)
Policy Convergence on Energy Issues and Dedicated Agency for promotion of SET
Development of Key Stakeholders in the sustainable energy sector in Bangladesh
Institutionalisation of SEDA as nodal agency on Sustainable Energy
Building Critical Technical Resource Base for large scale SET commercialisation
Integration of sustainable livelihood priorities within energy access projects for economically
challenged communities
Introduce and commercialise SET that seek to exploit existing resource base
A double-pronged Project Development strategy would need to be applied for development proliferation of
energy systems through various projects. These projects may be classified into two categories.
I. Remote and Marginalized Community Application
In the first category are projects that are essentially targeted at low-income, below poverty line
communities. The strategy here is to ensure that these communities have greater access to energy to be
able to raise their quality of life, not merely through improved lighting and cooking options but,
importantly, through access to quality and reliable power for pursuing enterprises, which would fetch
them additional incomes and raise their standards of living. For these categories, the tariff rates shall
have to be structured such that user groups pay a lower tariff at the start of the project. At the same
time, the energy from the project enables them to increase their earnings. Over time, as the
communities are able to scale their income levels upwards, the tariff also rises correspondingly, thereby
making the project viable and replicable in the long run, while making the community energy secure.
II. Commercial Applications
The second category of consumers are those who opt for clean or better energy access systems to
improve the viability of their existing or proposed commercial units, or use energy services for a
specific utility such as a cold storage or a waste heat recovery / steam recovery unit. These units are
commercial applications of a proposed energy system, such as a biomass (rice husk) gasifier in a rice
mill, a poultry litter to power unit (in a poultry farm), a cogeneration unit (Combined Heat and Power)
in a sugar mill, a distribution reform project in a PBS area, or a solar hot water unit in a hotel in St.
Martin’s Island for example. Further, a majority of these applications may involve the installation of
Heat Recovery Steam Generators (HRSG) and process efficiency projects in industrial units, especially
textiles and dyeing units, which begin to face the competitive international market in the absence of
protective economic measures. In all of these cases, energy is directly used to generate thermal or
electrical energy, or both, in most cases replacing conventional energy / power that may be unreliable
or expensive in comparison. In all such cases, the financing process shall remain quasi-commercial,
with support provided only to promote the technology and make it accessible to the project sponsor.
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Multiple Stages
Stage I: 2005 2007
- grant component 50%
- revolving fund for solar lanterns
- promoter equity capital 25%
- bank exposure 30% - 50%
- exposure to viable projects
- audio-visual for prospective bankers and
project proponents
- grant finance / co-finance for investment in
rural energy projects
- demonstration projects launched
- training & exposure for banks
- exposure programme for GoB staff
- exposure programme for contractors
-bank officers trained on financing renewable
energy / energy efficiency projects
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Stage II: 2007 2009
Stage III: 2009 2012
- grant component 30%
-part grant; part 0% Loan for
viable projects
- promoter equity capital 25%
- bank exposure 50% - 70%
- exposure to larger scale projects
- Grant to be cross-subsidised in
favour of higher-cost rural
electrification projects.
- bank / FI / lender presence in
every project
- Activated financial
institutions to scale up
further implementation
-grant component
for
remote applications
-no new commercial
projects financed by
grants in this stage
-commercially viable
projects (self financed)
by private sector
The objective behind this strategy is to ensure that the pro-poor thrust of the Programme is retained as the
topmost priority. By addressing energy efficiency issues, the Programme also addresses serious issues of power
shortages in industrial units, which as mentioned earlier have hindered, not only industrial development in
Bangladesh but also the process of a decentralized pattern of development, which is crucial for poverty
alleviation. Thus, by addressing issues of energy security, the Programme addresses the larger issue of poverty
and sustainable rural development.
Key Programme Milestones
The primary focus of Programme interventions at the grassroots level is to provide a greater degree of energy
security in rural and rural industrial communities. The primary objective being thus defined; there are a number
of milestones, whose achievement are imperative in order to achieve the primary objective. These are as
follows:
1.
Achieve Capacity Creation Target of 100 MW : Broadly, the Programme shall strive to contribute to
some extent in meeting the current energy shortage in Bangladesh (which is 400 MW approximately),
through a different renewable energy projects. In the preliminary stages of planning, the formulation
team has identified the setting up of decentralized energy systems based on renewable energy
technologies. In addition to solar powered PV and thermal energy, a set of improved cooking and
power production technologies shall make optimum use of the country’s agro-resource base, especially
paddy (rice husk), waste biomass (mustard husk, tea gardens waste), poultry litter, which may be
harnessed in a sustainable manner. Accordingly, with this mix of projects, the Programme shall strive
to install a total capacity of 100 MW over a period of 7 years through its proposed installations.
This is intended purely as a demonstration effect. The idea is not so much as to add to the power
base but to build on and strengthen the capacity of the stakeholders to produce on their own and put the
appropriate mechanisms in place to empower them to do so.
2.
Develop a Model for Commercialization : To be able to generate 100 MW of power, the central
requirement is to build a process for developing commercially viable decentralized energy models,
which can be put up for mass replication and proliferation through private initiative. In the context of
Bangladesh, a commercially sustainable model shall be able to reach the capacity target, and may even
seek to continue and expand after the tenure of the programme draws to a close. The Programme has
thus been designed to provide an enabling environment for the commercialization process to
continue with a public – private partnership.
3.
Improve the Energy Efficiency in the current generation capacity by 100 MW
In order to attain a GDP growth of 7% by the year 2007, power generation needs to improve at the rate
of 10 to 12 % per annum. Added to that is the goal of ‘electricity for all by 2020’. To achieve these
goals, the country needs to focus not only on enhancing generation but also substantial improvement in
the current generation efficiency. With an average system loss of about 18 to 20 %, there is adequate
scope for further improvement. 87% of generation in the country is gas based and a good no. of power
plants are old, with plant load factor ranging between 45 to 60%. The government has initiated power
sector reforms and several reform measures are on the anvil, which should be yielding positive results
in the near future. In addition, the team has identified commercially viable energy efficiency projects in
various key sectors of economy such as power production and distribution, textiles, steel, sugar (both
production and refining) and others.
4.
Explore alternative energy sources at local level
In a developing country like Bangladesh, bio-mass would form the largest energy resource, not
exploited sufficiently for effective energy use. Even today more than 65% of the rural population
depend on bio-mass for their daily needs for cooking, heating and lighting. But, over the years , the
bio-mass availability scenario has been changing rapidly and the day is not far away when the depletion
of this natural resource will affect large sections of the rural population. It is therefore important that
that this important resource be utilized efficiently and effectively to meet much of the energy needs in
the country. There are many ways this alternative energy source could help in enhancing energy
security in the villages and the same should be considered for future dissemination. A simple
intervention like introducing improved cook stoves could save enormous energy in the villages,
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followed by bio-methanation, bio-gasification and bio-combustion systems to generate power in remote
areas. Subsequently the country could look at latest bio energy sources like methanol, bio-diesel and
fuel cells as new environment friendly fuels. Coal bed methane could be another area of research which
might yield positive results in the future. There is tremendous potential for tapping Clean
Development Mechanism resources in this area of alternative energy sources.
5.
Undertake Capacity Building of the Financial Sector in Bangladesh :
For a successful
commercialization model to be developed, it is imperative that the financial sector be involved in the
process. The large number of private and public banks in Bangladesh, which are already developed
within a well-regulated financial sector under the supervision and monitoring of the central bank
(Bangladesh Bank), have the capacity to invest in power projects, provided the investments have
acceptable risk levels and strong cash flows. Although these institutions are backed by public sector
infrastructure finance institutions such as IDCOL (Infrastructure Development Company of
Bangladesh) and the IIFC (Infrastructure Investment Facilitation Centre), they may still require
capacity building in mainstream financial mechanisms for SE sector. Presently, due to a savings investment mismatch in the banking sector, approximately an amount of Taka 120,000 Million are
lying idle with the various commercial banks and waiting to be diverted into viable investment options
as per press reports.
The banks and FIs are in need of awareness and capacity building on various techno-financial
issues governing the development and financing of power projects, especially renewable energy
and energy efficiency projects. These projects are not in the conventional domain, since they are
different from the standard power project. As such, the bank / FI in the local context need to appreciate
these projects and expose themselves in the financing process. While on the one hand this will lead to
effective utilization of the unutilized bank funds, on the other hand it will catalyze the process of
dissemination, on very commercial terms, of energy technologies and projects in Bangladesh.
6.
Institutional Framework: Sustainable Energy Unit (SEU) as the SEDA : The promotion of
decentralized energy systems in the local context requires a structure that is able to promote the greater
proliferation of localized energy supply systems in the Bangladesh context. The structure should have,
as a key functionary, an agency that is able to appreciate development concerns at the local level and
integrate these with available options for energy supply. The eventual conversion of the Sustainable
Energy Unit (SEU) into the Sustainable Energy Development Agency (SEDA), developed as an
independent body under the aegis of Ministry of Power, Energy and Mineral Resources
(MPEMR) and dedicated to carrying forward the sustainable energy agenda in the country is one
of the key programme milestones.
7.
Enabling Environment for Sustainable Energy : Success of sustainable energy programmes in other
countries has depended upon the respective government’s efforts in the direction of creating an
enabling environment for its promotion. The programme shall seek creation of an enabling
environment through government support in the direction of promoting sustainable energy
initiatives. These may be possible through a mix of economic and regulatory incentives for the
promotion of sustainable energy in Bangladesh, along with the setting up of an executive authority for
the promotion of sustainable energy like SEDA as mentioned above.
Programme Activities
Sub-programme I
:
Policy and Institutions
The formulation mission has identified that there are serious policy level inconsistencies related to sustainable
energy in the Energy and Power sectors in Bangladesh due to two factors : existence of two independent
divisions within the Ministry (Power Division & Energy and Mineral Resources Division) that deal with
energy and which has given rise to generation of several policy documents on energy and power 12 which may be
harmonized into an enabling policy for promotion of sustainable energy in the country.
12
The National Energy Policy Document, Policy for Private Power Generation in Bangladesh, Guidelines for Small Power
Plants, Draft Renewable Energy Policy and Petroleum Policy all deal with project development in the power sector.
Page 22 of 33
Second, as far as sustainable energy is concerned, there is no single entity entrusted with the promotion of
sustainable energy in Bangladesh. The entity entrusted with the responsibility of fostering energy efficiency
initiatives locally is the Power Cell. However, for renewable energy in particular, no such entity has been set up
thus far. The GoB has committed itself to setting up of a Renewable Energy Development Agency for
Bangladesh in its National Energy Policy, however there is no clear road-map for such an organisation as yet.
Activity 1
Policy convergence on sustainable energy in the Energy and Power sector to be made by consolidating the
existing policy documents into a single policy document on sustainable energy and harmonizing it with the
PRSP and MDGs. A team comprising of senior officers of the two divisions (PD & EMRD) within the Ministry
will be assisted by the SEU in reviewing existing policies and developing the policy on sustainable energy. The
Ministry will be responsible for approval of the policy and ensuring its implementation by various stakeholders
in future. Ideally a single Policy Document on Energy and Power should be there in the country.
Activity 2
The Sustainable Energy Unit (SEU) created under the Power Division of the MoPEMR will house the
Programme Management Unit for the Sustainable Energy Programme(SEP). Under the programme, SEU’s inhouse capacity will be built and it will gather enough experience through managing and guiding the overall
implementation of the SEP to be in a position to convert itself into the Sustainable Energy Development Agency
proposed as Renewable Energy Development Agency (REDA) under the National Energy Policy. Towards that
end, SEU will be equipped under the programme with a management information system (MIS) and its capacity
will be built for ICT based energy governance so that it is able to executive authority and independent powers
for the promotion of sustainable energy as Sustainable Energy Development Energy (SEDA) eventually. For
SEU to take on the mantle of SEDA, the MoPEMR will need to depute GOB counterparts from the 2 nd Phase of
the programme. They will receive on-job training by working with the programme experts/consultants so that
they are able to take on the roles and responsibilities of SEDA eventually.
Activity 3
National standards to be set up for energy efficient equipments. It will be done by working with the Bangladesh
Standards and Testing Institute ( BSTI).
Activity 4
A fiscal incentive mechanism is to be developed for use of energy efficient equipment and energy audit.
Outcome/output
A coherent and harmonized policy output on sustainable energy will be the first step towards putting the country
forward in its agenda for Sustainable Energy. It will create an enabling environment for public and private
sector participation in various areas related to sustainable energy development in the country. Development of
SEU/SEDA as an institution will implement a long felt need in the country for having a nodal agency for
development of sustainable energy as envisaged under the National Energy Policy. Policy interventions are also
required in order to encourage energy efficiency and energy conservation nationally. The confidence of the end
users of energy efficient equipments will be gained by making the commercial process more transparent through
setting up of national standards. Use of energy efficient equipment will be significantly increased by
introduction of a fiscal incentive to do so both in public and private sector.
Sub-programme II
:
Capacity Development
The formulation mission has identified that there are a number of limiting factors within the energy sector in
general, and the sustainable energy sector in particular, which are significantly preventing the sector’s capacity
to effectively fulfil its stated objectives. It would require capacity development at all levels : national, subnational and community. Again, the capacity development required is assessed at two distinct levels : for key
programme partners and other institutions that would provide key services.
Page 23 of 33
Activity 1
Capacity development of key programme partners - It will primarily include the SEU and key institutions
identified such as concerned Government institutions , Banks and other Financial Institutions.
1.1 SEU capacity development : The SEU, being designed as the Nodal agency for the promotion of sustainable
energy in the country, would need to be armed with adequate knowledge and experience in the fields of
renewable energy and energy efficiency towards establishing themselves as the one-stop shop to any issue
related to sustainable energy in Bangladesh. This would call for not only general proficiency on the subject, but
also sector-specific expertise on various technological applications, professional ability for assessment of
viability in such projects and an ability to engage banks and financial institutions in the project development
process, with the vision of scaling up operations in the future.
1.2 Power Cell capacity development : For all initiatives involving energy efficiency applications, the Power
Cell and the PMU/SEU shall operate in partnership and close collaboration with specialist agencies such as the
BPDB, REB, and the PGCB (all for power) and specific industry partners as the case may be. Therefore, the
Power Cell would require capacity building in exploring pre-identified options and avenues for energy
efficiency, preparation of project feasibility studies (with support from SEU) to prepare project documents
demonstrating the commercial viability of the proposed project, identification of investment support for
sustainable energy projects, identifying prospects for tapping local sustainable energy grids.
1.3 Specialized agencies capacity development : Agencies like DESA, BPDB, DESCO will be provided
orientation on sustainable energy technologies and initiatives.
1.4 REB capacity development : To enhance REB’s understanding and appreciation of local level sustainable
energy development issues, a shift needs to be made to a more community-oriented approach. Thus, REB
would require direct exposure to success stories of community owned and managed energy systems locally,
exposure to successful renewable energy and energy efficiency projects regionally/globally and issues on power
system design for low income communities associating energy access with livelihoods.
1.5 LGED capacity development : Sustainable Rural Energy (SRE) Unit of LGED was involved with the
UNDP-SEMP Programme in successfully piloting a number of renewable energy activities dealing with solar,
biomass, wind and micro-hydro power. Though the SRE Unit has been able to meet their set milestones, LGED
as an organisation shall need to build further to add to their core competence to be able to proliferate sustainable
energy technologies as a service provider. In this Programme, LGED shall play the role of a Local Area
Specialist providing valuable ground level inputs on community energy needs, and assist in the project design
and development process wherever required. For this the capacity of LGED would need to be built for
graduating into a complete service provider of energy systems and operating as a Strategic Business Unit (SBU)
in the field of sustainable energy. LGED will also be provided exposure to success stories of community owned
and managed energy systems, issues involved in the design of decentralised energy systems for low-income
rural communities, new and advanced technologies and basic financial capacity to appraise sustainable energy
projects.
1.6 Bangladesh Standards and Testing Institution (BSTI) capacity development : The BSTI has an important
role to play in ensuring that imports of equipment, as well as domestically fabricated equipment, are of the level
of quality that may be depended upon for products of mass application such as Compact Fluorescent Lamps
(CFL) for solar applications, solar lanterns, wind power equipment and others. In the past, Bangladesh has
faced several instances of low-quality equipment imports, especially of CFL lamps, leading to the sabotage of
the product market. To avoid repetition of such an instance, the Programme shall periodically train staff of
BSTI to become specialists in the assessment of energy equipment, especially those needed for renewable
energy and energy efficiency projects.
1.7 Banks and Financial Institutions capacity development: The history of the power sector in Bangladesh have
shown the relative lack of presence of the financial sector in the financing process of small and medium scale
power projects, and their complete absence in the renewable energy and energy efficiency sectors. This puts
pressure on precious GoB resources, and often forces the government to knock on the door of donors. Thus, it
will be fair to say that the absence of private bank finance for the power sector has been one of the central
constraining factors hindering the growth of this sector as mentioned earlier. The Programme will involve the
banks in the project financing process. In the first stage, the banks shall be provided capacity building and
extensive exposure, through study tours, to existing sites where commercially viable projects have been
Page 24 of 33
installed. They shall also be provided with pilot stage co-financing, to give support for them to make stepped
investments in sustainable energy projects. The elements of capacity building for the financial sector are as
follows:
o
o
o
o
o
Exposure to and training on bank financed sustainable energy projects. For this, specialist
investors for sustainable energy projects such as Rabobank (Dutch) E&Co (US), IDFC (India),
I&G Bank (China), E3VPL (US / India) and IREDA (India) may be invited for a 2 – stage training
workshop for at least 20 banks / FIs, over 18 months;
Visit to existing, bank financed sustainable energy projects. This can be done in India where IDFC
has financed renewable energy and waste to energy projects, Netherlands (where several wind
power projects are bank-financed), China (for guarantee financing of energy efficiency projects)
and so on.
Detailed training on steps to be taken for financial due diligence for sustainable energy projects;
Exposure to hybrid cash flow options such as CDM.
Design training modules on energy services financing for credit officers of existing microcredit
schemes
Activity 2
Capacity development of key private sector service providers/partners - It will include private sector and
NGO/civil society institutions engaged in different stages of the programme. For this purpose, development of a
series of tools and training materials shall be required. For example, specific training on project development
cycle shall need to be provided to local Equipment Supply Companies, local Contractors engaged in
Engineering Procurement and Construction (EPC) and / or Operations and Maintenance (O&M) by communities
or local contractors.
Activity 3
Capacity development of poor communities - The poor urban and rural communities who are potential users of
SE technologies will require training/orientation not only on the technologies, but also on how these can
increase their livelihood options and their potentials for social and economic enhancement. They will also
require training on simple operation and maintenance of the equipment. A participatory approach has to be
developed and employed in community capacity development.
Outcome /output
Enhanced access to financing and financing options for improved energy services and energy efficiency will be
achieved in the country. Key national level stakeholders will be enabled and empowered to participate in
development of sustainable energy in the country through focused capacity building for each of them. Financial
institutions will have capacity developed for understanding SE interventions and making cost benefit analysis of
funding SE projects. The quality of service provided by the private sector to the consumers will improve
significantly through focused capacity building. The grassroots communities will not only be be confident
enough to undertake SE projects at local level and maintain and operate them following training but also be
encouraged to come forward in partial financing in groups.
Sub-programme III
:
Coordination & Management
SEU will have a strong role in co-ordination and management of all activities related to the sustainable energy
sub-sector as a whole on behalf of Power Division of the Ministry of Power, Energy & Mineral Resources. Thus
its capacity will be built for eventual conversion into the Sustainable Energy Development Authority (SEDA).
The SEU shall also be the functional Programme Management Unit for overseeing the day-to-day
implementation of the Sustainable Energy Programme (SEP).
With the above challenges in mind , the SEU functioning as the PMU, will have the following activities:
3.1 SEU shall coordinate various Programme components and sub-components, which are intricately linked to
one another, so that their delivery adheres to the workplan and timeline put for them.
Page 25 of 33
3.2 SEU shall provide management oversight of all activities of the programme, effectively overseeing the
implementation of pre-identified activities by Sub-Implementing Agencies (SIAs), and overseeing effective
management of Project Implementation Plans (PIPs) by the various stakeholders under the overall
programme.
3.3 SEU shall support a National Steering Committee to effectively guide the programme and keep an
oversight on the sustainable energy sub-sectoral development in the country.
3.4 SEU shall support a Technical Advisory Group to assess new “project development” and advise the NSC
accordingly.
3.5 SEU shall engage a whole variety of institutions in Bangladesh, with a wide range of technical capabilities
like banks and FI, GOs, NGOs, private sector. SEU shall develop and foster an active “network” of likeminded institutions on sustainable energy.
3.6 SEU shall function as a knowledge bank to be a successful co-ordinating agency. It will develop and
maintain an MIS on sustainable energy and share with all national stakeholders like GOs, NGOs, CSOs,
FIs, civil society, professional bodies, academia, etc.
3.7 SEU shall organise events for advocacy, awareness and knowledge dissemination, such as workshops,
seminars, training on various issues.
3.8 SEU shall facilitate the linkage of private sector with public sector and grassroots organizations or
community groups.
3.9 SEU shall assist the project proponents in developing new activities for SET demonstration and
community based technology promotion.
3.10 SEU shall provide financial and technical advisory services to all stakeholders.
3.11 SEU shall initiate early actions for its emergence as SEDA during the programme period, ideally within
the 2nd phase of the programme.
3.12 SEU shall induct GoB counterparts and build their capacity through hands-on experience for taking over
the functions of SEDA once it is established with a more concrete terms of reference.
Outcome /output
Going beyond its management of SEP role, SEU is to emerge as the one-stop shop providing an umbrella of
services on sustainable energy in Bangladesh, from executing research and advisory services to providing
specific guidance to project proponents on project design, development and financing. It will eventually take on
the mantle of Sustainable Energy Development Agency (SEDA) as envisaged in the National Energy Policy.
SEU/SEDA shall assist the Ministry of Power, Energy and Mineral Resources in the continuous review and
improvement of the non-conventional energy scenario in the country thus assisting the Government in “energy
governance”.
Sub-programme IV
: Studies, Assessment, Research & Development of Sustainable Energy options
Renewable energy and energy efficiency projects in Bangladesh have not taken a concerted, holistic
programmatic approach. Any programme would need to analyse the existing ground realities before it plan
larger interventions and embark upon a process of wider dissemination. Thus a series of activities such as some
very focused studies and assessments side by side with research and development of sustainable energy options
would need to be conducted in order to ensure that the Programme has the necessary database to support other
interventions. Such activities would need to be done throughout the first phase of the Programme. Some of the
key activities identified are given below :
Activity 1
A few focused surveys and assessments critical for programme expansion
1.1
District Level Biomass Inventory Assessment
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1.2
Wind mapping to be done for the entire country. There is no wind map in the country at present. The
activity could be built upon and expanded on the current wind mapping initiative taken up by LGED.
1.3
Assessment of energy needs of poor rural and urban communities. This is required for determining the
best SE options needed by a specific community depending upon its geographic location, energy
demand, ability to pay for services, etc.
Activity 2
Preparation of state-of-the-art tools for community based project development and operation : Preparation of
Audio Visual Tools in local language for promotion of advanced technologies (Bangla)
2.1 Video and Guidebook on biomass gasification technology (examples from India, China, Sweden and
Finland)
2.2 Video and Manual on power from poultry litter waste through
-bio-methanation
-combustion
2.3 Video on biomass combustion systems
2.4 Biogas Plant Operations and Maintenance Manual (in Bangla and English)
2.5 Solar PV Systems Operations & Maintenance Manual (Bengali / English)
-Home Systems
-Lanterns
2.6 Biomass Gasification: Installation Handbook, Operations and Maintenance Manual
2.7 Development of modules on Energy Efficiency Opportunities in Bangladesh
-Waste Heat Recovery in Textiles and Iron and Steel
-Cogeneration in Sugar
-Bio-methanation in Starch production, distillery and tannery waste units
-Energy Efficiency in Cement production
2.8 A Handbook for CDM Project Design covering CDM potential in Bangladesh, highlighting renewable
energy (biomass) energy efficiency (sugar, textile, cement) and forestry sectors
2.9 A comprehensive Project Finance Manual, identifying necessary steps in project cycle
2.10 A comprehensive Project Risk Management Manual, covering all aspects of project risks for the following
category of projects
-Biomass based combustion / gasification
-Bio-methanation units
-Waste heat recovery units
-Cogeneration units
Outcome /output
A biomass inventory is essential for planning resource use for generating area based power from SE. Installation
of wind generated SE plants require a wind map of the country as a pre-requisite. A user-friendly array of
comprehensive handbooks, manuals and audio-visual guides will provide working knowledge on planning and
designing SE projects at the local level and operation and maintenance of technical facilities. Suitability of SET
options will be determined by conducting assessment of individual community energy needs. The most cost
effective technological options will be replicated during the programme period.
Sub-programme V
:
Promotion of Rural Energy Economies through targeted interventions
Rural energy is admittedly one of the key focus areas of the project; it is the fulcrum on which the Programme is
based. The Programme seeks to achieve specific interventions in the rural areas, mapping energy needs with
Page 27 of 33
priorities for livelihood security, emerging with a sustainable model on how ultimately, the community is able to
pay for the service following increase in the income levels through better energy access.
In terms of the programme implementation process flow, the pilot phase of the Programme shall involve the
assessment of energy needs for some of the under-mentioned community types. Following the assessment, the
first project / set of projects would need to be commissioned in the pilot phase. The learning experiences
derived from the pilot shall pave the way for greater proliferation of such projects, on a more commercial basis,
in the subsequent stages. For a holistic approach towards the issue of rural energy, the activities are identified
around focus groups as follows:
Activity 1
Ensuring a clear understanding of livelihood issues related to sustainable energy and environment at the
community level for sustainable development
1.1 Forest Communities: Poor villages in remote forest areas in Sylhet and in the Garo Hills of Mymensingh
depend squarely upon the forest for their energy needs (cooking and space heating), complementing biomass use
with the use of kerosene for lighting. The strategy is to either replace the community’s use of forest resources
through the provision of alternative options or, through use of more efficient conversion technologies reduce the
rate at which the community depletes the forest resources.
1.2 Coastal Communities: Fishing Villages along the coast face dwindling incomes due to climate change that
change the patterns of movement of fish, followed by the near-total absence of efficient cold storage facilities.
They are also hamstrung by poor facilities for the drying of fish and improper drying on account of high ambient
humidity. These communities need improved energy systems for drying of fish and powering cold storage units
in addition to their own cooking and lighting needs.
Activity 2
Energy interventions for hard-core poor analysed and interventions designed on a need-based participatory
consultative process aimed at poverty reduction
2.1 Communities below Poverty Line:
These communities can be identified by drawing a second poverty
line, of a dollar per day of earnings or a household income of Taka 2,000 per month. These will typically be
areas hit by monga (such as in Nilphamari or Kurigram districts) or villages in char areas of riverine deltas
(found all across Bangladesh), or typical clusters where resettlement has been done without any rehabilitation
Gucchagram (could be a settlement in Lalmonirhat). Finally, remote areas such as Dahagram (in the Tin Bigha
Corridor) or Chittagong Hill Tracts area may be considered for community development through improved
access to energy. This would need to be an intervention over a long term period, in phases, with selected
communities following assessment of their energy needs and intervention suitability.
Activity 3
Sustainable energy technologies introduced in rural industrial enterprises
3.1 Rural Industrial Enterprises: A significant portion of the development process is and will continue to be
embodied in the ability of the rural population to be locally engaged in entrepreneurial activities in the country.
As such, it is expected that part of the overall programme focus towards rural and remote area development
should concentrate upon energising the local enterprise development process. Some key beneficiaries would be
rice mill owners, poultry owners, brick & lime kiln owners, local electrical service providers, etc.
Outcome /output
Sustainable livelihood will be ensured in communities that are over dependent on natural resource use in remote
areas like the deep forests, haors, coastal belts, barendra and charlands. Poverty reduction achieved in line with
Page 28 of 33
MGD goal on a pilot scale in some selected communities through introduction of SE interventions. Lessons
learnt from community based interventions integrated into the Programme priorities under Technology
Applications (Sub-programme 6) and future planning of SET applications. Sustainable Energy mainstreamed in
rural industrial enterprises.
Sub-programme VI
:
Technology Applications
The technology applications are aimed at increasing the energy efficiency and conservation in existing power
systems in a pilot scale purely for the purpose of demonstration and scaling-up of renewable energy options on a
commercial scale. An attempt to integrate both the financial sector and individual project developers will also be
made and in the process, over a period of 7 years, a transformation is aimed at where the project development
and financing may progress on a commercial scale without donor or GoB support. The technology applications
in the latter are expected to be carried out in 2 stages.
Activity 1
Energy Market based commercial instruments applied for promotion of sustainable energy technologies
Stage I: 2006 – 2007 (24 months) : In the first stage, an attempt shall be made to test the hypothesis on project
commercialisation, through a few flagship ventures. The proposed objective is to initiate FI sector participation
in commercially viable applications. The role of the Technical Assistance (TA) shall remain restricted to the
preparation of feasibility reports, including the design of tariff structures and escrow mechanisms, if necessary.
As per strategy, the bank/FI sector finance shall be sought to cover the debt component. In the event that bank
finance is not up to the level sought, additional TA may be solicited. Proposed projects to be financed in Stage I
will have upto 25% sponsor commitment (equity) and not less than 30% in bank finance (loan) with the
remaining gap made good from TA grants or community revolving funds.
A few proposed projects are as follows:
1.1 Power from Poultry litter - A captive basis power production system run as a pilot with bank finance and
sponsor equity. The installed capacity will not exceed 15 kW, and the scale of investment is expected to remain
within US $ 10,000 (project capital costs, excluding land costs).
1.2 Solar water heating systems - for captive utilisation in a hotel / apartment or in an industrial application in
and around Dhaka city as a pilot demonstration. A 1500 Litre Per Day (LPD) capacity solar water heating
system will be installed which is expected to cost around US $ 10,000.
1.3 Solar Lantern project - A 10,000 solar lanterns project, developed with a financial intermediary that also
acts as a local NGO operating as a micro-credit agency, will be launched. The proposed investment in the
project shall be around US $ 0.8 Million (roughly $100 per lantern as the total system cost) which will be the
revolving fund for further dissemination on larger scale.
Activity 2
Non-market interventions with a focus towards future application of SET by poorest communities
Stage II: 2008 – 2010 (30 months) : In the second stage, having demonstrated the process in the previous one,
the Programme will embark upon a new level of commercialisation where the financial sector takes not less than
a 50% share of the costs. The promoter contribution remains around 25%, while the TA grant reduces from the
earlier stage (where it provided grant finance as also last stage equity) to a maximum exposure of 25%. In rural
applications for energy access for remote and poor communities, higher proportions of donor grants may still be
required. The following ventures shall be tried out in this section:
2.1 Biomass-based energy supply systems - Area chosen could be a very poor and remote area like Dahagram
/ Maulvibazar / Potuakhali. Around 500 kW of installed capacity is project for this area development effort,
which shall be a fully independent power production and distribution unit for commercial as well as household
applications.
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2.2 Small scale Hybrid systems - Upto 25 kW solar - biogas - biomass mini-grid application in any of the
remote areas in Nilphamari, Lalmonirhat, Potuakhali for community advancement and incentive for microenterprise development. The solar component shall be around 10 kWp and the rest (up to 15 kW) may be made
up with biomass or biogas applications, depending upon the availability of the desired raw material and end-use
requirement.
Activity 3
Energy efficiency introduced in existing power systems
3.1 Energy efficiency applications in process industries: The textile, leather, chemical, pharmaceuticals, etc.,
industries can be a significant client for SET applications since these industries spend considerable amount of
diesel or hot water for different applications. The replacement of conventional energy systems in these
industries with SETs shall yield dividends for the end-users. The users will be assisted in assessing the energy
use and the process requirement based on which suitable SET technologies will be introduced in a pilot scale for
demonstration.
3.2 Efficient energy management for buildings and commercial establishments : The construction industry
is in a constant state of expansion in the country which is increasing the demand for energy day by day and
putting a load on the grid based power source. The conventional provision is energy intensive which could be
replaced with more energy efficient applications like building integrated photovoltaic and passive solar
architecture. The SEU will provide knowledge and know-how to the developers on these new energy
conservation measures. A few demonstrations can be pioneered in the construction of hotel, market, hospital,
office or a commercial building.
Activity 4
Energy conservation introduced in high energy consuming areas
4.1 Introduction of mandatory energy audit :
High energy consuming process industries like textile,
leather, chemical, pharmaceuticals, etc., to be brought under the fold of mandatory energy audit as the first
measure towards conservation of energy. Financial, technological and other incentives to be introduced for
conservation of energy. The process to be followed should be a participatory one.
4.2 Legislation to introduce SET in urban areas : Urban slums, markets, public and private places (as
appropriate) can greatly reduce the strain on the conventional power system by switching over to nonconventional ones. A few such activities will be demonstrated after selection of sites and modalities following
due process to gain confidence of the stakeholders in the system before legislation is introduced.
Outcome /output
Power freed up in the conventional system through conversion to SET and appropriate legislation and audit.
Energy efficiency and conservation facilitated through demonstration of pilots. Area based development
activated in remote rural communities through demonstration of appropriate SE options. Confidence of the
stakeholders gained for energy conservation and efficiency. The results of these activities shall be integrated in
the learning process for designing similar future projects.
Sub-programme VII
:
Advocacy & Awareness and Documentation
Activity 1
Advocacy & Awareness
1.1 Media Advocacy & Awareness : Both print and television media utilized for sustained campaigns over the
programme period for raising the awareness level of the people of the country in general on sustainable energy
issues
1.2 Participation in World Environment Day : Linkages built with the environment sector to be fostered
through participation in the World Environment Day for focused dissemination to school, college and university
students, academia, environmental activists, concerned NGOs, professional groups and civil society bodies.
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1.3 Advocacy & awareness through non-formal education : civil society involved in non-formal education to
initiated in the importance of sustainable energy and non-formal curriculum developed on SE for dissemination
in rural areas as well as urban slums.
1.4 Inclusion of Sustainable Energy in the primary and secondary school curriculum : This is to be done by
simply updating the environmental curriculum developed for primary and secondary education (by Department
of Environment in collaboration with the National Curriculum & Textbook Board) under the GOB-UNDP
Sustainable Environment Management Programme (SEMP).
Activity 2
Documentation
2.1 Documentation of success stories : The programme is expected to generate some “success stories” in field
demonstrations, adoption of technologies and their use by the poor communities and market interventions
particularly financial sector involvement which will be documented for the purpose of dissemination and record.
Outcome /output
Mass awareness will be raised on sustainable energy and its social, economic, environmental impacts by
concerted campaigns through the press, radio and TV and other events. In addition, non-formal and formal
channels of education will also provide information and awareness on sustainable energy.
Implementation Arrangements
Other than the arrangements described below, the implementation arrangements will follow the approved GOBUNDP National Execution (NEX) modality ( ref : NEX Manual, 2005 available with ERD). Under this
modality, the Ministry of Power, Energy & Mineral Resources (MoPEMR) shall be the Executing Agency (EA)
while the Sustainable Energy Unit (under the Power Division) shall be the Implementing Agency (IA). Any
other institution/organization/agency working under the programme shall do so as a Sub-Implementing Agency
(SIA) under a “Letter of Agreement” with the SEU as specified in the Programme Support Document (PSD) and
Technical Assistance Project Proforma (TAPP) to be developed (based on this Programme Framework).
National Programme Director
A National Programme Director, not below the rank of a Joint Secretary, shall be appointed by the Government
for leading the Sustainable Energy Progamme (SEP). The NPD shall ideally be a very high level official in
view of the large size of the programme which would require appropriate authority to deploy funds and other
resources for efficient implementation and also because of the nature of the programme requiring intricate
coordination involving many sectors. The NPD shall be assisted in the day-to-day management of the
Programme by a National Programme Coordinator recruited under SEP.
Deputy National Programme Director (DNPD)
The Director, Sustainable Energy Unit (SEU) will act as the DNPD. The DNPD may represent the NPD, as and
when required. As a representative of a technical agency (Power Cell/Power division), the DNPD will provide
technical guidance to the programme. He will act as the linkage between the SEU and the Power Division,
MoPEMR.
Programme Management Unit (PMU)
The Sustainable Energy Unit (SEU), under the aegis of the Ministry of Power, Energy and Mineral Resources,
shall host the Programme Management Unit (PMU) which will act as the nodal agency for overall
implementation. The PMU/SEU be responsible for co-ordination and management of the overall Programme.
As the Programme Management Unit (PMU), the SEU is expected to discharge a series of functions (as given in
p-24) contributing to the achievement of the overall Programme goals and objectives. Most importantly, for a
Page 31 of 33
multi-faceted Programme such as this linking energy, environment and development, the SEU has to possess the
skill sets necessary to appreciate various projects and initiatives, whether in the renewable energy, energy
efficiency or energy conservation sides. In addition, the PMU/SEU has to co-ordinate the activities of several
Programme and sub-Programme partners involved in the execution of various tasks under the programme.
Finally, it has to build it capacity for eventual conversion to SEDA.
In order for it to fulfil its mandate the SEU will be staffed by a team of highly qualified professionals in
respective fields who will be responsible for driving the implementation and assisting the NPC/NPD in
maintaining programme oversight. They will be supplemented by a team of highly competent support staff. An
appropriate organogram of the PMU will be developed in the Programme Support Document ( PSD) and
Technical Assistance Project Proforma (TAPP).
National Programme Coordinator (NPC)
The PMU shall function under the overall leadership of a National Programme Coordinator (NPC) recruited
under the programme. The NPC shall report to the NPD. The NPC shall be responsible for day-to-day
management of the overall programme. The NPC shall led a team of highly qualified professionals and support
staff in the PMU, based in the SEU, and provide guidance to the team in managing and coordinating the
implementation of programme objectives and activities.
National Steering Committee (NSC)
The National Steering Committee which has already been formed for guiding the formulation process may
continue to guide the Sustainable Energy Programme (SEP) at the policy level. The TOR of the NSC may be
revisited for that purpose. The NPD shall report to the NSC and seek policy level guidance and overall
concurrence on broad features of the workplan to be implemented.
Sustainable Energy Unit (SEU)
The Sustainable Energy Unit (SEU), under the aegis of the Ministry of Power, Energy and Mineral Resources,
will be the umbrella under which the Sustainable Energy Programme (SEP) will be executed/implemented. Until
the capacity of SEU is fully developed to take over the functions of the Sustainable Energy Development
Authority (SEDA), the PMU will run the day to day activities of programme management and also build the
capacity of the SEU as part of the programme objectives. The role of SEU is given in detail in p-24 of this
document.
Monitoring & Evaluation
Monitoring : A large programme of such intricate and complex nature, and one to be implemented nationally
for the first time, would require stringent monitoring of its activities vis a vis the workplan of the different subprogrammes followed by evaluation of its performance as a whole. The programme shall be monitored jointly
by SEU and UNDP (and any other development partners involved) through on-field visits, quarterly review of
workplans, budgets and expenditures. Performance oversight of SEU shall be kept jointly by UNDP and the
Ministry of Power, Energy & Mineral Resources through the NPD. The oversight will also be maintained in
accordance with the National Execution (NEX) procedures approved jointly by the Government (Ministry of
Finance/ERD) and UNDP.
Evaluation : As per NEX, the programme will undergo a mid-term joint evaluation by GOB-UNDP- other
development partners. In order to better capture the “lesson learnt”, it is envisaged that a terminal evaluation
will also be held at the end of the programme period.
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Funding Arrangements
The Programme funding includes the following possible options:
1. Government of Bangladesh resource allocation for the SEP, not only in kind, but also in terms of concrete
funds in order to show Government’s commitment to the programme.
2. Through Development Partners with the following options available
UNDP Technical Assistance
Grant from other multi- or bilateral partner agencies in a cost-sharing arrangement with
UNDP
3.
Private Sector financing options through project equity finance and debt finance extended by banks and
financial institutions.
4.
Community contribution to sustain their ownership over the sustainable energy options.
Funding allocation in Sustainable Energy Development Programme Components
Sl.
No.
1.
2.
(Sub)
Implementing
Agencies
Preparatory Assistance for SEDP (Strategy Formulation Programme) *
- Policy Convergence and creation of
Sustainable Energy
Policy & Institutions
single policy document
Unit
- Creation of the SEDA
SEU, REB, Power
- Support to GoB institutions
Cell, LGED, BSTI
Sub – Programme
Components
Capacity Development
- Support to banks and FI entities
Banks, FI,
- Capacity Building of stakeholders in the
project life cycle
3.
Coordination
Management
4.
Studies, Assessment,
research
&
Development
- Inventory Estimation
Development Programme
5.
Rural
Economies
- Sustainable Energy projects in remote
and rural areas
6.
7.
&
Energy
Renewable
Applications
Technology
Applications
Advocacy
Awareness
Total
Page 33 of 33
a) SEU/PMU
Energy
and
Toolkit
Technology
private
stakeholders
Indicative
Budget (US $)
$ 1,000,000
$ 5,000,000
sector
SEU
$ 2,000,000
SEU
$ 1,000,000
SEU, LGED
$ 4,000,000
SEU; LGED; REB
$ 10,000,000
- Energy Efficiency
technology applications
&
- Media Advocacy
- Non-formal Education
Improvement
SEU, Power Cell,
BPDB, REB
$ 2,000,000
$25, 000, 000