Solar and Wind Power Potential in Bangladesh

The Future of Renewable Energy in Bangladesh

All the triggers for a successful clean energy transition in Bangladesh are present. Renewables a cheaper and come with more stable prices. This can help it regain control over its power sector, cut capacity payments and meet growth expectations.

Bangladesh’s renewable energy investment opportunities will grow. The first places would be in the power plant development sector. Additionally, this would complement niches like solar power production. Due to the relatively lower labor cost and the growing industrial prowess of the country, experts project that the local manufacturing of floating pontoons, solar panels, and supporting accessories will experience a significant boom in renewable energy.

• Around 51 per cent of the capacity is natural gas-fired, while 27 per cent is from furnace oil, 6.0 per cent from gasoil or diesel and only 2.0 per cent from hydropower and solar, with another 5.0 per cent imported from India.
• The share of wind energy is almost zero.
• The under-trial Cox’s Bazar plant is, however, not the first wind-based power facility in Bangladesh.
• The country built its first wind-powered plant near the dam along the Muhuri river in south-eastern Feni district 18 years ago in 2005.
• The state-backed BPDB built the 0.9 MW plant.
• The second 2.0 MW plant was built three years later on Kutubdia island in the Bay of Bengal in Cox’s Bazar.
• But both plants lie idle for lack of supervision and interest from the power development board.
• Apart from the trio, Bangladesh has been working to install around a dozen more such plants with a total 1,000-MW generation capacity, said Power Division joint secretary Nirod C Mondol, who looks after renewable energy issues.
• Three more under-construction wind plants with a cumulative capacity of 102 MW in Sirajganj, Bagerhat and Chuadanga districts are due for completion by 2024.
• The process of selecting contractors for a 50-MW wind project in Chandpur Sadar and a 30-MW plant in Feni are also in the pipeline.
• Moreover, tariff negotiations are well underway to build a 200-MW plant at Chokoria in Chattogram, Mr Mondol told the FE.
• The technical evaluation for building a 100-MW plant at Banshkhali is underway. Another proposed 100-MW plant in Patuakhali will be sent to the evaluation committee soon, he mentioned.
• The US-DK Green Energy also submitted a proposal to Power Division for an extension of its power plant to double the capacity to 120 MW, said Mr Mondol.
• In July, a joint venture of two Danish renewable energy investors and developers-Copenhagen Infrastructure Partners (CIP) and Copenhagen Offshore Partners (COP)-also submitted a $1.3-billion investment proposal to develop a commercial wind-based project offshore.
• Initially, it aims to produce around 500-MW power.
• Once implemented, this offshore project will be the first of its kind in Bangladesh, and possibly in South Asia, enabling a technology transfer that would accelerate the learning curve for this nascent industry and reduce barriers to entry for future projects.
• The findings of a preliminary study suggest that hundreds of direct and indirect jobs could be created during the construction phase, in addition to dozens of permanent positions during the 30-year operational phase of the project.
• The Danish giants have proposed Summit Group, a leading infrastructure operator and developer in South Asia and the largest independent power producer in Bangladesh, to join the consortium.
• The US Department of Energy’s National Renewable Energy Laboratory (NERL) conducted a study on Bangladeshi wind energy potential several years back.
• The 2018 study ‘Assessing the Wind Energy Potential in Bangladesh: Enabling Wind Energy Development with Data Products’ said Bangladesh’s wind energy potential is at least around 30,000 MW.
• “Preliminary results demonstrate that for wind speeds of 5.75-7.75 metres/second, there are more than 20,000 square kilometres of land with gross wind potential of over 30,000 MW,” it concluded.
• The study found that nine locations across the country had an average wind speed of 5.0-6.0 metres/second at a height of over 60 to 80 metres above ground level.
• “We’re doing a feasibility study to build a number of new wind-based power projects on the basis of the NERL study,” Sustainable and Renewable Energy Development Authority (SREDA) chairman Munira Sultana told the FE.
• PM’s energy adviser Dr Tawfiq-e-Elahi Chowdhury also identified wind power as one of the energy sources to meet the country’s future energy demand against the backdrop of volatile fossil-fuel prices globally.
• The US-based Institute for Energy Economics and Financial Analysis (IEEFA) calls for an urgent overhaul of Bangladesh’s power-sector development with greater integration of renewable energy to enhance its energy security.
• The country should aim for renewables to make up 40 per cent of its total power-generation capacity by 2041, a target set by the government, said Shafiqul Alam, an energy finance analyst at IEEFA.
• “While once there was concern over the possibility of utilising wind to generate energy in Bangladesh attributable to the perception that we don’t have sufficient wind speed, later on, studies substantiated that Bangladesh could take advantage of wind speed in the coastal belt.”
• “We’re now concentrating on the utilisation of renewable energy,” said Mohammad Hossain, director general of the state-run Power Cell.
• “The Russian invasion of Ukraine has been an eye-opener, making us want to streamline local energy resources instead of depending on imports alone to meet the country’s energy demand.”
• The big thing is that renewable energy exploitation does not require any import of energy, said Mr Hossain. Bangladesh has been facing an acute dollar crisis since the beginning of the war in February 2022 mostly due to its over-reliance on energy imports to meet domestic demand.
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•  The long awaited Authorised Economic Operator (AEO) will start its operation on Sunday aiming to streamline import and export processes by providing a seamless clearance system.
• Finance Adviser Dr Salehuddin Ahmed will inaugurate the operation from a programme at rhe Multipurpose Hall of the National Board of Revenue (NBR).
• NBR Chairman Md Abdur Rahman Khan will preside over the event where chief adviser’s special envoy on international affairs Lutfey Siddiqui, Executive Chairman of the Bangladesh Investment Development Authority (BIDA) and the Bangladesh Economic Zones Authority (BEZA) Chowdhury Ashik Mahmud Bin Harun and Administrator of The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Md. Hafizur Rahman will attend as special guests.
• Under this system, AEO-certified businesses will be able to directly transport cargo from ports to their factories or warehouses through a green channel without undergoing physical inspections.
• This will significantly reduce clearance time, lower costs, and improve overall efficiency in trade operations.
• According to NBR sources, the revenue authority has been working on implementing the AEO system for a long time. Compliant taxpayers will self-declare their tax status and conduct their own assessments before applying for AEO certification.
• A senior NBR official stated that the board has already issued 14 AEO certifications, with several more applications under review.
• The approved companies include: Popular Pharmaceuticals, Jihan and Shoeniverse Footwear, Fair Electronics, ACI Godrej Agrovet Private, Towa Personal Protective Device Bangladesh, Cutting Edge Industries, Omera Cylinders, MBM Garments, M/S Footsteps Bangladesh, GHP Ispat and BSRM.
• The NBR formulated the rules for this system in June last year and finalised the operational procedures in December. Additionally, it has upgraded its digital infrastructure to facilitate AEO operations.
• During a recent event on World Customs Day, the NBR chairman stated that once the system is introduced, compliant taxpayers will no longer face interventions from Customs authorities.
• “The imported goods will be directly delivered to their premises from vessels under the self-assessment system,” he said.
• He also mentioned that tax payments will be made through bank-to-bank fund transfers.
• The AEO system also provides international benefits if reciprocal agreements are in place with other countries, allowing certified businesses to enjoy similar privileges abroad.
• Introduced by the World Customs Organization in 2007, the AEO system aims to enhance global supply chains and expedite trade. Countries such as the US, the European Union, Japan, Singapore, India, and China have already adopted the system. India, for example, has more than 5,000 AEO-certified businesses.
• Bangladesh initially planned to introduce the AEO system in 2013, and its implementation became mandatory after two-thirds of World Trade Organization (WTO) members ratified the Trade Facilitation Agreement.
• In 2018, the NBR issued an official order, and in 2019, Square, Beximco, and Incepta Pharmaceuticals were granted AEO status.
• A 2022 NBR study on port clearance processes found that 72 to 78 percent of clearance time is spent on collecting and submitting import documents, highlighting the need for automation in trade facilitation.
• Currently, the NBR’s Customs Valuation and Internal Audit Commissionerate is reviewing applications from nearly 60 companies seeking AEO certification.
• According to the rules firms that want to be listed as AEOs must have an authorised capital of at least Tk 30 crore and paid-up capital of Tk 10 crore.
• Moreover, they must have a minimum annual turnover of Tk 10 crore for three years in a row.
• If the firm is not into manufacturing, their annual export or import must be of at least Tk 10 crore for three years in a row.
• However, the revenue board has included some criteria enabling small and medium enterprises (SMEs) alongside logistics operators to avail the status.
• One criterion for the SMEs says they must have conducted 20 annual shipments on an average over the past three years whereas another for logistics operators say they must have run operations in Bangladesh for the past four years.
• According to the rules, all companies will have to ensure at least 70 percent of transactions through formal channels like banks and mobile financial services.
• Interested companies must have operations of at least five years and clean records in duty, VAT and income tax payments.
• The inclusion of SMEs and logistics operators in the AEO framework is expected to further facilitate trade and enhance business efficiency in Bangladesh, reports UNB.