A recent study by Change Initiative, a research organisation, reveals that Bangladesh’s private sector dominates the renewable energy sector, with 59% of planned projects under its ownership and 62% of the total investment coming from private sources.

Released on Thursday, the study report says public investment in renewables reaches $312 million, accounting for just one-quarter of the total funds while joint ventures contribute another $212 million, bringing their share to 15%.

The latest bi-annual report from “Follow the Renewable Energy Finance in Bangladesh” study highlights the key points on progress and challenges until 2023 of Renewable Energy adoption and practices.

According to the study, the sun-kissed Chittagong Hill Tracts Zone stands out as the undisputed solar champion of Bangladesh, claiming a whopping 44.34% of the country’s total solar project capacity (2020.30MW).

Other regions are also making significant strides in solar adoption. Rangpur will have projects generating 18% of total solar energy (a combined capacity of 611.3MW), while Mymensingh follows closely with 13% or 551.7MW of solar power generation.

Bangladesh has a target of generating 40% of its electricity from renewable sources by 2041, as per the Mujib Climate Prosperity Plan (MCPP).

As of the publication of the report, Bangladesh has installed 461MW of renewable energy capacity, mainly from solar power, and has planned projects for generating another 4,115MW in various stages of development.

According to the study, there is a difference in public and private tariff rates, the private projects charge a higher tariff for power purchase, specifically at a rate of $0.13/KWh. In contrast, public projects are offering the lowest tariff rate ($0.10/KWh).

Additionally, joint venture projects are charging tariffs higher than those of public projects, indicating variation in pricing strategies across different owners. There is an absence of clear trends in tariff rates across different capacity ranges, making it challenging to identify a consistent pattern in the pricing strategies of private power plants.

The majority of renewable energy projects are unsolicited, meaning they are initiated by developers without a competitive bidding process. There are also higher tariffs for both unsolicited and large projects, the study found.

At COP28, leaders of 123 nations including Bangladesh agreed to a Global Renewables and Energy Efficiency Pledge, committing to a collective goal of tripling global renewable energy targets to double the global average annual rate of energy efficiency improvements from about 2% to over 4% by 2030. They also committed to prioritising energy efficiency as the “first fuel” in policy, planning, and major investment decisions.

The Change Initiative study revealed the inconsistency in renewable energy targets, inequitable approval of projects in terms of the potential of solar radiation, and exaggerated tariffs.

The report further analyses the ownership, finance, tariff, and implementation of renewable energy projects, highlighting the role of the private sector, the need for transparent and efficient procurement, and the variation in pricing strategies.

M Zakir Hossain Khan, a climate finance expert and chief executive of Change Initiative, said, “Bangladesh’s sustainable progress in dealing with the climate crisis depends on building a nature-based, cost-effective, and sovereign renewable energy-based economy.”

“Under no circumstances should the potential of renewable energy be nipped in the bud by undermining the jurisdiction of the Energy Regulatory Commission and coming by immoral benefits through unreasonable tariffs. This tendency will jeopardize the immense potential of renewable expansion,” he added.

Another major point to note from the report is that the tariff rates for renewable energy vary across different owners and capacities, with private projects charging higher rates than public and joint venture projects. In neighbouring countries, regulatory authorities have predetermined tariff rates based on size and publicly disclose comprehensive detailed cost estimates and tariff rates of various projects. This level of transparency is lacking in Bangladesh, where regulatory bodies do not provide such information.

“To turn the current energy and economic crisis in Bangladesh into a possibility, the government must ensure integrity and competition in the energy sector. To build a smart Bangladesh, we must prioritize building a smart and green energy-dependent future,” recommends M Zakir Hossain Khan, Climate Finance Expert and Chief Executive of Change Initiative.

The Change Initiative study offers the following key lessons learned and recommendations for enhancing the renewable energy sector in Bangladesh. These include maximizing the potential of renewable energy sources, especially in the regions with high solar radiation and wind speed; as well as ensuring the best utilization of available finance for renewable energy expansion, by prioritizing solicited and competitive projects, reducing the reliance on loans and equity, and increasing the access to grants and concessional funds from national and international sources. Measures to address financing needs should include a carbon tax and products designed to specifically address risks and credit.

One crucial focus should be assessing and mapping renewable energy resources, as well as developing a comprehensive renewable energy finance strategy which should be obligatory. It is also important to improve the tariff determination process for renewable energy projects, by adopting a transparent and consistent methodology, benchmarking with regional and global best practices, and avoiding exaggerated or inflated rates. Bangladesh must also implement a strong monitoring system for renewable energy decisions, emphasizing environmental and social standards and ensuring compliance and transparency in all stages of RE projects including solar-based irrigation systems.

Finally, it is important to focus on strengthening stakeholder collaboration on renewable energy promotion, by involving the civil society, private sector, academia, and media in the policy development, implementation, and oversight of the renewable energy sector, says the report.