Bangladesh Energy Situation

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Bangladesh

Capital:

Dhaka

Region:

South Asia

Coordinates:

23.7000° N, 90.3500° E

Total Area (km²): It includes a country's total area, including areas under inland bodies of water and some coastal waterways.

147,570

Population: It is based on the de facto definition of population, which counts all residents regardless of legal status or citizenship--except for refugees not permanently settled in the country of asylum, who are generally considered part of the population of their country of origin.

171,466,990 (2023)

Rural Population (% of total population): It refers to people living in rural areas as defined by national statistical offices. It is calculated as the difference between total population and urban population.

60 (2023)

GDP (current US$): It is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources.

437,415,331,041 (2023)

GDP Per Capita (current US$): It is gross domestic product divided by midyear population

2,551.02 (2023)

Access to Electricity (% of population): It is the percentage of population with access to electricity.

99.40 (2022)

Energy Imports Net (% of energy use): It is estimated as energy use less production, both measured in oil equivalents. A negative value indicates that the country is a net exporter. Energy use refers to use of primary energy before transformation to other end-use fuels, which is equal to indigenous production plus imports and stock changes, minus exports and fuels supplied to ships and aircraft engaged in international transport.

16.84 (2014)

Fossil Fuel Energy Consumption (% of total): It comprises coal, oil, petroleum, and natural gas products.

73.77 (2014)

Source: World Bank

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Introduction

Bangladesh is a country that is located in the heart of the Ganges-Brahmaputra-Delta in the south of the Asian continent. Bangladesh borders India on 3 frontiers: west, north and east, Myanmar on the south-east, and the Bay of Bengal on the south.

Map of Bangladesh (UN, 2004)

The Republic of Bangladesh was founded in 1971, when the Bengali speaking population fought for independence from west Pakistan, as they were considered back then as the eastern province of Pakistan. The country is considered one of the most countries impacted by climate changes along the year, as natural disasters hit the country more often. For example; tropical cyclones hit the country’s coastal regions about twice a year, both the rise of sea level and heavy flooding accelerate riverbanks’ erosion and loss of arable land. Bangladesh has also suffered prolonged heat waves recently, hence both natural disasters and environmental challenges have jeopardized the livelihoods of the Bangladeshi people, who rely mainly on agriculture.

Bangladesh is considered one of the fastest growing economies in the Southern-Asia, with 64% of the total population are living in rural areas. By 2014, Bangladesh ranked as 9^th in the world’s largest populated countries.

The country has a very limited energy reserve; small amounts of oil, coal and countable natural gas reserves. The country suffers an internal energy struggle, as about 93% of the country’s power producing thermal plants are gas-based, but the gas is also needed for the industrial sector. Therefore, the country has to -continuously- make some compromises between power production and developing the industrial sector.

Bangladesh is one of the world's poorest and most densely populated nations. The last Household Income and Expenditure Survey (2010) classified 32% (from 56.6% in 1990/91) of the country’s population as “poor” (i.e. incomes below the upper poverty line of BDT 1311-2038, which is calculated on regional base - see graph below). 17% of the population is considered “extremely poor” having income below the lower poverty line. In rural areas, where more than 70% of the population lives, 35% are below the upper benchmark and 21% fall even below the lower regional poverty lines (BDT 1192-1495).

An average household in Bangladesh consists of 4.5 household members and have an overall income of BDT 9648, or about BDT 2130 per head.The average per capita income level of consumers below the upper poverty line is BDT1271 per month, for those below the lower poverty line its only BDT 1102.84 per month on national level. According to the 2010 survey, the number of earners per household is 1.31 at national level, 1.27 in rural area and 1.40 in urban area. Since, 1995-96, number of earner per household shows a declining trend and has a positive correlation with the declining changing pattern of household size. The income per earner was found to be BDT 8795 for the country as a whole in 2010. In rural areas, this was BDT 7592 and in the urban BDT 11778. Income per earner increased to BDT 8795 in 2010 from BDT 5145 in 2005, an increase of BDT 3650 (70.94%) during this period. The average income per household in turn was found to be 9648tk in rural areas and 16477tk in urban areas, on a national level the average amounts to 11480tk.

In 2013, the International Renewable Energy Agency (IRENA) ranked Bangladesh as having the sixth-largest renewable energy–related workforce in the world with 114,000 jobs.

Table. :Socio-economic and Demographic Information

Indicators/Variables	2011	2004	1991
1. Household size (Dwelling)	4.35	4.66	5.5
2. Sanitary toilet facilities (%)	61.6	N/A	N/A
3.Sex ratio	99.68	104.1	106.26
4. Literacy (%)	47.68	38.06	24.90
5a. Economic activity rate (Male) (%)	66	68.1	77.1
5b. Economic activity rate (Female) (%)	9.8	5.4	6.7
6. Gross growth rate	1.08	1.26	1.66
7. Internal migration (rural to urban) (%)	4.29	4.79	5.62
8. International migration rate (%)	3.46	N/A	N/A

Energy Situation

Overview

The power sector in Bangladesh is highly dependent on fossil fuels, as natural gas and coal are the dominating sources for power generation in the country. About 62.9% of Bangladeshi generated electricity comes from natural gas, while 10% is from diesel, 5% comes from coal, 3% of heavy oil, and 3.3% is of renewable sources.

Despite the fact that the Bangladeshi energy sector uses and covers varied products; electricity, petroleum products, natural gas, coal, biomass and solar, yet the policy and decision makers are mostly pre-occupied with electricity, as it is the most common used form of energy in the country. Thus, because there is a continuous and rapidly widening gap between electricity supply and demand, therefore it is a major challenge for the energy sector in Bangladesh.

In 2016, the total number of consumers connected to the grid is 21.8 million. Out of the 21.8 million 16 million are domestic connections (households), which would represent roughly 50% of all Bangladeshi households (30-40 million). Another 15% of the households have access to off-grid electricity.

Power cuts and the low reliability of the power supply are the major problem of the grid extension. Even with newly installed capacities (in total 11,532 MW; 13, 540 including captive power generation) and the import capacity of 500 MW from India. There has been a massive expansion of the grid infrastructure and other electrification measurements, the electrification rate is around 75%, but in reality many households suffer from unreliable electricity supply with power outages of up to 14 hours per day.  However, the number of connections is in fact increasing rapidly with around 250.000 per month. 

The supply of population and industry with modern energy is very low compared to countries with similar economies. The per-capita production of commercial energy increased since 2010 to 371kWh, but is still one of the lowest in the world.

Bangladesh will probably need to triple that amount in order to achieve its target to become a middle income country by 2021. At the same time avoidable energy wastage in the industrial and household sectors mitigates a large share of the benefit this energy could bring to the country.

Only about 6% of the entire population has access to natural gas, primarily in urban areas. Biomass fuels, such as wood, cow dung and agri­cultural residues are collected mainly from the local environment and have become a traded commodity as cooking fuel as access to local biomass becomes ever more difficult. Inefficient, kerosene lamps are the most common sources of light. The kerosene price has increased from 42 tk (end 2010) to 70 tk (July 2014). The supply of new gas connections to industries have been suspended in 2009 and resumed in April 2012 . Also new gas connections to household were suspended for a certain time.

Table. :Source of Lights (in %)

Source	2011	2004	1991
Grid Electricity	53; 56.6	39.77	14.37
Solar Energy	6.9; 3.3	-	-
Kerosene	39.5	59.93	84.73
Biogas	0.1	-	-
Others	0.5	0.31	0.89

Table. :Source of Cooking Fuels (in %)

Fuel Type	2011	2004	1991
Wood	34.8	31.76	44.27
Kerosene	1.0	1.79	0.57
Gas/LPG	12.6	9.09	2.36
Electricity	0.4	0.76	0.88
Straw/Leaf/Dried cow dung	51.2	55.91	-
Bio-gas	0.1	-	-

► See also: Fuel Prices in Bangladesh

Energy Access

After Bangladesh’s independence in 1971, only 3% of the total population had access to electricity. This ratio has go up to 59.6% in 2012, and almost 76% by 2016. 79% of the grid-connected population suffer load-shedding, and 60% suffer low-voltage supply.

Bangladesh's Total ELectricity Access 1990-2016 (Tracking SDG7, 2018)

The country has about 1.5 billion people who lack electricity access, according to IEA’s 2008 estimates, representing almost 20% of the total population. Furthermore, approximately 96.2 million people in the country still even without access to a nearby electrified city. 52% of the total population are with partial electricity access, while only 10-15% of the rural population have electricity access that barely meets limited usages: light, ceiling fans, refrigeration, and irrigation.

Urban & Rural Electricity Access in Bangladesh 1990-2016 (Tracking SDG7, 2018)

The Bangladeshi government has set a vision of achieving 100% electricity access by 2021, thus by integrating more solar PV and biomass sources, as the country is rich with these two particular ones. 

Bangladesh suffers a crisis of regular power outages, for about 4-6 hours/day in rural areas, reaching up to 6-8 hours during summer times. Currently, only about 52% of Bangladesh’s total population are connected to the main grid, while almost 75% of rural population are not connected to it. Only 32% of Bangladesh’s total households have access to electricity. 

Table. : Electricity Access in Bangladesh

	Total Access					Urban Access	Rural Access
Year	1990	2000	2010	2014	2016	2016	2016
% Population	--	32	55	62	76	94	69

Bangladesh’s electrification rate in rural areas is still poor, since only 38% of rural households are with access to electricity. Despite the fact that the Bangladeshi government is cooperating with other 30 partner organizations for improving the electricity access situation in the rural areas, yet the pace is still too slow.

Production

Bangladesh's Total Primary Energy Supply by Source 1990-2016 (IEA, 2018)

As shown in the previous figure, Bangladesh's energy production, from both different oil products and biofuels, is almost steady along the past two decades, while natural gas is gaining more dependency and accelerating since the early 2000s.

The following figures shows an example of the country's energy production from different sources during the few past fiscal years, in particulary the fiscal year 16/17, and as shown, natural gas is highly dominant.

Bangladesh's Total Energy Generation by Source 2016-2017 (Suntrace, 2018)

Installed Capacity

Table. :Bangladesh's Installed Capacity with Accordance to Fuel Type

Installed Capacity (as of fuel type)	[MW]
Natural Gas	6587
Furnace Oil	1963
Diesel	683
Coal	250
Hydro	230
Import	500
Total	10,213

Installed Electricity Capacity in Bangladesh (Taheruzzaman & Janik, 2016)

Consumption

Primary consumed energy is calculated as 62% of biomass, 25% of natural gas, 12% of imported oil, and 1% for both coal and hydropower.

Table. : Bangladesh's Primary Energy Consumption since 1975 in Mtoe

Year	1975	1985	1995	2000	2005	2010	2015	2016	2017
Rate	2.0	4.1	9.2	11.7	16.1	21.6	31.1	31.9	33.0

Bangladesh's Total Energy Consumption 1990-2016 (IEA, 2018)

Table. : Bangladesh's Primary Energy Consumption by Fuel 2016-2017 in Mtoe

	Oil	Natural Gas	Coal	Nuclear	Hydroelectric	Renewables	Total
2016	6.7	22.7	2.2	--	0.2	0.1	31.9
2017	7.5	22.9	2.3	--	0.2	0.1	33.0

Different Sectoral Percentages of Bangladesh's Total Final Energy Consumption in 2016 (IEA, 2018)

Cooking Situation in Households

Table. : Access to Clean Cooking in Bangladesh

Year	2000	2010	2014	2016
% Population	7	13	16	18

The most important staple food in Bangladesh is rice in combination with various kinds of lentils (locally known as daal). Also common are wheat, meat, eggs, and different vegetables. In regions near the sea or lakes households eat also more fish. Meals are generally prepared by women on fixed stoves indoors or in a semi-enclosed shelter. Portable stoves are also common but used more occasionally.

Most Bangladeshi households in rural areas (99%) as well as urban areas (60 - 66%) use biomass such as wood, cow dung, jute sticks or other agricultural wastes for cooking. The fuel is used in traditional stoves which consist of a hole in the ground with a raised clay lip to rest the pot, with a separate fuel entry hole. Many households cook large volumes of food in large pots. Stoves are often fed with bigger pieces of wood or dungsticks. Households are unaccustomed and/or unwilling to chop wood into small pieces. In addition, traditional stoves are constructed in a way that the fuel naturally slides further into the .chamber as it burns. This allows multi-tasking during cooking.

The traditional clay stoves are inefficient and generally poorly ventilated so that they produce fine particles, polycyclic aromatic hydrocarbons, carbon monoxide, dioxins and other carcinogens (ROUSE 2004). Housewives are exposed to high levels of these toxins between three and seven hours a day. Research revealed that this indoor air pollution (IAP) occurs not only in the kitchen but only slightly lower in the living area therewith affecting also other family members such as children. The World Health Organisation (WHO) estimated (based on 2002 data) that more than 46,000 women and children die each year as a direct result of exposure to indoor air pollution, while many more suffer from respiratory diseases, tuberculosis, asthma, cardiovascular disease, eye diseases, and lung cancer. Further WHO attributes 1.3 million disability adjusted life years (DALY) to the use of solid fuels . Right behind unsafe water and inadequate sanitation, indoor air pollution is the second biggest environmental contributor to illness worldwide (WHO 2007).

Although the estimated per capita consumption of timber and fuel wood is one of the lowest in the world, biomass is becoming increasingly scarce and costly. The natural growth of forests as well as afforestation measures are too low to meet the consumption of the population due to inefficient burning of biomass for cooking purposes and high population growths, putting pressure on the economic situation of biomass-purchasing households. Poor rural households have to spend a significant amount of time on biomass collection. Wastage of biomass is depriving the soil of nutrients, resulting in unsustainable low levels of organic matter in the soil.

The figure shows the distribution of the energy consumption of rural households. Nearly one half of the total consumption is for firewood.

Access to Clean Cooking in Bangladesh 2000-2016 (Tracking SDG7, 2018)

Table. :Annual Household Energy Consumption: All Divisions (average per household)

		Heating
Energy Type	All Uses	Cooking	Parboiling	Other	Cooling	Lighting	Amusement
Biomass (kg)
Fuelwood	1,186.21	1,064.84	28.60	92.77	—	—	—
Tree leaves	501.51	470.67	29.99	0.85	—	—	—
Crop residue	708.18	538.86	164.41	2.72	—	—	—
Dung cake/stick	523.90	503.68	16.07	4.16	—	—	—
Sawdust	8.40	8.36	0.02	0.02	—	—	—
Non-biomass
Candle (piece)	15.86	—	—	—	—	15.86	—
Kerosene (liter)	28.98	1.76	—	0.07	—	27.16	—
Natural gas (Tk)	9.59	9.59	—	—	—	—	—
LPG/LNG (liter)	0.05	0.05	—	—	—	—	—
Grid electricity (kWh)	143.83	0.25	—	4.00	49.50	80.74	9.34
Solar PV (kWh)	0.53	—	—	—	0.04	0.48	0.01
Storage cell (kWh)	0.55	—	—	—	—	0.14	0.41
Dry-cell battery (piece)	15.01	—	—	—	—	—	—

Solar Energy

Solar photovoltaic: Solar photovoltaic (PV) systems are in use throughout the country with over 2.9 million household-level installations having a capacity of 122.2 MW (April 2014). Scaling-up of solar PV systems assisted by the development partners are being implemented through Infrastructure Development Company Limited (IDCOL), Rural Electrification Board (REB), Local Government Engineering Department (LGED), Bangladesh Power Development Board (BPDB), NGOs and Private Organizations implementing solar energy program. There is a strong potential for solar energy within the country. Dissemination of solar home systems (SHSs) is being promoted mainly by IDCOL, private sector companies and NGOs based on the direct-sale approach and provision of refinancing funds for micro-financing of SHSs to participating organizations (mostly NGOs) through IDCOL.

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Wind Energy

Wind Energy has also made some inroads but its potential is mainly in coastal areas, and offshore islands with strong wind regimes. These coastal settings offer good opportunities for wind-powered pumping and electricity generation. Presently there are 2 MW of installed wind turbines at Feni and Kutubdia.

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Biomass

Bangladesh has strong potential for biomass gasification based electricity. More common biomass resources available in the country are rice husk, crop residue, wood, jute stick, animal waste, municipal waste, sugarcane bagasse etc. This technology can be disseminated on a larger scale for electricity generation.

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Biogas

Biogas mainly from animal and municipal wastes may be one of the promising renewable energy resources for Bangladesh. Presently there are tens of thousands of households and village-level biogas plants in place throughout the country. It is a potential source to harness basic biogas technology for cooking, and rural and peri-urban electrification to provide electricity during periods of power shortfalls.

►See: Biogas Technology in Bangladesh

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Hydro Power

Microhydro and minihydro have limited potential in Bangladesh, with the exception of Chittagong and the Chittagong Hill tracts. Hydropower assessments have identified some possible sites from 10 kW to 5 MW but no appreciable capacity has yet been installed. There is one hydro power plant at Kaptai established in the 1960s with present installed capacity of 230 MW.

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Other Renewable Sources

Other renewable energy sources include bio-fuels, gasohol, geothermal, river current, wave and tidal energy. Potentialities of these sources are yet to be explored.

Electricity Situation

The government’s vision of electrifying the entire country by 2020 through grid expansion is not realistic due to inaccessibility and low consumer density in many rural areas, as well as financial constraints. To reach the government’s vision of universal electrification, renewable energy sources, in particular solar energy will have to play a vital role for off-grid electrification.

Within the reach of the national grid Bangladesh is still reeling under 600 - 1200 MW of ‘load-shedding’. A situation which deteriorates during irrigation seasons, when the demand-supply gap reaches up to 1500 MW. Domestic and industrial sectors consume about 43% and 44% electrical energy respectively, i.e. a total of about 87% of power consumption occurs in these two sectors. Out of this, a large part of electrical energy is consumed for lighting. All power sector experts acknowledge that the maximum power gap occurs primarily during the evening. A way to manage the evening load is the introduction of energy efficient lights/lighting systems.

Electricity Generation

Different types of power plants generate electricity and synchronize it with the national grid. There are some isolated diesel power stations at remote places and islands which are not connected with the National Grid. Terminal voltage of different generators are 11 kV, 11.5 kV and 15.75 kV.
In the Eastern Zone (eastern side of river Jamuna), electricity is generated from indigenous gas and a small percentage through hydro power.

In the Western Zone, Coal and imported liquid fuel is used for generation of electricity. The fuel cost per unit generation in the Western Zone is much higher than that of the Eastern Zone. Therefore, as a policy, low cost electricity generated in the Eastern Zone is transferred to the Western Zone through the 230 kV East-West Inter connector transmission line.

Table. :Bangladesh's Pablic Sector's Organizations for Electricity Generation

Public Sector	Installed Generation Capacity (MW)
BPDB	4186
APSCL	777
EGCB	622
NWPGCL	300
RPCL	77
Subtotal	5,962(58%)

Table. :Bangladesh's Private Sector's Organizations for Electricity Generation

Private Sector	Installed Generation Capacity (MW)
IPPs	1330
SIPPs(BPDB)	99
SIPPs(REB)	226
15 YR. Rental	167
3/5 YR. Rental	1929
Power Import	500
Subtotal	4251(42%)

The total installed electrical generation capacity in Bangladesh is 10,213 MW. The maximum demand served was on 12 July 2013 with 6675 MW.

Table. :Bangladesh's Different Shares of Installed Capacity with Regard to Used Different Technologies

Share of installed Capacity by used technology	[%]
Reciprocating Engine	33,06%
Steam Turbine	25,83%
Combined Cycle	19,01%
Gas Turbine	14,95%
Hydro	2,25%
Power Import	4,90%
Total	100,00%

Bangladesh has signed a protocol deal with Russia on October 21, 2011 after series talks on cooperation in the field of peaceful usage of nuclear energy as the country plans to install a nuclear power plant in Pabna district, some 216 km northwest of capital Dhaka.

Currently 3% of the power generation is based on coal. In future, this share shall grow to 21% by 2020 and 50% by 2030 according to the seventh 5-years plan published in 2015. 8% (2020) and 10% (2030) shall be based on nuclear power.

Electricity Access

Bangladesh has currently (2016) a electrification rate of 76%. In the cooking field Bangladesh’s reliance on biomass will continue for several decades. A mere 6% of the entire population has access to natural gas, primarily in urban areas. Biomass fuels, collected mainly from the local environment only two decades ago, are fast becoming a marketed commodity as access to local biomass becomes ever more difficult. The stark reality is that many rural residents are dependent on such fuels as agricultural residues, dung, and even leaves and grass for cooking.

Table. :Energy Access based on presence of expenditures for electricity (HIES 2010)

	Total	Rural	Urban
National	55.26%	42.49%	90.1%
Barisal:	40.12%	31.62%	82.33%
Chittagong:	60.34%	48.84%	92.31%
Dhaka:	67.34%	47.36%	96.15%
Khulna:	54.13%	45.55%	83.83%
Rajshahi:	51.88%	46.94%	75.53%
Rangpur:	30.07%	24.44%	68.68%
Sylhet:	47.22%	39.09%	88.94%

Key Problems of the Energy Sector

• Only 59.6% of its 161 million people have access to electricit. In rural areas, where more than 70% of the population lives, only 42% have access to electricity
• A mere 6% of the entire population has access to natural gas, primarily in urban areas
• Electricity supply is not reliable and peak demand cannot be met
• Substantial amount of energy is used inefficiently
• Most people in the rural areas depend on kerosene lamps for light
• 90% of all Bangladeshis cook with biomass, such as rice straw, dried leaves, jute sticks, cow dung, or wood.

Policy Framework, Laws and Regulations

Poverty Reduction Strategy

All mentioned problems related to inefficient biomass and indoor air pollution use are addressed in the Bangladesh Poverty Reduction Strategy Paper (PRSP), chapters 5.H.1 ‘Conservation of Nature’ and 5.H.2 ‘Combating Pollution’:

• "The relationship between the amount of the fire wood use and level of income is clearly positive and monotonic. This means that the poor has much less access to quality fuel for cooking. Income poverty thus translates into energy poverty." (p. 164)
• "Population pressure on land has been leading to conversion of forest land and land under tree cover into other uses. This at the same time further lowers the supply of biomass and fuel wood for cooking raising their market value including further deforestation and cutting down of trees. Smoke due to fuel wood burning also is a major cause of a significant rise in the level of indoor air pollution affecting adversely the health of women and children." (p.164)
• "Air pollution needs to address both the outdoor and indoor sources of pollution. […] Indoor air pollution is mainly caused by cooking fuels such as firewood and dried cow dung. Most of the poor families use these as fuel and women and children are the main victims of indoor air pollution. Due to air pollution the number of people suffering from respiratory diseases is on the rise." (p. 167)

The PRSP derives the following national strategies to address the mentioned problems:

• "For controlling indoor air pollution use of natural gas, biogas and LPG may be encouraged through various means including policy supports for their lower relative prices as well as more efficient and cost- effective cooking stoves." (p. 167)
• The introduction of energy efficient cook stoves was set one of the key targets to control air pollution in rural settings. "Building coalitions with NGOs for wider dissemination of fuel-efficient cooking stoves" and "Promote R&D to change building and construction standards and designs for pollution-free kitchens" were the respective planned actions on the policy agenda for the fiscal year 2005/06 (p. 301).

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General Energy Policy, Energy Strategy

The Bangladeshi Energy Strategy of 1996 with its actualisation in 2002 is the main document of the promotion of RE It focusses on energy supply in rural areas. In December 2009 the "Renewable Energy Policy for Bangladesh was ratified. It was intended to integrate this policy paper into the New Energy Policy (NEP). The NEP was developed in 2006 by the "Renewable Energy and Energy Efficiency Programme" in cooperation with the UNDP.

The Renewable Energy Policy (Download PDF; 83 kB) contains the following parts:

• Overview of potentials of RE sources
• Institutional arrangements in the RE sector (above all the responsibilities of the Sustainable Renewable Energy Authority (SREDA) which has been approved on Monday 18th of July 2012
• Resource, technology and program development
• Investment and fiscal incentives
• Regulatory Policy
  

The Rural Electrification Board (REB) has recently announced that 2.70 million households will be connected with the power-supply network by 2021. The REB wants to cover all the villages across Bangladesh with two seperate projects. After completion of the project, all the rural Bangladesh shall have electricity coverage.
The state-owned rural electricity provider is currently implementing some 16 electricity-distribution projects. Those include connection to roughly 5.8 million consumers.

(Intended) Nationally Determined Contributions

In the INDC, the government announced to install 3000 Mega Watts of solar energy and continue to promote off-grid solar energy as well as improved cook stoves. It looks like the GoB is following a parallel strategy: on the one hand, increase power generation based on coal, on the other hand offer projects in the field of on-grid and off-grid solar electrification and stoves to be supported by donors.

Specific Strategies (Biomass, renewable energies, rural electrification, energy access strategy etc.)

The Private Sector Power Generation Policy (Download PDF; 135kB) shall attract private investment for installing new power generation capacity on build-own-operate (BOO) basis.

Number of Fiscal Incentives are provided in the Policy for the private power companies. Some of them are as follows:

• Exemption from corporate income tax for a period of 15 years.
• Exemption from Customs Duties (CD), VAT (Value Added Tax) and any other surcharges in importing plants and equipment.
• Repatriation of equity along with dividends allowed freely.
• Exemption from income tax for foreign lenders to such companies.
• Avoidance of double taxation case of foreign investors on the basis of bilateral agreements.
• Remittance of up to 50% of salary of the foreigners employed in Bangladesh.
• Companies are eligible for all other concessions which are available to industrial projects.

The Renewable Energy Policy (see above) provides incentives for renewable energy. Some of them are as follows:

• all renewable energy equipments and related raw materials in producing renewable energy equipments will be exempted from charging 15% VAT.
• a network of micro-credit support system will be established especially in rural and remote areas to provide financial support for purchases of renewable energy equipment.
• SEDA will consider providing subsidies to utilities for installation of solar, wind, biomass or any other renewable/clean energy projects.
• Renewable energy project investors both in public and private sectors shall be exempted from corporate income tax for a period of 5 years from the date of notification of this policy in the official gazette and it will be extended periodically following impact assessment of tax exemption on renewable energy.
• An incentive tariff may be considered for electricity generated from renewable energy sources which may be 10% higher than the highest purchase price of electricity by the utility from private generators.

Furthermore a lot of procedures will be simplified and investment in renewable energy and energy efficiency projects will be facilitated.

The Power Division of Bangladesh Ministry of Power, Energy and Mineral Resources has announced and published the Country Action Plan for Clean Cookstoves (CAP) in November 2013. The target of CAP is o disseminate cookstoves to over 30 million households in Bangladesh by 2030. CAP defines ten priority interventions, to be implemented immediately:

1. Development of a coordination mechanism, called the Household Energy Platform
2. Research and Development to improve the existing local models and potentially create new cookstove models
3. Development of a national network of suppliers
4. Identification of strong non-cooking product distribution channels and the addition of improved cooking solutions into already successful distribution chains
5. Increase of awareness of clean cooking solutions among consumers
6. Building of capacity of individual suppliers and distributors to effectively market their products
7. Increase of access to finance for cookstove and fuel entrepreneurs
8. Better understanding of Bangladeshi consumer preferences
9. Establishment of a national cookstove testing and knowledge centre for laboratory and field testing
   
10. Inclusion of cookstoves and fuels into other key Government priorities
    

As one of the measures to support this plan the government of Bangladesh has approved $ 4.4 million from their Climate Change Trust Fund to implement the Bondhu Chula (improved cookstove) program.

Institutional Set-up in the Energy Sector

Governmental institutions

• Bangladesh Ministry of Power, Energy and Mineral Resourcesis in charge of electrification activities as well as of improved cookstoves. The Power Division is responsible for the Country Action Plan for Clean Cookstoves (CAP).
• Bangladesh Energy Regulatory Commission (BERC): BERC has authority over consumer protection, approval of tariffs and pricing, issuance of generation and distribution licenses, and promotion of competition.
• Power Cell: Within the MPEMR power division, the Power Cell oversees power sector reform.
• Rural Electrification Board (REB): REB oversees operations of consumer-owned rural electric cooperatives (PBSs). It performs supervisory and regulatory duties to ensure that technical standards are met and performance is monitored.
• Sustainable and Renewable Energy Development Agency (SREDA): SREDA will act as a focal point for sustainable energy development and promotion, ‘sustainable energy’ comprising renewable energy and energy efficiency. (This institution is not established yet but concrete steps have been taken in this regard by the Government, with SED support).
• Bangladesh Power Development Board (BPDB): BPDB operates most publicly owned generators and some urban distributors; it acts as a single buyer, purchasing from public and private generators and selling to distributors.
• Power Grid Company of Bangladesh (PGCB): PGCB is a wholly owned subsidiary of the BPDB, operates the national transmission grid, schedules grid operations and wheels energy to distributors.
• The Dhaka Power Distribution Company Ltd. (DPDCL): DPDCL distributes energy and conducts commercial operations in Dhaka and adjoining areas, except for Mirpur and Gulshan.
• Dhaka Electricity Supply Company Ltd. (DESCO): DESCO distributes energy and conducts commercial operations in the Mirpur and Gulshan jurisdictions of the Dhaka metropolitan area.
• West Zone Power Distribution Company (WZPDC): The WZPDC is responsible for regional distribution in Khulna.
• The Bangladesh Standards and Testing Institute (BSTI) is in charge of defining standards and testing technologies including for clean cookstoves.
• The Bangladesh Council for Scientific Industrial Research (BCSIR) is the institution that came up with the original design of the Bondhu Chula improved cookstove that is now promoted by GIZ. They will now become involved as part of the testing committee under the new IDCOL/World Bank stove program
• The Ministry of Environment and Forests (MoEF) is supporting improved cooking promotion through provision of a subsidy component.

Private Sector (enterprises, NGOs)

• Summit Power Company: A private power company that operates some smaller size power plants.
• EnergyPac: A private sector enterprise that produces transformers, energy saving lamps, etc.
• Rahim Afrooz: The biggest manufacturer of batteries in Bangladesh. Besides battery manufacturing, it is also involved in the import of solar panels and installation of solar home systems:
• Infrastructure Development CompanyLimited (IDCOL): IDCOL is a government owned company. Although its mandate is to finance all types of infrastructure projects in Bangladesh, its main activity is to manage REREDP project and biogas projects supported by KfW and SNV. IDCOL started recently to establish a testing and certification lab for stoves .
• Grameen Shakti (GS): The biggest NGO involved in the dissemination of renewable energy technologies in Bangladesh. GS has installed around 750,000 (January 2014) ICS so far and is one of the two project participants under JP Morgan’s CDM (Clean Development Mechanism) program for ICS dissemination. GS is managing their activities through branch offices (sales point) and manufacturing centres
• Bangladesh Rehabilitation Assistance Committee (BRAC): One of the biggest NGOs in the world and internationally active. The focal areas are wide, in Bangladesh they comprise of poverty allevation, micro-finance, health, environmental protection, and social empowerment, also through provision of improved energy services with a focus on solar household systems.
• SZ Consultancy Services Ltd. (SZCSL) is a private consultancy and a partner of the ICS CDM project under JP Morgan. SZCSL monitors the distribution of stoves, assists in capacity building and bundles the distribution of many small enterprises with the aim to provide them with access to CER (Carbon Emission Reductions) revenues.
• Rural Services Foundation (RSF) is one of the largest NGOs in the country and is involved in the dissemination of renewable energy technologies in general.
• .Palli Karma Sahayak Foundation (PKSF) has been created by the Government of Bangladesh as a not-for-profit organization and is undertaking nationwide programs for poverty alleviation through employment generation. The principal objective of PKSF is to provide funds to various organizations for their microcredit programme with a view to help the poor who have no land or any credible material possession.
• The Village Education Resource Center (VERC) is implementing stove projects
• The Bangladesh Solar Energy Society (BSES) formed by academics and individual active in the field of solar energy. BSES carries out seminars, workshops and training measure on solar technologies.
• The Solar Association of Bangladesh whose member are solar companies and NGOs selling solar products and implementing solar projects. The association is mainly a lobbying organisation providing advice to governental entities and representing the interest of the solar industry in national debates.

Activities of Other Donors

• Asian Development Bank (ADB): The ADB as the major donor took the coordinating role and acts as the chief negotiator with the Government of Bangladesh. All international donor activities in the energy sector are coordinated by the Local Consultative Group led by ADB. Since recently ADB is providing funds to the RERED program implemented by IDCOL.
• The World Bank (WB): The WB is providing funds to the Government of Bangladesh to increase the electricity generation, transmission and distribution capacity. The WB initiated the SHS RERED program. It recently announced that it will scale up its support for the solar home system (SHS) program by adding US$78.4 million in IDA credits to the Bangladesh Rural Electrification and Renewable Energy Development II (RERED II). This funding shall help install an additional 480,000 solar home systems in areas without grid access to electricity.
  In 2015 the World Bank signed a $15 million grant agreement with Bangladesh to increase access to clean energy for targeted rural areas through output-based aid (OBA) subsidies. 1.1 million people shall benefit from the program. The program is used to reduce the cost of 225,000 solar home systems and 2,500 mini-grid connections. In addition, investments in solar-powered irrigation to 6,600 farmers will be supported as well as clean cooking solutions for over 9,850 households through biogas plants. IDCOL will implement the program in partnership with micro-finance institutions, non-governmental organizations and private sponsors.
  
• Japan International Cooperation Agency (JICA): JICA is helping Bangladesh in the generation of electricity. Currently, JICA is also providing funds to REREDP program.
• Global Environment Facility (GEF): GEF has supported REREDP from the very beginning and plans to undertake projects in the areas energy efficiency and improved brick kilns.
• SNV: SNV is active in the field of biogas technology dissemination and is showing interest in improved cook stoves.
• Urban Partnership for Poverty Reduction (UPPR): Under UNDP initiated UPPR is collaborating with SED in the cook stove sector and is also open for cooperation in biogas plants in urban settings.
• U.S. Agency for International Development (USAID): USAID has been supporting rural electrification program of Bangladesh for the last 35 years. Currently, USAID has approved a 50 million USD program for energy. 35 million are foreseen for energy efficiency measures and 15 million for improved cook stoves.
• Practical Action (PA): PA is mostly active in infrastructure and livelihood improvement in poor urban areas. As part of their efforts to provide energy access to the poor, they are interested to cooperate with SED in the promotion of improved cook stove as well as related monitoring and evaluation activities.
• Swedish International Development Agency (SIDA): SIDA is planning to start improved cook stove activities in Bangladesh. It is not yet decided wheter this will happen in cooperation with GIZ.
• UK Department for International Development (DFID): DFID has made tremendous funds available for electrification projects. They have indicated strong interest in SHS/SSHS, PicoPV as well as improved cook stove activities. Also they will be active in the field of political advisory, e.g. they are working on the topic of reallocation of subsidies for energy services and fuels.
• Climate and Clean Air Coalition (CCAC): CCAC is a new partnership represented by the USA, Canada, Sweden, Mexico, Ghana and Bangladesh. This group is focussing on the reduction of short lived pollutants such as black carbon and methane by promoting new environmentally friendly technologies and processes like improved cook stoves, brick kilns and rice parboiling system. Detailed discussions for cooperation have taken place in Toronto and Paris recently.
• Kreditanstalt für Wiederaufbau (KfW): Besides their efforts in rehabilitation of old power plants and grid efficiency, KfW has been a strong promoter and supporter of the SHS and SSHS dissemination under IDCOL. Further cooperation can be envisaged also for PicoPV.
• Global Alliance for Clean Cookstove (GACC): GACC, an UN Foundation, is now start working in Bangladesh and developing a Country Action Paln (CAP) which will give the whole cookstove sector participants a common platform.

Further Information

• Restoring Balance: Bangladesh's Rural Energy Realities (ESMAP Report)
• Energy Access, Efficiency, and Poverty - How many Households are Energy Poor in Bangladesh? (World Bank Policy Research Working Paper)
• LGED-REIN.orgBAngladeshs renewable energy information network
• Alamgir-Kabir (Bangladesh Power Development Board, Sept. 2011) presentation on Energy Sector and Solar Projects
• Rural Electrification and Renewable Energy Development (World Bank Report)