Stakeholders at an event on Wednesday said about 37 per cent of Bangladesh's average peak electricity demand could be met through renewable energy sources by 2030.
Significant enhancements in renewable energy financing from the banking sector are necessary to achieve the target, they told the workshop titled "Renewable Energy Financing Trends in Bangladesh" held at a hotel in the capital.
At the workshop organised by the private think tank Unnayan Shamannay, bank representatives, renewable energy entrepreneurs, and stakeholders exchanged views on the challenges and ways to bolster renewable energy financing in Bangladesh.
Former governor of the Bangladesh Bank Dr Atiur Rahman presented the background note.
He said local banks and non-bank financial institutions (NBFIs) naturally face capacity constraints when financing large-scale renewable energy projects.
However, the potential for financing small-scale projects is not being fully realised either, said Rahman, also a Dhaka University emeritus professor.
He pointed out that it is possible to stop burning 81 lakh litres of diesel annually by encouraging irrigation using solar-powered pumps.
The economist added that with an emphasis on environmental and social risks, banks and NBFIs must also be cautious about governance risks.
"Inadequate attention to governance during green financing may lead to a waste of limited resources and reduced stakeholder interest in green renewable energy financing," he said.
The workshop was attended by officials from four banks and 11 solar energy companies.
Stakeholders further noted that if the current trend in renewable energy financing persists, domestic banks and NBFIs may only be able to contribute around 10 per cent of the required investment for achieving the 2030 target.
They called for proactive measures to strengthen the financial sector's capacity to meet the growing demand for renewable energy investments.
A Bangladesh Institute of Bank Management paper revealed the country's required annual funding to ensure 40 per cent energy from renewable sources by 2040 is likely to increase from Tk 205 billion in 2023 to Tk 494 billion in 2041.
However, if the current trend in renewable energy financing by banks and NBFIs is maintained, only 4-9 per cent of the demand will be met by the credit channelled through the country's financial system.
[email protected]
