Pvt sector faces five key challenges: USAID

The United States Agency for International Development has identified five key challenges facing the private sector in the expansion of clean energy in Bangladesh.
The challenges are: lack of strategic direction, failure of early unsolicited utility-scale solar projects, lack of proper studies, bankable data and regulatory checklist, investor/lender interest surrounding uncertainties and failure in upgradation of the distribution system.
The USAID has conducted a comprehensive assessment recently and prepared these challenges based on consultation with stakeholders and discussion with government functionaries.
It said the renewable energy sector in Bangladesh lacks a clear strategic direction in terms of specific targets from specific technologies. Shifting government priorities have seen some technologies-- solar home system and mini-grid being hamstrung.
Different competing energy sources and power systems are also shifting the government's focus from renewable energy. "The fuel oil-based quick rental power plants and small independent power producers are still a major and costly portion of the power mix, and they need to be gradually phased out to make room for renewable energy."
The assessment also found that many large utility-scale power projects have failed to come online in time and the government had to either extend the commissioning date or allow change of partners and allow change of areas to keep the projects alive.
"(The) failure of early unsolicited solar projects have had a negative spillover effect in the government. A few bad actors from the early stage utility-scale projects have deterred the government and private sector investors," it said.
The USAID also revealed that the major points of contention were land availability and land acquisition, securing the right-of-way and challenges surrounding grid-interconnection.
The private sector is exposed to a lot of risks in terms of acquiring reliable and authenticated data. There is a dearth of data in terms of land availability, substation load capacity and site-specific data.
"Although the wind energy sector has considerable potential in Bangladesh, without proper policies and guidance in place, the sector remains at risk," it added.
To bring forward utility scale renewable energy projects, it said, renewable energy special purpose vehicles are created with a partnership between a foreign company which typically brings technical expertise and global, low-cost finance and a local company which brings regulatory navigation and local logistics.
"The way renewable energy SPVs are designed, foreign investors/lenders are deterred over the project timelines, inter-agency navigation, contract lock-ins, and lack of clarity over various regulations," it said.
The study revealed that though a lot of local players received interests from reputed international developers/lenders, they ultimately shied away over delayed timelines and conflicting contracts.
"Local lenders were not equipped with proper lending mechanisms for utility-scale renewable energy projects. The private sector feels the need for a guarantee mechanism to attract lenders," the study mentioned.
It said the distribution utilities in its current state are inadequate to support mass renewable energy adoption.
"The underlying problems are twofold, first in the infrastructure readiness and planning level, and second, in terms of capacity and preparedness of many local level offices."
It added: "The utilities are also currently ill-equipped to adopt net-metered solar rooftop systems, making the incentives hard to avail."
The USAID said the future of clean energy in Bangladesh revolves around multiple sector actors of the government, the power sector, private sector, multilateral agencies and they need to come together in solving these issues.
According to Sustainable and Renewable Energy Development Authority (SREDA), now some 626.56 megawatt of electricity is being produced from renewable sources.
The government has set a target to produce some 10 per cent of electricity from renewable energy by 2021.

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