Bangladesh's factories have turned to rooftop solar to cut emissions and power costs, but limited roof space can only meet a fraction of their needs, so they are looking further afield, including buying renewable power from off-site plants, reports bdnews24.com.
Bangladesh last year began allowing private companies to sell power directly to large consumers, with electricity from the "merchant power plants" carried over the grid and users paying charges to grid and distribution companies.
India has long allowed open-access power purchases, while Pakistan is working toward a competitive bilateral market, but has faced disputes over use-of-system charges.
Meanwhile, Bangladesh's energy regulatory commission is working on the key details of how its own open-access system will work, including the charges that consumers would have to pay to use the grid.
Energy analysts said the viability of open-access power purchase deals partly depends on open-access grid charges and additional surcharges, which will be key to balancing the interests of businesses, households and farmers.
Once the grid charges and rules are finalised, corporate buyers like ready-made garment manufacturers with greenhouse gas emission reduction targets purchase renewable electricity from remote solar or wind power plants directly.
A mid-sized factory can offset between 10 percent and 15 percent of its electricity demand through rooftop solar alone, while off-site generation could take that to 50 percent, 70 percent or more, said Mohiuddin Rubel, a managing director of garment supplier Denim Expert Ltd.
Companies can also buy renewable energy certificates, or RECs, from renewable energy producers. But Bangladesh so far lacks a well-developed REC market with a sufficient supply of those certificates, garment suppliers said.
"Merchant power plants will allow us to purchase electricity directly, reducing the need for purchasing renewable energy certificates from the market," said Mashook Mujib, sustainability manager at fashion manufacturer DBL Group.
Charges Key
Bangladesh's recent annual investment in renewable energy is less than $250 million a year, far less than what is needed, said Shafiqul Alam, energy analyst at the Institute for Energy Economics and Financial Analysis, a US-based non-profit.
Merchant power generators could offer a promising way forward in boosting renewable investment, he said.
But recent news reports have suggested the open access charges could be about 2 US cents per kilowatt-hour, on top of renewable tariffs of around 9 US cents per kilowatt-hour. Such charges could raise costs for industrial consumers and the response from industry could be lukewarm, said Alam.
