World Bank Support World Bank Support to to

Solar Energy in BangladeshSolar Energy in Bangladesh

Zubair K M SadequeEnergy Finance Specialist

The World Bank

BackgroundBackgroundWorld Bank’s support for Rural Electrification◦ Rural Electrification and Renewable Energy

Development (RERED) Project approved in 2002Grid electrification support to Rural Electrification Board (REB)

The main component of the original projectSupported 650,000 new connectionsSupported GOB’s rationalization programSystem loss reduction componentComponent largely completed satisfactorily

Support for Off-grid electrificationSolar Home Systems (SHS) for remote rural areas where grid electrification is not cost effective or will take a long time to reachSupported the SHS programs of the Infrastructure Development Company Limited (IDCOL) and of REB

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Support to SHS ProgramSupport to SHS ProgramOriginal target was 50,000 SHS during 2003-2008◦ IDA credit US$16 million, GEF grant US$8 million◦ GEF grant supported pilots for the SHS program for

both IDCOL and REBIDCOL’s “ownership” model proved effectiveTarget was achieved within 2 yearsWorld Bank continued to support the fast growing program

Through project cost savings and reallocation from the grid componentProvided support for a total of 236,000 SHS by 2009 under the original credit

REB’s “fee for service” model was not as effectiveDue to neglect in system maintenance by consumers as they don’t own the systems, institutional constraints of REB etc

◦ Piloted a biomass based mini-grid (250KW rice-husk gasification plant)

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Support to SHS ProgramSupport to SHS ProgramThe continued growth of the IDCOL program required more funds◦ World Bank responded with an additional financing of

US$130 million in 2009US$100 million for SHS and renewable energy mini-grids

Achieved 336,000 SHS against a target of 300,000 SHSSupported mini-grids (a 400KW biomass and a 100KW Solar PV)

US$15 million for energy efficient CFL deployment (REB)US$15 million to meet the funding gaps of REB (to support contracts already awarded)

◦ Grant Support from Global Partnership for Output Based Aid (GPOBA) (multi-donor trust fund)

US$15 million for subsidies for SHS and mini-grids

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Continued Support to SHS ProgramContinued Support to SHS Program

Second additional financing of US$172 million going to IDA board in October 2011◦ US$157 million for refinancing support for

additional 600,000 SHS and mini-grids by December 2012 (project closing)◦ US$9 million for grant support for the SHS

and mini-grids◦ US$6 million TA for SHS testing facility,

training, environment management support, and capacity building for carbon finance

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Carbon FinanceCarbon Finance

World Bank is helping Bangladesh claim carbon credits for SHS◦ Emission Reductions Purchase Agreement

(ERPA) signed with IDCOL and Grameen Shakti◦ Validation process ongoing

Registration with the UNFCCC is at final stageWorld Bank is also exploring options to purchase carbon credits beyond Kyoto Protocol (2012)

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Going ForwardGoing ForwardWe look forward to continued successful implementation of the SHS program during the remaining period before project closing (December 2012)Expectation is that other development partners will augment support to help IDCOL achieve its target of 2.5 million SHS by 2014IFC sub-national finances can be explored to meet the remaining funding gap of the SHS program

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Future Support to Renewable Future Support to Renewable Energy Energy

Bank is supporting a study to assess the renewable energy potential in the country◦ Identify renewable energy options that are economically

feasible◦ Provide an action plan for tapping the renewable energy

potential ◦ TOR is being finalized in collaboration with the SEDA cell

of Power DivisionEstablishment of Sustainable Energy Development Agency (SEDA) will be critical for Bangladesh◦ IDCOL as the financier cannot effectively play a project

development role◦ Appropriate policy and regulatory environment is needed◦ Bank stands ready to support operationalization of SEDA

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Thank YouThank You

Questions?

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