World Bank Support to Solar Energy in Bangladesh

Zubair K M Sadeque Energy Finance Specialist The World Bank

Background
World Banks support for Rural Electrification
Rural Electrification and Renewable Energy Development (RERED) Project approved in 2002
Grid electrification support to Rural Electrification Board (REB)
The main component of the original project Supported 650,000 new connections Supported GOBs rationalization program System loss reduction component Component largely completed satisfactorily

Support for Off-grid electrification

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

Support to SHS Program

Original 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 REB
IDCOLs ownership model proved effective Target was achieved within 2 years World Bank continued to support the fast growing program
Through project cost savings and reallocation from the grid component Provided support for a total of 236,000 SHS by 2009 under the original credit

REBs fee for service model was not as effective

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

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Due to neglect in system maintenance by consumers as they dont own the systems, institutional constraints of REB etc

Support to SHS Program

The continued growth of the IDCOL program required more funds
World Bank responded with an additional financing of US$130 million in 2009
US$100 million for SHS and renewable energy mini-grids
Achieved 336,000 SHS against a target of 300,000 SHS Supported 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

Continued 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 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 stage World Bank is also exploring options to purchase carbon credits beyond Kyoto Protocol (2012)

Going Forward
We 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 2014 IFC sub-national finances can be explored to meet the remaining funding gap of the SHS program
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Future Support to Renewable 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 Division 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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Establishment of Sustainable Energy Development Agency (SEDA) will be critical for Bangladesh

Thank You
Questions?