Green energy schemes need a push: analysts

The government should incentivise green energy schemes in order to achieve the goal of producing 10 percent of total power through renewable sources by 2021, said industry stakeholders yesterday.

At present, 200 megawatt of electricity is generated from renewable sources, meaning an additional 1,800 MW of power needs to be produced from green sources over the next five years to attain the goal.

The 9 percent interest under Bangladesh Bank's refinance scheme is relatively high when compared to the overall interest rate for commercial loans, said Siddique Zobair, member of Sustainable and Renewable Energy Development Authority (SREDA).

Zobair's comment came at a roundtable on Green Banking for Sustainable Energy Development held at The Daily Star Centre in the capital.

The Bangladesh Institute of Bank Management (BIBM), SREDA, German Federal Enterprise for International Cooperation (GIZ) and The Daily Star jointly organised the event.

In 2009, BB set up a Tk 200 crore revolving fund for banks and financial institutions to give loans at low interest rate to solar energy, biogas and effluent treatment ventures.

Under the scheme, the central bank provides funds to financial institutions at 5 percent interest, which then provide loans for renewable schemes at 9 percent interest.

Zobair went on to urge the central bank to reduce the interest rate, as the money allocated for green projects is not being gainfully used.

In response to the call, BB Deputy Governor SK Sur Chowdhury, who moderated the discussion, said the market forces will automatically determine the interest rate.

“We are trying. We are working on it,” he added.

Some discussants said bankers do not always give loans for green projects despite the demand for finance.

“A mere policy on green banking will not be enough. There should be clear instruction to bankers to grant loans for green schemes,” said Arun Karmaker, special correspondent of Bangla daily Prothom Alo. Bangladesh's dependence on import of fuel to produce electricity is rising. “It is dangerous from the energy security point of view,” he said, adding that more emphasis should be given to explore domestic sources of energy.

In response, Chowdhury said banks are given disbursement targets and BB regularly monitors it.

“There should be incentives for green projects,” said Saiful Huque, professor and director of Institute of Energy of the University of Dhaka.

Huque also stressed the need for monitoring operation and maintenance of solar home systems.

“Sustainable energy projects should be self-sustainable,” said Zahurul Haq, professor of the department of mechanical engineering at Bangladesh University of Engineering and Technology.

He also emphasised knowledge gathering on green energy.

BIBM Director General Toufiq Ahmad Choudhury said financing has to be reorganised as sustainable finance for development.

Per capita consumption of electricity is significantly lower in Bangladesh than in Asia, according to Shah Md Ahsan Habib, professor and director of training at BIBM.

Renewable energy accounts for only 4 percent of total electricity generation, he said.

Time has come to revisit green banking strategy and sector gaps to streamline existing efforts, said Al Mudabbir Bin Anam, senior adviser of Sustainable Energy for Development of GIZ.

Bangladesh has got very limited land to expand solar energy to a large extent, said Humaira Azam, deputy managing director of Bank Asia.

“Bangladesh has a huge population and a huge amount of waste is produced here. Waste management and their use for power generation are critical,” she added.

The potential for energy generation from waste is huge, said Shahed Khan, joint secretary of Bangladesh Bio Gas Development Foundation.