Power from the Sun
Only two hours away from
Dhaka, life is surprisingly different in Dakatia , a
small village under Munshiganj district. As night falls
darkness descends in the neighbourhoods. The weak slim
flame from the kerosene-burning kupi and hurricane is
no match for the deep darkness of the village nights.
Here sunset means more than just the end of a day, it
means the end of all forms of activity. The only thing
one has to do then is retire to bed.
Dakatia is certainly not the only village
where life halts at sunset. There are thousands of villages
across the country where people do not have access to
simple household conveniences basic to modern living
like light, fan, television, fridge and many more household
appliances, because they don't have electricity. Access
to electricity is still a privilege only a few urbanites
can enjoy while the majority of village folk have to
depend on lanterns.
Electricity would not only allow this
large village populace a few extended hours of work
but also open up opportunities to involve themselves
in many new income-generating activities. Grid-based
electricity is extremely expensive and the best option
would be to opt for renewable energy, which can be reached
far more easily and quickly to these power-starved areas.
Infrastructure Development Company Limited (IDCOL),
a government financial institute, through its renewable
energy programme has shown the great potential of solar
power in bringing about a positive change in our social
and economical life. SWM ventures to find out how.
are a power-starved nation. Access to electricity in
Bangladesh is one of the lowest in the world -- around
70% of the total population do not have electricity.
To put it in another way, among some 30 million families
about 23 million families are now deprived of power,
most of who live in the rural areas. Neither is there
any realistic chance that these rural people will get
electricity any time soon. Rural Electrification Board
or REB, the institution created to facilitate electricity
in rural areas, is currently providing 5 lakh new connections
a year. At the present pace of installing new connections,
it will take at least 50 years to reach our target of
electricity for all. On an average each connection costs
Tk 6,000, so approximately 25 thousand crore Tk will
be required for transmission and distribution purposes.
An estimated 50 thousand crore Taka more is needed to
generate the additional 15,000 megawatts to supplement
the existing about 4,000 megawatt power to provide electricity
throughout the entire country.
The question is where do we get this
huge amount of money and how long do we have to wait?
Along with speeding up of the on-going electrification
process we will have to think of alternative means of
power generation using renewable energy, such as solar,
mini-hydro, wind and biomass energy etc. In fact, some
works have already been done in the last 6 or 7 years,
but in too small a scale to be noticeable. Local Governemnt
Engineering Department (LGED), Grameen Shakti, Bangladesh
Rural Advancement Committee (BRAC), Centre for Mass
Education and Science (CMES) and a few other organisations
have been trying to use solar energy since 1996. In
the last one year, that is 2003, this venture of installing
solar power system acquired a momentum with IDCOL (Infrastructure
Development Company Limited) getting into the act.
was created by the Government of Bangladesh (GoB) and
financed by the International Development Agency IDA.
IDCOL, in addition to financing infrastructure project
is also financing renewable energy to help Bangladesh
accelerate its electricity access rate promoting mainly
Solar Home System (SHS) and a few wind, mini-hydro and
biomass energy projects in rural areas. The initial
project period was five and half years and IDCOL was
given a target of financing 50,000 SHS by the stipulated
time. By installing 12,000 SHS within a year, against
a tar get of 6,000 in the first year, IDCOL has set
a new target for itself : " We hope to achieve
our target of 50,000 SHS in three years time,"
says Dr Fouzul Kabir Khan, Executive Director and CEO,
IDCOL. IDCOL's success of reaching double its annual
target proves one thing beyond any doubt--the huge potential
of renewable energy in terms of popular acceptance in
Bangladesh. If the momentum occasioned by IDCOL can
be sustained, the piteously low rate of access to power
can be raised to a respectable position in the near
illustrates various aspects of SHS that make it preferable
to other alternative means of power generation. It is
easy to install, doesn't require any specialised training
to install and takes less than two hours to set up.
It is also easy to operate. With no electricity bill
to pay in this system there is no scope of corruption.
Solar energy, moreover, is environment friendly, because
it is clean and doesn't produce residue and unpleasant
odour. Another advantage of solar power is that it can
be installed anywhere and requires no extra space. Especially
in places where habitation is sparse as in the hilly
areas or an area surrounded by jungles or water bodies,
solar power is certainly the best option. There are
many places where setting up the conventional electrification
system is not economically viable. If there are a few
households in a char, far away from the mainland, providing
power in the conventional means is not feasible there.
Unlike the conventional electrification system which
requires high poles, transmitters and long electric
wires, a Solar Home System is self-sufficient and therefore
affordable and preferable in difficult areas.
renewable energy programme has not only provided electricity
to remote rural areas but in the process has created
new job opportunities. The eight participating organisations,
which are providing SHS for IDCOL, have recruited some
500 young men, both skilled and unskilled, for this
programme. Besides a good number of Diploma Engineers,
around 188, technicians, around 356, accountants, around
11, have been recruited in the last one year.
Local manufacturing companies have also
been benefited from IDCOL's programme. Except for the
PV module all the components required for an SHS system
such as battery, charge controller, solar lamp and switch
are produced locally, so a rise in the sale of SHS means
more business for the local industries. Besides, charge
controller and solar lamp workshops provide poor women
with a job opportunity. Rahimafroz, a supplier of batteries,
for example, has doubled its capacity after the successful
commencement of the project. "So, job opportunities
were created even there and, provided we can keep up
our good work, there will be many more new jobs,"
the 10,000th SHS
On 25 December 2003, M Saifur Rahman, Minister for Finance
and Planning inaugurated the 10,000th SHS under IDCOL
financing at the residence of a grocer Ankar Mia at
Rajnagar, Maulavibazar. While inaugurating the system
he lauded IDCOL's initiative and congratulated both
IDCOL and its POs for their work. He also suggested
that the government will consider providing additional
subsidies to popularise SHS.
Access to power can make a world of
difference. The 12,000 households in the remote rural
areas have been changed forever. The nights are no more
dark and full of silence and inactivity, but bright
with lights and full of life. Students no more have
to strain their eyes in the weak light coming from kerosine
lamps and hurricanes. The dull evenings that were spent
waiting for sleep is now full of fun and entertainment,
thanks to television. Entertainment aside, television
has also provided them with access to information and
they are certainly more conscious about things that
never crossed their minds before.
Different types of economic activities
in the rural areas have also been boosted. Working hours
that formerly ended with the sunset have now extended
late into the night allowing small businessmen, weavers,
tailors, hair dressers, and handicrafts makers extra
hours and, of course, extra income. Another crucial
contribution electricity has brought about is women
in the rural areas no more suffer from the insecurity
of walking in the dark.
If solar power can be used to its fullest
potential it will bring a sea change in rural lifestyle.
what is a Solar Home System or SHS?
The SHS is a means of supplying power using the energy
from sunlight. A typical SHS operates at a rated voltage
of 12 Vdc (?) and provides power for small electrical
loads such as fluorescent luminaries, radio, cassette
players, small black and white television or similar
low-power appliance for about four hours a day. An SHS
consists of PV (Photovoltaic) module, charge controller,
battery, DC lights and cables, fuses and light switches.
The Photovoltaic solar module converts the solar energy
to electrical energy and this output power from the
solar module charges the battery. The charge controller,
positioned between the solar module and the battery,
is meant to protect the battery from overcharging and
discharging below their cut-off voltage, which may cause
permanent damage to the battery. An SHS generally comprises
2 to 8 DC lights in range in wattage from 6W to 20W
depending on the capacity of the module.
SHS however, is by no means is cheap.
A 50Wp system that can provide power for 4 DC bulbs
and one black and white television costs Tk 22,750.
However, since the target group of buyers is generally
lower income group people, under IDCOL programme the
Participating Organisations (POs) provide an installment
facility to make it affordable. For example, one has
to pay an initial down payment of Tk 3,375 and a monthly
installment fee of Tk 627 for three years, and then
he/she becomes an owner of the SHS. Khan concedes that
it is a little expensive, but it's a good investment
for the long run, he claims: "The photovoltaic
panel is warranted for 20 years and battery for 5 years.
So after paying off one becomes the owner of the system
within 3 years, which he/she will be able to run for
at least 17 years more. It requires little maintenance
costs and the only major part he needs to buy during
this 17 years period is battery. When you take all these
factors into account it isn't all that expensive."
does it work?
IDCOL doesn't work all by itself. It acts through the
Participating Organisations that include NGOs, Microfinance
Institutions and other entities by channeling IDA fund
and GEF (Global Environment Facility) grant. At present
IDCOL is working in collaboration with 8 POs namely
Grammen Shakti, BRAC Foundation, Coastal Association
for Social Transformation (COAST) Trust, Thengamara
Mohila Shabu Shangha (TMSS), SRIZONY Bangladesh, Centre
for Mass Education in Science (CMES), Shubashati and
Integrated Development Foundation (IDF).
After the POs are selected they enter
into an agreement with IDCOL that categorically spells
out how they select the project area and target potential
customers, and how they will extend loans, install the
system and provide maintenance support. IDCOL on its
part provides grants and refinance, sets technical specification
for solar equipment, develops publicity materials, and
provides training and monitors the PO's performance.
Khan believes that the Participating Organisations deserve
as much credit as does IDCOL for making the renewable
energy project a success. "Without the great network
of these organisations spread out all over the country
as well as commitment and hard work of their staff we
could never materialise this project," Khan remarks.
Secret to IDCOL's Success
The success of IDCOL's was possible
due to the visionary and dynamic leadership of IDCOL's
Executive Director and CEO Dr Fouzul Kabir Khan(FKK).
He shares his experiences and future plans with SWM.
What is the secret behind your success, especially when
most other foreign funded projects have miserably failed
to produce any results? And what have been the main
constraints you have had to overcome?
Actually, our experience is rather mixed in managing
two World Bank funded projects on behalf of the government.
In the renewable energy development project, in the
first year, we have financed nearly 12,000 solar home
systems (SHSs) against the target of 6,000. However,
our achievement is more modest with respect to financing
private sector infrastructure projects: we have invested
$80 million in a 450 MW power plant.
The success of renewable energy development
project is attributable to: (a) the project providing
for a critical need of our energy-starved country; (b)
our involvement in designing the project; and (c) existence
of a decent renewable energy programme of Grameen Shakti,
BRAC, LGED and others. Most importantly, we were able
to combine the social responsibility of IDCOL as an
government institution, international experience of
the World Bank, grassroots experience of the NGOs, dynamism
of private business, technical expertise of local academics
and consulting houses in our programme. Our contribution
relates more specifically to the acceleration of the
existing programme. During 1996-2002, in six years,
about 9,000 SHSs were installed in Bangladesh; whereas,
we financed about 12,000 systems in 2003 alone. That's
the key to development-- to do things in a year that
took six years in the past; do things in a month that
took a year.
The major challenge, however, was to
design a programme that would work under local conditions.
A programme working in one country may not work in another.
Fortunately the World Bank helped us to develop a programme
suitable for Bangladesh.
IDCOL is supposed to invest private sector for infrastructure
developmentthen how come you have managed to invest
only 80 million dollars when IDCOL has access to a fund
worth 225 million dollars?
Private sector participation in infrastructure is a
relatively new concept in Bangladesh. When the project
was prepared, it targeted to finance several infrastructure
projects through private sector participation. Some
of those projects in IDCOL's pipeline, namely, SSAB
Container Port in Chittagong, 300,000 Fixed Telephone
Lines, Meghnaghat Phase-II, Baghabari Power Plant, etc.
either did not materialise or were delayed, denying
us the opportunity to make investments. Moreover, in
recent years there has been a downturn in the private
sector interest to invest in infrastructure projects
in recent years. In addition, the project did not allow
financing of captive infrastructure, making local currency
loans and equity investments. All these limitations
in project design also caused similar projects implemented
in Sri Lanka and Pakistan to run into difficulties like
Under the project, IDCOL could finance
only those private sector infrastructure projects for
which the relevant government agency has followed "International
competitive bidding (ICB)" procedure to select
the sponsors or the sponsors will have to follow ICB
for its downstream procurement. While ICB works fine
with public procurement, both government agencies and
the private sector are reluctant to follow ICB procedure
in public-private partnership projects. Notably, IFC,
an affiliate of the World Bank and the Private Sector
Group of Asian Development Bank do not require ICB,
when making loans to private sector projects.
From the beginning, we have raised these
issues with the World Bank. The Bank has recently agreed
with the government to allow local currency loans. We
are optimistic that, working with the World Bank, we
will be able to restructure the project and achieve
its objectives. In addition, we have been authorised
by the government to invest re-flows from our power
plant loan. We believe that we have now turned a corner
and look forward to making local currency loans to local
There are various forms of renewable energy. Why has
IDCOL opted for solar power instead of, say, windmill
Initially, we opted for solar energy because of its
demonstrated potential. However, we have recently initiated
feasibility study for 3 micro-hydro, 2 biomass and 2
What is your future plan with the solar power project?
Is IDCOL contemplating to work on any other renewable
In the next phase, we are getting private businesses
involved in the programme. Given, its enormous potential,
we need to commercialise renewable energy in future
and involving private businesses is the right way to
What can the government do to expedite this project
so that a larger number of people get solar energy more
quickly? And who else (for example media) can play a
role here except the government?
IDCOL is a fully government owned institution.
IDCOL, on behalf of the government, is already channelling
Global Environment Facility (GEF) grants and providing
concessional re-financing to the POs. The government
has also exempted SHSs from import duties. To accelerate
the programme further, we have to lower SHS prices and
commercialise it. The solar panels, the single most
expensive (about 60%) component of the SHSs, are now
imported. As the market grows, plants for manufacturing
solar panel may be set up by the private sector in the
country. This would lower system costs and make it more
We cannot expect to achieve the goal
of "electricity for all" by 2020 by relying
solely on expansion of grid based electricity. We have
to provide different kind of electricity based on realistic
assessment of availability of resources for grid-expansion;
and needs, ability to pay, and location of different
type of consumers. Renewable energy, such as solar energy
is not a substitute, but could become a useful complement
to grid-based expansion. Media has an important role
to play here in educating people that there are different
energy solutions for different groups of people. But
we must provide basic electricity to all.
IDCOL's success can be a good example for others who
want to work for the development of the country. What
can you do so that others know about this institution
and its success story?
IDCOL was designed to have a finite life -i.e. to end
with the project. But we felt that the country needed
a development finance company and converted IDCOL into
an institution that is financially independent of both
GOB and donor agencies to meet its operational expenses.
We also had a very successful knowledge transfer programme.
Now Bangladeshis are doing most of the work previously
done by foreign consultants. IDCOL is now fully equipped
to work with the World Bank in other projects and multilateral
agencies such as ADB, DFID, UNDP and similar agencies
that may require our financial services. Most importantly,
IDCOL will continue to work for the Government and the
people of Bangladesh as their prime development finance