1.

Brief Overview of Renewable Energy in Bangladesh

Overview

Renewable energy provides a significant potential source of energy with benefits of reduced negative environmental impacts, provision of electricity in remote locations(off grid locations), also the fact that only 35% of the countrys 15 million population have access to electricity, and hence reduced reliance on fossil fuels which are either imported(oil) or depleting(gas reserve). Bangladesh government has a vision to make electricity available for all by 2020. But to meet electricity 100% by 2020, Bangladesh need to increase generation every year by 1000 MW. But Government of Bangladesh do not have sufficient fund to meet this goal, so it must welcome foreign investors and donor organizations to invest in the power sector. The government has drafted a Renewable Energy Policy which is expected to be finalized very soon. However, current share of Renewable Energy Technologies (RET) in electricity production is very low. Conventional hydro produces only 4% of electricity. Solar and wind contributes less than 1% at the time. The government proposed target is to generate power utilizing new renewable technologies to share 5% of total electricity demand by 2010 and 10% by 2020. Energy experts believe solar has brighter future in Bangladesh compared to other renewable sources (please refer to the below table) Renewable Advantages Disadvantages Source Wind power - Clean - limited only - 724 km to coastal coast areas due to - Many small availability islands of steady wind - Cost Solar Power* - Plentiful - Expensive - Clean - Easy to use in rural areas and decentralize d areas - Commerciali zation of solar is a distinct possibility now Hydroelectric - Clean - Limited by

Suitable geographic location for solar energy

As experts pointed out during the interviews for this research, that there is immense potential for the use of solar PV technology in Bangladesh. Photovoltaic is a proven viable option in remote areas. Also the fact that solar irradiation in different regions of Bangladesh is sufficient for cost effective application of solar photovoltaic electrification. Geographically, Bangladesh is situated in an ideal location for solar energy utilization. Average solar radiation varies between 4 to 6.5kWh each day. At a minimum, Bangladesh receives about 4.5kw-hr/m2 per day while the global rate varies between 3.8 to 6.4kw-hr/m2 per day. Maximum amount of radiation is available in the month of March April and in December January. According to scientific studies, the yearly direct solar energy available in the whole of the country is estimated to be 25,610 million tons of coal equivalent. Therefore, experts believe that solar photovoltaic applications can be implemented on a large scale in Bangladesh. Solar power utilization is being accepted gradually, but its slow progress is due to high initial cost, low daily operation time, and lower output levels. Bangladesh is ideally located for trapping solar energy effectively. The period of February to June provides excellent sun coverage over Bangladesh, followed by reasonably good sunshine during September and October. The winter months of November to January and the peak monsoon months of July and August are less reliable for sunlight. But in spite of having a long rainy season, the overall solar energy resource in Bangladesh is a very promising one throughout the year. Bangladesh is continuing its efforts for harnessing its solar power for reaching electricity in remote rural areas, where supply of traditional electricity will not be possible in foreseeable future. The people in these areas will need electricity for household use as well as for running hospitals, vaccine refrigeration, telecommunication, cyclone shelter and navigational lighting system. Although there are good prospects for solar PV system in Bangladesh, potential commercial market development has rather been limited. The government (funded by the international donors), private sectors and NGOs are taking increasing initiatives towards development of solar energy utilization in the public sector as well as off-grid locations.

Carbon Trading Opportunity

2.

Electricity Generation Situation & the Development Plan

Banglades hs Power situation

Bangladesh is an energy starved country with per capita energy consumption is only 136kwh which is one of the lowest in the world. Only 35% of the people have access to grid electricity, most of them living in the urban areas.

35%

Off-Grid Area Grid Area

65%

Another important feature of the rural market is that only 20% of the rural people have electricity. In the absence of grid electricity, most rural people depend on kerosene lamps for light.

Vision 2020 Developm ent Plan upto 2020

Items Installed Capacity, MW Peak Demand, MW Net Generation, Mkwh No. of customers, million Per Capita Generation kwh Access to electricity Investment requirement ($in billion) 2003 4,710 3,622 18,458 7.1 144 32%

Year 2007 2012 6,716 9,810 5,368 28,651 9.0 190 47% 3.60 (2004 07) 7,887 39,157 12.5 260 65% 4.50 - (2008 12)

2020 17,500 14,600 79,250 24.30 470 100% 7.00 - (2013 20)

The above table suggests Bangladesh governments ambitious plan related to power generation, with ever depleting gas and not yet realized planned coal extraction for power generation, the importance of solar energy in the total energy mix cannot be over emphasized.

Commercia lization of Solar Energy in Banglades h

Although the renewable energy including solar energy systems is yet to assume commercial dimensions but experts believe that commercialization of solar PV technology is a distinct possibility now. Some niche opportunities already exists in the telecom sector, where mobile phone companies are seeking hybrid (power generator and solar panel) solutions for network stations situated all over Bangladesh. Companies like Rahim Afrooz, a commercial organization active in the solar energy sub-sector, have provided one such hybrid solution to Grameen Phone (the largest mobile phone service provider in Bangladesh) recently. To Grameen Phone, solar energy brings a no. of benefits: o Green energy which supports CSR(corporate social responsibility) concept o CDM : emission reduction carbon credits o Potential cost savings over the period of the life of the product Encouraged by its success after implanting one hybrid power system, Grameen Phone is now actively considering installation of similar systems in other stations country-wide which would cost approx. BDT 150 crore. Similar opportunities exists in the telecom sector with other mobile phone operators, such as Banglalink, AKtel, City Cell, Warid telecom etc. Experts believe, other industrial organizations (both local and foreign) may pursue similar strategies in future. The General Manager of Rahim Afrooz commented that our company being the largest battery, inverter circuits manufacturer and CFL (energy saving lamps) supplier in the country, we are in an ideal position to play an important role in the commercialization of solar PV technology in corporate Bangladesh. Rahim Afrooz has set standards for charge controllers, inverter circuits and lamps and develop local production of all components other the solar module. Elaborating on the variety of target customers, the General Manager of Rahim Afrooz commented that our experience ranges from Solar Home Systems (SHS), vaccination refrigeration, water pumping, drip irrigation, telecom back up system. Perhaps the most encouraging news was that the Bangladesh government have decided in principle to bring changes in the existing building code making installations of solar panels on top of high rise buildings mandatory/compulsory to reduce

The Governme nt will make installatio ns of solar panels mandatory

Solar Power in Banglades h

Of all the renewable technologies (except for hydro) Bangladesh has made the greatest progress in solar energy. In 2007-08, about 80% of power generation from renewable sources was from solar energy. From currently installed capacity, more than 8MW electricity can be generated every year. Solar energy generation in Bangladesh is achieved by the use of PVs, mostly in the form of small home systems (SHSs). These SHSs are installed in rural areas of Bangladesh, which so not have access to conventional grid connected electricity. REEIN (Renewable Energy & Environmental Information Network) Bangladesh reported that as of May 18, 2008, 198,842 SHSs have been installed in the country. A number of non government organizations (financed by IDCOL) are selling the solar PVs, performing installations and providing all sorts of after sales services. Bangladesh is located at a very suitable geographic location to generate a huge amount of power. The solar and wind energy resources assessment project (SWERA) states that the total yearly amount of solar radiation available in Bangladesh is 10,000 times the current electricity generation. Such estimates leads to the conclusion that even if the country uses 1/1000 of the entire surface of the country (at minimum 10% level of efficiency) it can generate the same amount of electricity as produced by all conventional sources. The World Bank estimates that there are about 4.8 million people in off-grid locations who have the need for SHS. However, only about 5% of the off-grid household demand has been fulfilled or met at present. The government of Bangladesh has planned to increase the number of SHSs to one million, but such an increase will only serve a small share of untapped market. Therefore, huge market expansion possibility exists in terms of installing SHSs. Another potential direction of SHS expansion could be the installation of these systems in urban areas as a back up during power outages. Stand alone solar PV systems are larger than the SHS, already installed in off-grid locations in Bangladesh. For example, hospitals, handloom units, rural markets and commercial centers have been identified by SWERA-Bangladesh project to be very suitable targets for solar PV systems. There are 1383 hospitals, and about 212,481 handloom units. A world bank

Banglades hs advantage & Opportunit y in solar energy

Opportunit y of Solar PV manufactu

IDCOL & the success of Solar Home Systems in Rural Areas

System. Solar telecom system for BTS tower, solar water heater, solar home appliances with the help of their foreign partner. This is noteworthy, beside SHSs rest of other products is being imported as CKD form.

IDCOL Programs Major Participati ng Organizati ons & their role

and most of the that Although there has been attempts made by government and non-government organizations and development partners over the last three decades but the real success of solar home system was realized through the introduction of IDCOL in 1998. Infrastructure Development Company Limited (IDCOL) is the only local public-private financial institution and the largest financial institution working for the promotion of renewable energy in Bangladesh. It is funded by multilateral agencies i.e., World Bank, Kfw, GTZ, SNV, ADB and others. It works to provide soft loans, grant and technical support for the promotion of solar home systems across Bangladesh. IDCOL works closely with NGOs/MFIs (micro credit financing institutes) and private businesses to implement its solar program in Bangladesh. The main role of the partner organizations is to select project areas, potential customers, extend loans, install the systems, and provide maintenance support. Except for providing grants and loans, the IDCOL also sets technical specification for solar home systems, provides training and monitors the performance of partner organizations (POs). o IDCOL provides grants, refinance and technical assistance to POs o Participating Organizations (POs) implement the project through installation and maintenance o Local and foreign suppliers of SHS components o Technical Standard Committee (TSC) sets the technical specifications for solar home systems As per agreement with World Bank, IDCOLs initial installation target of solar home systems was 50,000units by the end of June 2008. It was decided to implement the solar home systems through the partnership with 15 partner NGOs who have the micro credit experience. This was seen as important because the target population do not have access to the grid, they have limited purchasing power, and role of micro credit

IDCOL grants and financial terms

Componen ts of Solar Home System

A solar home system includes the following: o Photovoltaic module o Battery o Charge Controller o Inverter o CFL lamps, solar LED lantern o Cables & Switches Except for the solar PV module, other components are produced locally. Rahim afrooz, a renowned local battery supplier and exporter, has doubled its capacity to meet the demand of the IDCOL solar project. It has been reported that Grameen Shakti, the largest NGO working in the solar sector, holding more than 65% share in SHS system installation in Bangladesh, have signed a joint venture agreement with a German company to assemble Solar PV panels locally. Year 2003 2004 2005 2006 2007 2008 2009(proje
cted)

Local Production

Installatio n of SHS under IDCOL Solar Energy Program

Annual Installation 17,000 20,000 25,000 36,000 70,000 85,000 115,000

Growth Rate 17.64% 25% 44% 94% 21.4% 35.3%

Source: IDCOL Major NGOs & their target Grameen Shakti : the company has installed approx. 130,000 SHSs in rural Bangladesh. The companys solar photovoltaic (PV) program is internationally renowned. Grameen Shakti is one of the fastest growing rural based renewable energy companies in the world. The company has a plan to install 1 million SHSs by 2015. BRAC Foundation: BRAC is arguably the largest NGO in the world and their renewable energy organization BRAC Foundation have installed around 40,000 SHS units. They have a plan to install more 50,000 units of SHS by 2011. Rural Services Foundation (RSF): RSF is the third largest participating organization in IDCOL solar program. They have a plan to install 30,000 units of SHS by 2011.

Installatio n of SHS by organizati on

Renewable Energy & Environmental Information Network (REEIN) reported that as of May 18, 2008, 198,842 no of SHSs have been installed. The following chart shows the number of SHSs installed by non-government organizations under IDCOL solar program:

Source: Renewable Energy Info Network (REEIN) Other Solar Programs in Banglades h Besides SHS, there is another market for solar panels which lies with the public /government sector, funded by the donor agencies. The below is a typical example of a project.

Sustainable Rural Energy (SRE) Project: The project was undertaken by the Local Government Engineering Department (LGED) with the support from the UNDP. The objective of the project was the demonstration of renewable An energy technologies, capacity building for technology transfer Example of and wide dissemination of those technologies in the off-grid public areas. By September 2007, LGED procured the following PV sector systems under the project loan, financed by UNDP. procureme nt More specifically, Under the project, LGED procured solar PV modules of following capacities: o 225Wp PV solar lighting system at Sherpur area o 10kw pilot wind solar hybrid power generation units at the St, Martin islands o 2.6KWp SHS in 35 houses in Thakurgaon district and 1.7KWp SHS to a cluster of villages in Sherpur area

Suggestio ns for Korean companies to be competitiv e in governme nt procureme nt

Government organizations such as LGED, and to a lesser extent REB(Rural Electrification Board) and BPDB (Bangladesh Power Development Board) procure solar PV modules time to time by inviting international tenders. Korean companies may take part in such opportunities to supply solar PV modules in collaboration with their local representatives/agents. Role of local agent cannot be overemphasized, as advance information on these tenders is important in order to be competitive in the tender bid and also because government tender projects involve huge paper work from the suppliers/participants. A good agent can provide advanced tender information due to his connection with the government and can work out a strategy with the Korean supplier to win the tender. Except for the solar PV module, other components are produced locally. The approximate market size for solar PV modules in Bangladesh is $ 14.8 million. Since there is no local manufacturing of solar PV modules in Bangladesh, the demand trend for solar PV panels must coincide with the year-wise import statistics, collected from Bangladesh Bank as below: HS Code (Amount in USD) Year* Annual Import 2005-06 3,906,414 2006-07 13,825,488 14,787,912 2007-08 :8541.40.10 Growth Rate

Demand of Solar PV Modules in Banglades h

(So urce: Bangladesh Bank) * year means a fiscal year, that starts in July and ends in June in the following year The above suggests a phenomenal rise of import of solar panel during the period 20067-07 over the previous year. Fiscal year 2007-08 maintains a positive growth rate as well. The above figures are in line with annual installations of SHSs, currently regarded as the largest and the fastest growing market segment in the solar energy market in Bangladesh. The following is the country-wise import statistics for the year 2007-08 (A mount in USD)

Countrywi se Import Statististic s

4.

Competitive Landscape

Market Share of Different Brands

15%

3% 2% 5%

Kyocera, Japan BP Solar, India Contennial Solar, Canada Suntech, China Others

75%

(Source: the importers & agents) The above chart shows that Kyocera is clearly the market leader with 75% market share. The local agent informed that although it is a Japanese brand, Kyocera is mainly imported from Singapore. The Singapore office, Kyocera Asia Pacific Pte. Ltd., receives L/Cs directly from the local buyers such as the NGOs etc. All the above brands are registered with IDCOL, the financial institution, a necessary prerequisite for doing business in IDCOL supported solar program. In 2008, two more Chinese company have been registered with IDCOL, namely Yingli Solar and Solar land. While Kyocera is represented by Bangladesh Advanced Energy Systems, Suntech, Contennial Solar are being represented by Rahimafrooz Renewable Energy Ltd. So far, there is no Korean company registered with IDCOL, the government organization in Bangladesh.

Price (C&F) of Solar PV Panel

All the registered brands are supplying the solar PV panels at the below price range: C&F price ranges between UDS 3.20 to USD 3.60 per Wp for each solar panel. The agents informed that the price has slightly gone up due to the higher prices of silicon in the international market. However, Kyocera being a leading company in the world, is in a position to leverage from its global business (forward contract of raw materials such as silicon) and could offer a competitive price for Bangladesh market. Kyocera is offering a product warranty period of 20 years for the solar PV modules. Currently IDCOL allows photovoltaic modules in the capacities from 16W to 220W for IDCOL solar program. For example, Kyocera has got the approval for the following ranges: 40W, 50W, 60W, 65W, 70Wm 80W, 85W, 120W, The most sellable wattage is 40W & 65W. Other capacities also have a moderate to good demand.

Approval from the Technical Committee

To be able to supply Korean PV modules in IDCOL solar program, the Korean supplier would have to get the product approved by the IDCOL technical committee. The committee consists of IDCOL and government officials & academicians from BUET (Bangladesh University of Engineering &Technology). Each month they hold one technical committee meeting and they consider application from a foreign supplier. It may take 1 month to 3 months to get an approval from the committee. However, local agents influence and proactive role is considered important in getting the approval in a quick time. The Korean company will have to apply to IDCOL (preferably through local agent/representative) in the below address: Executive Director & CEO Infrastructure Development Company Ltd. UTC Building, 16th Floor, 8, Panthapath, Kawran Bazar, Dhaka-1215 The following are applicable standards for PV modules: o International Electro technical Committee (IEC) 61215 certification: Crystalline silicon terrestrial PV modules design qualification and type approval o IEC 616646: Thin film silicon terrestrial PV modules design qualification and type approval IEC 60904 -1: Photovoltaic devices part 1 measurement of PV currentvoltage characteristics o IEEE 1262: Recommended practice for qualification of photovoltaic modules o IEEE 1262: Recommended practice for Qualification of PV o PV GAP recommended standards are preferred o The photovoltaic array will consist of one or more flat plate photovoltaic modules. Each module should comprise of no less than 36 series connected single or poly crystalline silicon solar cells. Flat plate thin film modules could also be used o The photovoltaic module should have a peak power output of at least 30wp o All modules must be product tested and certified o Each module must be factory equipped with weather proof junction box with terminal strip that allows safe

Required Technical Specificati on for PV Module

Market Opportunit ies for Korean Supplier of PV Modules

SHS Market: IDCOL estimates that only about 5% of the offgrid household demand has been fulfilled through IDCOL solar program. As the government is planning to increase the number of SHS to one million, there lies a vast opportunity for Korean supplier in this important segment of the solar market. Urban Market: Another potential direction of SHS expansion could be the installation of those systems in urban areas as a back up during power outages. Business Segment: Tap into business segments with larger stand alone PVs: Experts suggests that there are nearly 10,000 rural markets and commercial centres in the country which are excellent markets for centralized solar photovoltaic plants. Private companies with conventional back up power generation system: Experts commented that most of the big users (Steel corrugation and re-rolling mill owners) own diesel and gas generators as back up, they want to switch to hybrid solutions with solar panels but fear that the initial invest would be too high. Growing awareness of carbon trade and how the system could work in their favor and corporate social responsibility as well as some sort of favorable financing arrangements could make it very good opportunity for solar energy solution providers in the future. Real Estate Sector: There will be a viable commercial market for solar PV panels in the real estate/housing sector, if existing building code has been changed and government make it mandatory for high rise buildings to use solar panels at the roof top. Opportunity in the telecom sector: Also there exists an opportunity in the telecom sector, specifically. Grameen Phone, the countrys number one mobile phone service company have installed 4,000 units of solar PV modules in 2007, following the success of two pilot hybrid projects installed in two of the mobile network towers. Grameen Phone is going to purchase another 12,000 units within 2008. The company has already floated a tender in this connection. They will install the solar panels as a hybrid solution to their existing power back up system for network towers. Two of the earlier pilot projects were installed by Rahimafrooz in 2006. Grameen wants to showcase this as a part of their corporate social responsibility drive. Similar opportunities exist with the

Marketing of Korean Solar PV Panels

Distribution & Sales Channels: The primary channel for selling Korean solar panels in Bangladesh is through a resident agent or representative (indenter or distributor). In the private sector businesses and non government organizations prefer deals with exclusive agents to solve possible future technical problems. It is also helpful for a Korean supplier to have an exclusive agent in order to monitor the progress of an approval from IDCOL and also some of the major projects both in the private and public sector. The agent can provide information on upcoming sales opportunity, and work out strategies to win tenders. In solar panel business exclusive arrangements are common where brand name is considered as important. Finding the right local partner: Korean supplier may appoint a Bangladeshi firm as an exclusive or non-exclusive agent. The local agent should be reputable, imaginative, proactive, politically astute and well connected and also technically competent. A local agent may be authorized to service the customers, to bid on government tenders, or to place orders or book indent orders for his own account. Our experience suggests that a local agent, which represent more than one foreign companies in the same sector, may not be as effective as an agent working solely on behalf of a Korean firm, which can be more aggressive in pursuing a product or product line. Close political ties with the government of the day do not automatically guarantee success, as new governments have delayed or re-tendered deals done by their predecessors.

Import duty & Current regulation s

The local agent should be given instructions to provide advance information regarding potential sales opportunities and government procurement projects, since the government tender procedures are complicated and require considerable paper work and lead time to prepare a sound, competitive bid. Local agent should be given adequate product information in order to promote the Korean product in the market. The government of Bangladesh has recently reduced the import duty from 5% to 3% in fiscal year 2008-09. The current duty structure is as follows: Import duty 3%

Regulation s

Under the current caretaker government of Bangladesh, the council of advisers are set to approve the new policy by the first week of December. According to the new policy, the government will form an independent institution sustainable energy development agency(SEDA) which will be established under the companies Act 1994, as a focal point for sustainable energy development and promotion.

List of Potential Agents

Following companies were interested to represent the Korean supplier of solar PV module in Bangladesh. 1. Mr. Arif ud doula Managing Director Micro Electronics Ltd. Mobile: 88-01711525749 Fax: 880-2-8012266 Email: daviddoula@yahoo.com Comment: The company is an active player in solar energy field; they also participate in government tenders. They are keen to represent Korean PV module in the solar energy sector. 2. Mr. Sohel General Manager Rahimafrooz Renewable Energy Ltd. Tel: 8832206 -8 Fax: 8832209 Email: Comment: a renowned company in the solar energy sector. They are representing Suntech of China and ------------ of Canada for solar photovoltaic module. The company is the largest manufacturer of battery in Bangladesh. Following the success of solar home systems in 2008 the company has doubled their production capacity of batteries. They also produce florescent lamps/luminaries/CFL lamps. They are in unique position to supply the solar home systems in a bundle/package. They are also interested to hear from the Korean suppliers of solar panels. 3. Mr. Nurul Aktar Director, Energypac Electronics Ltd. Mobile: 01722539900 Website: www.energypac-bd.com Comment: Manufacturer of electronic lamps, reputed company in the conventional power generator business. Want to represent Korean company in the solar energy field.

List of other useful contacts

Below contacts might be considered useful, if Korean companies want to learn more updates on solar energy projects in the private and public sector in Bangladesh: 1. Hirak Al-Hammad Senior Investment Officer (Technical) Infrastructure Development Company Limited (IDCOL) Tel: 880-2-9114385, 8111235 Fax: 880-2-8116663 Email: hirak@idcol.org Comment: useful contact to learn anything on IDCOL supported solar program 2. Mr. Aksar Kamal General Manager Grameen Shakti Tel: 880-2- 9004081, 9004314 Comment: Grameen Shakti is the number one player in the procurement and installation of SHSs in Bangladesh. The company has 340 unit offices covering all 64 districts in the country. 3. Mr. Tanweer Hossain Project Manager Local Government Engineering Department (LGED) Tel: 880-2-8144058, 01714130333 Email: tanweer.husain@gmail.com Comment: LGED is the government organization which implement UNDP funded solar projects. Korean company may know about potential tender opportunities with LGED from the above contact person 4. Mr. Rashed Mahmud Jewel Manager, Marketing Bangladesh Advanced Energy Systems Tel: 880-2-8620934, 01911484310 Comment: The company is the exclusive agent of Kyocera in Bangladesh. Mr. Jewel is a useful contact for information.