Bangladesh is a poor, densely populated country, with about 162 million people. In 2002, only about 30 percent of them had access to electricity, which loomed as a major constraint to economic growth and quality of life. For this reason, the Government of Bangladesh established a goal of providing electricity to its entire rural population by 2020. However, with the Rural Electrification Board connecting only about 400,000 households every year, it was on pace to take more than 35 years complete the task. Furthermore, since Bangladesh is a delta with more than 400 rivers, extending a grid system is complex and often prohibitively expensive.
The IDA-financed Rural Electrification and Renewable Energy Development Project was launched in 2002 to achieve the Government’s target of full access. It aimed to expand the electricity distribution grid to connect new consumers. Importantly, it also aimed to promote renewable energy options to provide electricity in remote areas where grid electricity was not feasible. Specifically, the project made solar home systems available to households and conducted a biomass pilot project to electrify village markets and associated small enterprises and households. The project was implemented by the Rural Electrification Board through its rural electric cooperatives, with the cooperation of NGOs and private sector companies. For the off-grid renewable energy component, participating organizations extended micro-credits for consumers to buy solar home systems. They then obtained refinancing from the central Infrastructure Development Company for up to 80 percent of the credit they had extended to consumers.
This project established the renewable energy option as a practical and cost-effective alternative for rural electricity. As of June 2009, more than 600,000 new consumers had been connected to the grid for the first time. Access to electricity increased from about 30 percent in 2002 to about 40 percent. At the same time, 320,000 consumers had new solar home systems, surpassing the original target of 50,000 by a factor of 600 percent. A pilot biomass plant started to generate electricity using rice husk for the first time in Bangladesh. The plant’s capacity is 250 KW and it provided electricity to 300 households and shops in village markets. The implementing agency has a strong pipeline of biomass based projects to be supported under this project.
Highlights:
- Study time increased. Children’s study time increased by about 6 percent in houses with electricity.
- Illness decreased. An increase of electricity use at home led to a decrease of 20 percent in children’s school-days missed caused by illness, compared to non-electrified areas.
- Small businesses and income expanded. Home businesses increased by about 8 percent compared to households without electricity.
- More time saved. Time spent on household chores decreased by 6 percent in the electrified households.
- System savings achieved. The project reconfigured the service boundaries between urban and rural utilities and renovated the old distribution network. This reduced duplication and system losses from more than 18 percent in 2001 to about 12 percent in 2008.
IDA provided US$236 million in credit of which the renewable energy component received about US$56 million. In addition, GEF financed US$8 million of the renewable energy component. To meet the total project cost of US$290 million, the Government of Bangladesh contributed US$92 million and local communities provided US$7 million.
With successful implementation of this project, several other development partners showed interest to support this program following the same project design. As of now the Asian Development Bank, KfW and GTZ (German development bank and German international cooperation enterprise) have started to support this program. The Inter-American Development Bank, the Japan Bank for International Cooperation and the Global Partnership on Output-Based Aid have also shown interest to join in. IDA has approved an additional financing of about US$ 130 million to this project to continue efforts to expand electricity through renewable energy options. Bangladesh has made a target of connecting 1 million rural consumers by 2012 using solar home systems.
Given the project’s success, the Government of Bangladesh requested additional IDA funds to continue with solar home system installations and to scale up other renewable energy options. An additional financing of US$130 million was approved in August 2009. To achieve the Government’s vision of universal rural access by 2020, a radical change will be required to scale up provision. IDA’s strategy is to strengthen the managerial capability of the Rural Electrification Board to ensure that it can function autonomously and more effectively.
RSS