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SME CONTRIBUTION INSOLAR PANEL Rakib Hasan ShovanBUSINESS INBANGLADESH
Serial Contents Page | 1 Pagenumber number1 INTRODUCTION TO SOLAR ENERGY 022 PRESENT CONDITION OF ELECTRICITY IN 03 BANGLADESH3 REGULAR DEMAND OF ELECTRCITY IN 04 BANGLADESH4 CAUSES OF POWER CRISIS 055 SOURCES OF POWER ENERGY IN 9 BANGLADESH6 INTRODUCTION TO SME 107 PRIMARY GREEN OPTION-SOLAR 118 SOLAR PV IN BANGLADESH 119 SOLAR PV COST STRUCTURE 1210 SOLAR PV APPLICATION 1311 ADVANTAGE OF SOLAR ENERGY 1312 SCENARIO SOLAR ENERGY IN 14 BANGLAADESH13 SCOPE OF SOLAR ENERGY BUSINESS IN 16 BANGLADESH14 GOVERNMENT POLICIES IN REGARD TO 17 SOLAR ENERGY15 RECOMMENDATION 19
Page |21. INTRODUCTION TO SOLAR ENERGYThe Sun, our nearest and the biggest star, is the biggest source of energy to us. Sunenergy or the solar energy has been in use since the time human existed on the earth.Solar energy is our essential need and we need it naturally to make our life workproperly. Sun has a lot of stories and histories attached to it, for most of the humans ofthe world, Sun is God, it is a Holy part of religion to many tribes like the AmericanNative Tribe, it is also worshipped by the Greek people, where as many other religionslike Hinduism, Buddhism, Zoroastrianism and Druids of England take Sun as the priorityof their religion. Today we know that solar energy is highly important for us and withoutit we would not be able to live our lives. We need solar energy to get our work done frominside home to outside there in the factories and industries. The old fossil fuel is also oneform that has a lot of sunlight energy trapped in it. In short the Sun and also other starsare responsible in providing us energy. We can use solar energy in different methods toget our work done in proper way.According to market economy, the increasing worldwide demand for energy, forces acontinuous rise on the price of fossil combustibles. In fact, it is expected in the nearfuture, that the demand for energy will grow faster than the finding out of new availablefossil resources. This market behavior brings a positive challenge to the scientificcommunity as more funds are allocated for the research and development of newalternatives to the usual main energetic sources (fossil combustibles). In this context inthe last decades, concentrated focuses have been assisted on renewable energy research.Among these renewable energetic sources, the international scientific community hasdevoted intense efforts to wind, solar photovoltaic and biomass. Some investigations andhardware developments on wave energy have been led by Great Britain and Portugal .
Page |3In this paper an intelligent sun-tracking system for efficiency maximization referringsolar energy production is developed. Nowadays solar energy has a low efficiency ratioconcerning the complete distribution chain from production to consumption (ca. 12%). Inoptimized environments (materials, electric inverters, tracking systems, etc) an input of1000W of solar incident energy production and it avoids systematic failures coming fromchanges on the assumed values (position, initial infrastructure orientation, cleanness ofthe photovoltaic cells, etc.).2. PRESENT CONDITION OF ELECTRICITY INBANGLADESHThe urban Bangladesh now faces almost 10-12 hours load shedding every day while the situationin the rural areas are even worst, where in most cases, the length of load-shedding range between18-20 hours. Though the current government led by Bangladesh Awami League made specificpledges to the nation of greatly resolving the power shortage maximum by 2012, in reality thesituation is getting worst from bad. Power crisis has already affected country‟s production sector,while severe environmental pollution is continuing due to use of generators at domestic,commercial and industrial establishments. Diesel-run generators not only create unbearablenoise, it also releases hazardous smokes or gas, which is extremely vulnerable to human health.Power Development Board (PDB) said, the rental, quick rental and peaking plants wereundertaken on a fast-track basis to address the nagging power crisis. The QRPP projects weresupposed to add about 1,000 MW of electricity to the national grid. These QRPP projects areMeghnaghat 100 MW, Khulna 115 MW, Meghnaghat 100 MW, Ghorasal 78.5 MW, Ashuganj80 MW (gas-generated), Keraniganj 100 MW, Ashuganj 53 MW, Noapara 40 MW, Amnura 50MW (Chapainawabganj district), Juldha 100 MW, Siddhirganj 100 MW and Katakhali 50 MW.Bangladesh‟s energy infrastructure is quite small, insufficient and poorly managed. The percapita energy consumption in Bangladesh is one of the lowest (136 kWH) in the world. Non-commercial energy sources, such as wood, animal wastes, and crop residues, are estimated toaccount for over half of the country‟s energy consumption. Bangladesh has small reserves of oiland coal, but very large natural gas resources. Commercial energy consumption is mostly naturalgas (around 66 percent), followed by oil, hydropower and coal.
Page |4Electricity is the major source of power for country‟s most of the economic activities.Bangladesh‟s installed electric generation capacity was 4.7 GW in 2009; only three-fourth ofwhich is considered to be „available‟. Only 40 percent of the population has access to electricitywith a per capita availability of 136 kWh per annum. Problems in the Bangladesh‟s electricpower sector include corruption in administration, high system losses, and delays in completionof new plants, low plant efficiencies, erratic power supply, electricity theft, blackouts, andshortages of funds for power plant maintenance. Overall, the country‟s generation plants havebeen unable to meet system demand over the past decade.3. REGULAR DEMAND OF ELECTRCITY IN BANGLADESHPeak demand is catered by:Demand from:Natural gas 85% DESA,DESCO1800MWLiquid fuel 6.76% REB2200MWCoal 5.41% PDB itself 1500MWHydropower 2.45%1 TCF Coal (37MT) can produce 14000-94000 MW1 TCF Gas can produce 3.5 barrels of oil = 17000 cubic feet gas= 1780pound coal (in terms of energy production)4. CAUSES OF POWER CRISIS
Page |5Bangladesh electricity supply industry is controlled by the centralized bureaucraticsystem of the Ministry ofPower, Energy, and Mineral Resources (MPEMR) and its subordinateorganizations Power Division and BPDB. It is believed that the organizationalinefficiency along with other factors is responsible for the current electricity crisis.(A)Organizational structure and Reform PolicyKerr and Savelsberg (2001) argue that reformation is done by the state for welfareof the people. The locus ofresponsibility for welfare is refocused in what we see aspart of a broader new social agenda which encompasseschanged roles,expectations, rights and responsibilities for individuals, organizations, andgovernments (Kerr andSavelsberg, 2001). Alamet al. (2004) argues that, theBangladesh government has kept the electricity business inits jurisdiction with aview to serve the mass people either in the name of corporate body or of companyas thisindustry has an immense social, political and economic importance. As aresult Bangladesh electricity supplyindustry is highly centralized within thebureaucratic system, although private participation is there (Alametal.,2004).Tayeb (1994) discusses that, high degree of centralization means all the decisionsare taken at the topof the organizational hierarchy. It this situation the employeescannot express their opinions and it does notreflect the consultations andinformation exchange (Tayeb, 1994). In Bangladesh all the decisions are taken bythe cabinet and the ministry without consulting with the stakeholders (“PMapproves emergency powerplant……”, 2010).(B) Privatization and Public-Private-partnershipWilliamson (2002) discusses that, the main rationale for privatization is the beliefthat private industry ismanaged more efficiently than state enterprises, because ofthe more direct incentives faced by an organizationalmanager who either has adirect personal stake in the profits of an enterprise or else is accountable to thosewhodo. But, in Bangladesh public-private-partnership or privatization take place inthe case of urgency andemergency rather than increase efficiency of the electricitysupply industry (Gratwick and Eberhard, 2008).Independent Power Producers(IPPs) take part in electricity generation under privatization and private-publicpartnership policy of Bangladesh government at the moment whengovernment funds are not available and crisisin electricity supply becomes acute(World Bank, 2003; TIB, 2007). Although Bangladesh adopted electricitysupplyindustry reformation policy and the private sector power generation policy in 1996to encourage privateinvestment in this industry (BOI, 2010; World Bank, 2003), it
Page |6takes a long process for approval of these IPPsprojects due to political influence,corruption and inefficiency (“Lengthy process sets back power projects…”,2010).(C) Electricity crisis due to organizational weaknessesElectric supply industry of Bangladesh subsidizes its residential customers as wellas its commercial andindustrial customers, although the industry is not able to meettheir operational costs (Khan, 2003). Khan (2003)suggests that, the Government ofBangladesh (GoB) funds to Rural Electrification Board (REB) to meet therevenuedeficit and the operational losses. REB and DESA in Bangladesh also receivepower from BPDB atsubsidized rates. Temple (2002) estimates that, in the year2002, the average cost of electricity supply was taka3.08 per kWh whereas, theaverage selling price of BPDB was below its cost of supply, providing a totalsubsidyof 12170 million taka to its customers in the year 2002. The losses ofBPDB have been attributed to mainly threefactors: Low Average tariff, highsystem losses of (including pilferage, non-billing, non-payment of bills, etc)andlow rate of bill recovery (ADB, 1997; Rahmatullah, 2001).(D) Inefficient organizational managementIn view of the fact that BPDB has been in losses, unable to recover its operationcost through sales revenue, thesubsidy to REB come from public funds rather thancross-subsidization from BPDB‟s other customers (Alametal., 2004). Alamet al.(2004) argues that, these losses implied that allocation to BPDB by the governmentcouldnot be fully utilized for capital investment in expanding electricityinfrastructure. Also it is likely that thisaffected the available resources with thegovernment for allocation to the rural electrification program (TIB,2007).(E)CorruptionKlitgaard (1988) defines corruption as “the abuse of office for personal gain”. InBangladesh electricity supplyindustry corruption takes many forms, ranging fromgrand corruption – the capture of high office of governmentby elites and the usesof these offices for private gain – to “petty” corruption – the use of bribes or other“facilitating payments” to provide services, bend or break laws (TIB, 2007; Azfar,2002; Johnston, 1996) . TIB(2007), World Bank(2003), Newbery(2006) &Smith(2004) think Bangladesh electricity supply industry suffersfrom all sort ofmalpractices and inefficiencies, particularly „corruption„. Ahmad (2007) arguesthat, corruptiontakes place because of inadequacies in existing public managementsystems as well as in social and cultural roleof communal bonds and kinship ties
Page |7within social framework„. On the other hand Mauro (1993), opines that,„speedmoney„or „bribe‟ helps to conquer the „bureaucratic red tape„ works as motivationfor the industriousgovernment employees. Due to the alleged corruption in theelectricity supply industry the present Prime Minsterand ex-Prime Minister alongwith their political and bureaucratic colleagues were arrested and they are stillfacing the court (Bangladesh Awami League, 2010).(F) Weak governance: Theft and lack of accountabilityAccountability covers the issues such as, making the elected representatives toanswer for their policies to thevoters, making the public servants answerable fortheir mistakes and seeking redress from government agenciesand officials by themember of public (Mulgan, 2000). Mulgan (2000) suggests that there should be arelationbetween accountability and efficiency and accountability leads toresponsibility for political and managerialaspects. Laking (2001) and Khan (2003)argue that, the main form of corruption in Bangladesh PowerDevelopment Board(BPDB) and Dhaka Electric Supply Authority (DESA) is system loss and theemployees ofthese organizations are responsible for that loss. System loss occursmostly due to the theft of electricity byunauthorized connections and unpaid billsand the employees of these organizations assist these activities (Smith,2004; Khan,2003; Laking, 2001). Engineers of the electricity supply industry oppose thereformation process astheir professional body named, „Institution of Engineers inBangladesh (IEB)‟ that is controlled by the politicalleaders, is partly against thereformation process in this sector (Bhattacharyya, 2003; IEB, 2000). Hill and Lynn(2004) demonstrate that, political actors who pursue their interests through thehierarchical structures of nationalpolitical institutions control over the officers andorganizations having the administrative authority and thus thestaffs are notformally accountable to anyone.(G) Other weaknesses
Page |8Apart from the organizational inefficiencies there are some other factors those areconsidered as equal responsiblefor the current electricity crisis1.1 Wrong policyGovernance framework has the power to make policy and its implementation quitedifferent from reformers‟intentions (Boyne et al. 2003). Forbes et al. (2004)suggests that different levels of governance influence oneanother, that is, that theorganization of governance impacts what, how, and for whom public services areprovided. Public managers control formal structures and authority below the levelof national policy making,other discretionary choices by public managers, and thecharacteristics of service provision (Forbes et al., 2004).TIB (2007) finds that dueto the indecision of the Power Division of Bangladesh in policy formulationprocesssome proposed power plants both in the public and private sectors couldnot start its operations on time and thusthe crisis has been deepen in these days. Onthe other hand wrong site selection and wrong policies to build newpower plants are also responsible for the delay (TIB, 2007).1.2 Insufficient Government fundingUSAID-SARI/Energy (2007) finds that Bangladesh Government had insufficientfund for electricity supplyindustry since its emergence as electricity generation,transmission and distribution require large financialinvestment. Bangladesh„selectricity generation plants have been constantly incapable to meet systemdemandsince 1990s (Newbery, 2005). Newbery (2005) argues that, shortages ofgovernment funds for electricitygeneration plant maintenance and for installationof new plants have created this acute problem in Bangladesh.1.3 Inadequate public-private investmentBangladesh started „privatization‟ and „public-private-partnership„in 1994,consulting with the World Bank andAsia Development Bank (ADB, 2001).MacEwan (2002) argues that, as the private company earns enormousprofits for itsowners, „privatization‟ is not always suitable and it is particularly tricky when itswaps aninefficient government monopoly. (Newbery, 2006) thinks that,Bangladesh have been more successful thanIndia in continuing to attract foreignprivate investment, although it was the most corrupt country in the world till2005.On the other hand Bhuyan (2009) argues that, although Bangladesh adopted„private sector generationpolicy in 1996 and declared its vision in 2000, it has not
Page |9received significant amount of investments in thissector ever after a decade.Experts, businesspersons, donors think there are still scope to invest in Bangladeshelectricity supply industry (“Enough scope to invest in power sector……”, 2010).1.4 Long term absence of government oversightWomukonya (2003) , TIB (2007) and (Bhattacharyya, 2007) identify many causesof the crisis those are notproperly over-sighted by the government over the years,although those are creating current electricity crisis: 1)5. SOURCES OF POWER ENERGY INBANGLADESH Natural Gas Diesel Petroleum Coal Solar Energy Wind Energy Water Energy6. INTRODUCTION TO SME
P a g e | 10SMEs all over the world have played a fundamental role in promoting economicand industrial production. In particular, SMEs especially the „micro-enterprises‟provide the necessary foundations for sustained growth and rising incomes in theless developed and transitional economies. However, in the current state ofchanging times, SMEs need to adapt themselves to new realities and challengesand to stay competitive. Not only they must add new features to their products,improve performance and reduce prices to remain competitive, but must alsoinnovate to create new products and markets. Clean and renewable energytechnology or CRETs need to be effectively tapped by SMEs to enhance theircompetitiveness. The deployment of CRETs need to be seen as a process whichcompliments and is customized to the local requirements of the users such as microand SMEs, with a view to enhance their competitiveness aspect especially thoserelated to quality, convenience, flexibility, delivery and cost of the product beingmanufactured. The technology innovation in the context of SMEs has to bedeployed in a way that enables its business activity to operate efficiently andprofitably, while providing equitable opportunities for jobs, and due considerationto gender issues such as inclusive role of women. The technology transfer ofCRETs to SMEs in modernizing their production system and making them moreefficient in utilizing locally available fuel can significantly reduce the energyinputs required for their operations, making them more profitable andeconomically competitive. Technology transfer takes place in various differentmodes. Most commonly it occurs through the consumption of products or servicesthat incorporate the technology, through licensing the production, or by a jointventure arrangement or foreign direct investment. Technology transfer also mayresult from technical assistance programmes from either multilateral or bilateraldonors. These might include training and capacity building in technical skills,policy formulation, project management, development and monitoring, andapplication and commercialization. Whichever mode is used, the transfer ofhardware, knowledge and expertise to operate that hardware must becomplemented by the development of local knowledge and expertise to modify andadapt that hardware as necessary.7. PRIMARY GREEN OPTION-SOLAR
P a g e | 11• Abundant solar radiation– Annually ≥330 days are solar proactive• Easy to use– Relatively low tech• Environmentally friendly– No carbon emission• Relatively inexpensive– BDT 16 per kWh vs. PDB cost BDT 14 per kWh8. SOLAR PV IN BANGLADESHInstallation Base• Current PV installation–15 MW in 2010• Projected installation– Ten-fold increase in 5years• Aggressive projectionby a Bangladeshipublication– 300 MW in few years
P a g e | 129. SOLAR PV COST STRUCTUREModule vs. electricity• PV module lowest available cost– Mono-crystalline silicon• $2.07 /Wp– Poly-crystalline silicon• $1.74 /Wp– Thin film• $1.50 /Wp• Solar firm installation cost– $4.23 /Wp (US)– $4.11 /Wp (EU)• PV electricity cost– 19.27 cents /kWh (US
P a g e | 1310. SOLAR PV APPLICATION• Solar power systems• Solar irrigation• Solar heating• Solar cooling• Solar street lighting• Commercial• Industrial• Househol11. ADVANTAGE OF SOLAR ENERGYOne of the most important problems facing the world today is the energy problem. Thisproblem is resulted from the increase of demand for electrical energy and high cost offuel. The solution was in finding another renewable energy sources such as solar energy,wind energy, potential energy...etc. Nowadays, solar energy has been widely used in ourlife, and its expected to grow up in the next years.Solar energy has many advantages: Need no fuel Has no moving parts to wear out Non-polluting & quick responding Adaptable for on-site installation Easy maintenance Can be integrated with other renewable energy sources
P a g e | 14 Simple & efficient12. SCENARIO SOLAR ENERGY INBANGLAADESHEnergy issue has become a global concern. Like other countries, Bangladesh also maynot find immediate and easy solution to the energy problem. Moreover, with the passageof time the demand for energy in Bangladesh will increase further. From the pastexperience it appears that there is prevalence of huge gap between demand and supply.Striving to remove this demand and supply gap, Bangladesh has made significantprogress in the renewable energy sector by introducing solar energy systems.Infrastructure Development Company Limited (IDCOL), Grameen Bank, BRAC and fewother NGOs have taken remarkable steps forward in this regard. Grameen Shakti that hasinstalled about 125,000 Solar Home Systems at rural level has opened our eyes. Thisenergy technology might change the life style of the poor people.Solar Home Systems have mainly targeted the rural areas of Bangladesh so the range ofproducts is limited. These can however be expanded to include the solar lantern, solartorch light, solar thermal heater, and solar mobile charger. Small shop owners at ruralgrowth centers, mini poultry farm owners, country boat operators, and police and ansar-VDP forces, Union ParishadChowkidars could be potential users of solar systems. Inurban areas slum people may use these solar products to improve their living condition.Rickshaw puller may have the opportunity to use products like solar lantern in theirrickshaws and other products for their households.In Bangladesh, building and houses located in all metropolitan areas could at least usesome of the solar products in lightning their garden, boundary wall, gates and furnishsecurity lights and water heating systems. RAJUK, CDA, KDA, RUK, city corporations,
P a g e | 15which have a role in approving architectural and structural plans may have a goodopportunity to recommend solar energy systems.There are about 3000 growth centers in the country. If growth centers are lighted withsolar applications by LGED it will have a tremendous effect in our agriculture, trade andcommerce and thus economic growth. The government can also bring thousands of floodshelters cum schools, 465 Upazilla Chairmans houses, 490 Upazilla Teachers ResourceCentres, 5000 Union Parishad Buildings, 54 Primary Training Institutes (PTI) 3150colleges, 18700 high schools and 9300 madrashahs under the solar power system.Moreover, 80,000 primary schools, 2.00 lakh mosques and few thousands rural healthcentres may have the opportunity to use this energy. Maintenance of solar system couldbe another opportunity of employment. Customised Technical education courses willbuild local capacity and help generate rural employment.There are many islands in coastal areas and remote char areas in Bangladesh. At present,a few islands are using Solar Home Systems in households. The life of the people of Charareas may change dramatically change through solar power. Coastal areas will havesimilar opportunity.Solar energy however will not be very competitive, in the economic sense, in a marketdominated by fossil fuels. Despite market factors, solar industry needs governmentpatronage and help to create the right momentum in solar market, and government grantsare needed for research in solar technology. Many countries in the world have providedincentives to encourage people to use solar power.Unlike others, there are, of course, limitations in expanding these solar programmes inBangladesh. Research & development is not very significant. Initial investment in solarsystems is quite high. Moreover there is no complete manufacturing plant yet of solarsystems in Bangladesh. These are expensive and susceptible to frequent change of
P a g e | 16technology. The private sector in Bangladesh may not be attracted enough to establishsolar manufacturing plants. Public Private Partnership might provide a solution. We mayalso think about accessing funds from carbon trading etc. Despite the limitations, theobjective conditions are favorable and ready for expansion of solar energy in Bangladesh.All we need are appropriate policy, planning and initiatives, together with Public PrivateLeadership.13. SCOPE OF SOLAR ENERGY BUSINESS INBANGLADESHCost details of acquiring solar panel:To procure a solar panel one has to pay 15% down payment, the rest is covered byinstallments, total costs stand at Taka 68000.Direct purchase costs 2 thousand 720 less.The maintenance cost for the panel is very low.The companies also give 20-25 years of warranty.Investment in this sector:The amount of investment in this energy sector in rural area per year is more than2500 crore.60% of this invested in solar panel, total of which requires to be imported fromoutside. 25% is invested in battery and the rest 15% in small mechanical parts.Batteries and accessories are all produced in the country. In near future, the solarpanel will also be produced locally.
P a g e | 1714. GOVERNMENT POLICIES IN REGARD TOSOLAR ENERGYThe cabinet of Bangladesh government and the ministry have taken someimmediate strategies as well as long termstrategies to overcome the electricitycrisis.Immediate strategiesThe Bangladesh government and the Prime Minister have taken some instantmeasures to reduce social unrest and dissatisfaction: Prime Minster and her cabinetrapidly approved some huge projects that are also haveallegation of corruption,without following the rules and laws (“PM approves emergency power plant……”,2010). Power Division, BPDB carried out decisions of shutting down somefertilizer factories and diverting gasfor power generation, rationing the use of airconditioners in private homes/offices, 1 hr electricity outage everyalternate hour(“PM Orders 1 hr Outage ………”, 2010). All these were contingency approach ofthe Ministry,Power division and BPDB though no measures have been taken toenhance organizational efficiency and to stoppolitical interference.6.2 Long-term strategiesThe Cabinet of Bangladesh government and the power division of the ministryhave taken some immediate butlong term strategies to mitigate current electricitycrisis. Some of the mentionable strategies are: project to buildten "peaking powerplants" and project to modify and renovate the old generation units which willproduceelectricity in 2011 (“Cabinet body approves 3 rentals ………”, 2010).Bangladesh is going to install a nuclearpower station with the help of Russia andgoing to import electricity from India, Nepal, Bhutan and Myanmar(“Dhaka andMoscow sign nuclear….”, 2010).The objectives of solar energy policy are to: Harness the potential of solar energy resources and dissemination of solar energy technologies in rural, peri-urban and urban areas Enable, encourage and facilitate both public and private sector investment in solar energy projects.
P a g e | 18 Develop sustainable energy supplies to substitute indigenous non-solar energy supplies. Scale up contributions of solar energy to electricity production. Scale up contributions of solar energy both to electricity and to heat energy. Promote appropriate, efficient and environment friendly use of solar energy.INVESTMENT & FISCAL INCENTIVES BY GOVERNMENT A renewable energy financing facility shall be established ; Private sector participation including joint venture initiatives in renewable energy development will be encouraged and promoted. Renewable energy project investors both in public and private sectors shall be exempted from corporate income tax for a period of 15 years. Accelerated depreciation up to 80% may be allowed in the first year. An incentive tariff may be considered for electricity generated from renewable energy sources which may be 1.25 times the highest purchase price of electricity by the utility from private generators. To promote solar water heaters, rates of both electricity and gas may be refixed to discourage electricity and gas use for water heating.
P a g e | 1915. RECOMMENDATION Solar PV is primary choice of green technology forsustainable industrial development in SME sector Solar power systems be installed for SMEs as a backup if not primary power supply GOB and UNIDO incentivize solar installations for SMEsOffer low interest loans/grants for global joint ventures.