Bangladesh News

The government has decided to withdraw all duties from solar energy equipment to encourage use of solar energy, especially in the remote and economically backward locations.

With over three lakh households already using solar energy equivalent to 15 megawatt, mainly in the coastal southwestern region, this withdrawal would reduce around Tk 1,500 per solar panel worth Tk 10,000. People usually go for a two-panel system that costs them Tk 20,000.

Currently, there is 15 percent VAT on renewable energy equipment.

This decision came at a meeting of Prime Minister Sheikh Hasina, who also holds the energy portfolio, with the energy ministry officials yesterday.

This decision was made in line with the Renewable Energy Policy of Bangladesh, approved by the caretaker government on December 18 and made effective through a gazette notification.

The policy follows the Vision and Policy Statement, 2000 that aims at providing power to all by 2020 in phases.

The policy targets developing renewable energy resources to meet five percent of the total power demand by 2015 and 10 percent by 2020.

It also says renewable energy project investors in public and private sectors will be exempted from corporate income tax for five years from the date of notification of the policy and it will be extended periodically following impact assessment of tax exemption on renewable energy.

An incentive tariff may be considered for electricity generated from renewable energy sources which may be 10 percent higher than the highest purchase price of electricity by the utility from private generators.

Existing renewable energy financing facility will be expanded and in addition to commercial lending, a network of microcredit support system will be established, especially in rural and remote areas, to provide financial support for purchase of necessary equipment.

An institution — Sustainable Energy Development Agency (SEDA) — will be established under the Companies Act, 1994 as a focal point for sustainable energy development and promotion.

The SEDA will coordinate sustainable energy planning, supporting new technologies and business models and establishment of small and medium renewable energy enterprises and providers. It will also stimulate market development, provide financial support for research and development.

Under this policy, electricity generated from renewable energy projects, both in public and private sectors, may be purchased by power utilities or any consumers through mutual agreement.

Renewable energy project sponsors may use existing electricity transmission and distribution systems to supply electricity.

The policy identifies that renewable energy in the form of biomass is already the main source of primary energy comprising 35 to 60 percent of total primary energy use. The size and economic potential of renewable energy resources like solar photovoltaic, solar thermal, wind power, biogas in Bangladesh are yet to be determined.

Solar photovoltaic system has been identified as having the strongest potential in renewable resources and is already being used throughout the country. It is being facilitated by the Infrastructure Development Company Ltd (IDCOL), Rural Electrification Board (REB), Local Government Engineering Department (LGED), Power Development Board (PDB), non-government organisations and other private organisations.

Wind energy’s potential, according to the policy document, is limited within coastal areas and offshore islands. Presently, there is 2 megawatt of installed wind turbines in Feni and Kutubdia.

Solar thermal power, biomass and biogas also have potentials, but their technology needs to be disseminated in the country to supplement the power supply. Hydro power has limited potential as well.