The Financial Express

Huge investment needed to fill up infrastructure gaps in energy sector

| Updated: October 24, 2017 00:15:55

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A WOMAN ENGINEER DEMONSTRATING A SOLAR HOME SYSTEM: 'The Solar Home System (SHS) dissemination programme is now being considered one of the fastest growing off-grid systems in the world.' 	— Photo credit: Grameen Shakti A WOMAN ENGINEER DEMONSTRATING A SOLAR HOME SYSTEM: 'The Solar Home System (SHS) dissemination programme is now being considered one of the fastest growing off-grid systems in the world.' — Photo credit: Grameen Shakti

Producing Renewable Energy (RE) and improving energy efficiency (EE) are two key areas for energy sustainability and policymakers of both developed and developing countries are increasingly focusing on the issues. In most economies of the world, growth is surpassing the capacity to provide adequate energy. Energy use and status in global economies are, therefore, a cause for concern. Especially, developing countries are facing increasing pressure. Moreover, increasing use of fuels is causing an adverse impact on environment. All types of economies are burning fossil fuels and contributing massively to the concentration of greenhouse gases in the atmosphere. Predictably, these non-renewable energy sources are going to deplete in every location of the earth sooner than later. The global energy crisis coupled with the threat of climate change brings into sharp focus both opportunities and challenges for all countries. There is no option but to address the increasing energy demands of growing economies by planning and strategising RE and EE. Moreover, the energy sustainability and relevant investment and financing  are very much within the broader scope of sustainable development agenda of a number of developed and developing countries and this too within the wide coverage of the recently formulated Sustainable Development Goals (SDGs) by the United Nations. 
Greater production and use of renewable energy could bring notable beneficial impact in Bangladesh in the form of offering greater access to energy. In the context of the country, it is essential to realise the fact that the more the energy efficiency is, the less pollution and environmental degradation and less reliance on imported oil, leading to improved power scenario and ultimately to cost saving. Furthermore, efficient utilisation of energy in industry reduces cost of goods sold which ultimately yields in higher net profit. Renewable energy plays a vital role in order to solve these issues and energy efficiency and saving energy is referred to as hidden fuel that is critical to attaining energy sustainability.  
It is well-known that the initiatives in RE sector in Bangladesh are relatively late. However, some commendable successes have been achieved in a few instances. Especially, the Solar Home System (SHS) dissemination programme is now being considered one of the fastest growing off-grid systems in the world. In line with the target envisaged in renewable energy policy, the government has made a year-wise implementation plan to reach its target in connection with solar, wind, biomass, biogas and hydro-power. Bangladesh targeted to ensure electricity for all by 2021. Therefore the country needs huge investment to fill up the infrastructure gaps, especially in the energy sector there is 10 per cent demand growth of energy per year. In order to cope with this rapid industrialisation process, it has become essential to generate energy from alternative sources. Without addressing the growing need, the desired economic growth and development cannot be ensured. A lack of supply of the much needed energy is one of the main factors hampering economic growth in the rural areas of Bangladesh. So, strengthening the country's renewable energy sector could prove to be crucial. For EE, the government prepared an Action Plan in 2009 to identify priority energy efficiency and conservation interventions both at supply and demand end, which can be implemented in shorter and medium term.  The master plan identified energy efficiency development up to 2030 which suggested several interventions in the areas of energy management, EE labelling, EE building, EE finance and awareness raising programmes. 
In connection with the institutional setup, the ministry of power, energy and mineral resource of Bangladesh is the authority administering all activities related to energy including  renewable energy. In a remarkable initiative, in 2012, the government initiated a move to set up the Sustainable and Renewable Energy Development Authority (SREDA) and has finalised Sustainable Energy Development Act, 2011. SREDA has been working to provide policy support to the government as well as promote, expand and develop renewable energy and to enhance energy efficiency both in public and private sector. The government has set targets for renewable energy and energy saving, and SREDA has been playing a pivotal role to achieve these targets and supporting several renewable energy and energy efficiency initiatives in the country. By the time a good number of relevant projects are funded by the public sector and international donors where different public institutions, private institutions, NGOs worked as the project implementing agencies. Different stakeholders are reaping benefits from those projects. Especially energy development programmes of some donor agencies are contributing to improve the framework conditions for building markets for sustainable energy solutions through building capacities of relevant stakeholders, promoting application of EE technologies and technologies for generation of RE. They are also contributing to the institutional development of SREDA and helping to develop locally customised technological solutions on sustainable energy delivery and establishing business cases through successful piloting. In spite of some notable improvements, there is no doubt that RE and EE sectors need more investment and financing to attain relevant targets of the government. 
As a key stakeholder of renewable energy and energy efficiency initiatives, banks and non-banking financial institutions (NBFIs) of the country are undertaking energy sustainability initiatives mainly as part of their green banking and financing activities. Policymakers have played remarkable role in this connection. In a resource-constrained developing country like Bangladesh, finance is a powerful intervention that can contribute to the process of green and energy sustainability. In this connection the policy initiatives by the Bangladesh Bank (BB) is remarkable. Alongside a comprehensive policy guideline on Green Banking, the BB circulated a guideline on Environmental Risk Management (ERM) in financing, and introduced several refinance schemes. The policy initiatives have brought significant changes in terms of the creation of green governance frameworks in banks. The refinance line of Bangladesh Bank has already started accruing beneficial outcome in terms of renewable energy generation, installation of Effluent Treatment Plants and of new energy efficient technologies at a concessional interest rate. In spite of some notable development, optimum positive impact on the ground at micro level is yet to be fully realised.  Especially, targeted product development in certain areas and enforcement could bring remarkable benefits to the end users and might contribute to the sustainable energy efforts of the country.  
Dr Shah Md Ahsan Habib is Professor and Director (Training), Bangladesh Institute of Bank Management (BIBM).
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