The World Bank has approved $185 million to facilitate 310 MW of renewable energy generation capacity in Bangladesh to meet the growing demand for electricity in the country. The funding is also expected to encourage private sector participation in developing renewable energy projects in the country.
The World Bank believes that this credit facility provided under the “Bangladesh Scaling-up Renewable Energy Project” is expected to increase installed capacity of renewables through piloting and expanding investments in key market segments. The $185 million credit also includes a $26.38 million loan and a $2.87 million grant from the Strategic Climate Fund (SCF) of the World Bank’s Climate Investment Funds (CIFs).
The project is expected to mobilize up to $212 million from the private sector, commercial banks and other sources of financing and establish a dedicated renewable energy financing facility to provide credit to developers of both rooftop solar photovoltaics (PV) and large-scale solar PV projects. The project is also expected to support the Infrastructure Development Company Limited (IDCOL) with the development of the financing facility and provide resources to the Sustainable and Renewable Energy Development Authority (SREDA) to build market capacity and develop a pipeline of renewable energy projects.
The first 50 MW phase of a large-scale solar park project is to be developed in Feni district, which would be implemented by the Electricity Generation Company of Bangladesh (EGCB).
According to the World Bank, Bangladesh’s share of installed renewable energy capacity in the grid supply is only 1.5 percent and has significant potential for scaling up.
“Bangladesh is well on its way towards becoming an upper middle-income country with about 80 percent of the population having access to grid electricity. It also has one of the most successful off-grid renewable energy programs in the world, providing electricity to another 10 percent of the population,” said Dandan Chen, World Bank’s acting country director for Bangladesh and Bhutan. “This project will help expand renewable energy generation capacity. By leveraging all sources of finance, the expanded renewable energy sector is ready to push the country’s growth trajectory further.” Chen added.
The credit from the World Bank’s International Development Association (IDA), which provides concessional financing, has a 30-year term, including a five-year grace period, and an interest rate of 1.25 percent with a service charge of 0.75 percent. The World Bank has committed more than $30 billion in grants and interest-free credits to Bangladesh.
In April 2018, Mercom reported on the news of World Bank approving $55 million for the development of renewable energy projects in Bangladesh.
Image credit: Znshine Solar