Making renewable energy investments sustainable through grid-connected solar pumps in Bangladesh

Summary

The Bangladesh government plans to generate 10% of its electricity from renewable sources by 2030. The Infrastructure Development Company Limited (IDCOL), a nodal agency for renewable energy in Bangladesh, has so far installed 1,523 off-grid solar irrigation pumps (SIPs) with 42.1 megawatts (MW) capacity through an innovative fee-for-service model. These pumps have a high panel-to-pump capacity ratio to meet irrigation demands during the peak irrigation season of summer boro paddy. However, beyond the boro season, irrigation demand is limited. Overreliance on one crop for revenue generation and low usage during the off-season affect the financial viability of SIP investments. Grid integration can offer a one-stop solution for increasing the capacity utilization of solar panels and helping the government meet its renewable energy targets by utilizing the existing solar infrastructure.

Introduction

Bangladesh’s energy demand for electricity generation, irrigation, and transport sector depend on fossil fuels, most of which are imported from outside. For example, approximately 30% of the current (installed) electricity generation capacity is dependent on imported petrol and diesel. The rise in petroleum prices due to the Russia-Ukraine war has led to an energy crisis and an exponential increase in fuel import bills.

The consequences of an energy crisis are also dire for Bangladesh’s agricultural sector, particularly its food security. Boro rice, instrumental for the country’s food security, predominantly depends on diesel-run
groundwater irrigation.

Towards solar irrigation

Bangladesh has immense potential for expanding the share of renewable energy in its total energy mix through rapid solarization. Transitioning to solar energy is also crucial for achieving Bangladesh’s updated Nationally Determined Contribution (NDC) targets of greenhouse gas (GHG) emissions reductions. As part of its possible mitigation actions, the Government of Bangladesh (GoB) has set a
target of installing 176 megawatts (MW) of solar irrigation unconditionally and an additional 164 MW with financial and technical support.

The Infrastructure Development Company Limited (IDCOL) agency for renewable energy financing plans to scale-up solar irrigation in Bangladesh using its unique fee-for-service financial model.

Barriers

1. IDCOL needed to increase the panel size-to-pump ratio of the SIPs to meet the constant flow requirement of irrigation water during the peak irrigation season of boro. But oversizing the panels has clear cost implications, borne mainly by private sector companies or nongovernmental organizations (NGOs), who pay 15% as equity and 35% as loans and recover the same from the farmers as irrigation fees.
2. Irrigation demand in Bangladesh is limited to only a few months of the year. This seasonal demand for irrigation leaves much of the expanded panel capacity underutilized and threatens the financial sustainability of SIPs.

Solutions: grid integration and net metering

Solar-grid integration is a network allowing evacuation of (unutilized) photovoltaic (PV) power into the national utility grid. It prevents the wastage of surplus energy, and the pump owners can subsequently monetize this surplus power by selling it back to the national grid. Annual SIP utilization estimates show that irrigation usage accounts for only 27% of annual sunshine hours and there is an opportunity to sell approximately 800 to 1,200 kWh/kWp through a grid connection.

With approximately 20% additional investment of about BDT 0.035 million/kWp, this readily available solar infrastructure can be easily connected to the grid. It can contribute to the target of a 10% renewable energy mix by 2030.

Net metering is suggested as another solution to balance the demand for SIPs. Through net metering, SIP owners can supply electricity to the grid during periods of high solar generation and draw electricity from the grid when solar power is insufficient. This system can reduce reliance on diesel and expand the area under solar irrigation. However, careful implementation is necessary to ensure that SIP owners do not prioritize grid sales over solar usage

Suggested citation

Mitra, A., Mukherji, A. (2022). Making renewable energy investments sustainable through grid-connected solar pumps in Bangladesh. IWMI Issue Brief.