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Rural Electricity : Barriers to and Incentives for Promoting Renewables Isolated Systems: Solar Energy Program

Rural Electricity : Barriers to and Incentives for Promoting Renewables

Isolated Systems: Solar Energy Program in Bangladesh

Isolated Systems: Solar Energy Program in Bangladesh Nazmul Haque Director & Head of Investment

Nazmul Haque

Director & Head of Investment Infrastructure Development Company Limited (IDCOL)

3rd Annual AsiaPacific Dialogue on

Clean Energy, Governance, Policy, Law and Regulation

June 4~5, 2012

IDCOL Solar Home System Program IDCOL is a state-owned financial institution dedicated to promote private
IDCOL Solar
Home System
Program
IDCOL is a state-owned financial institution
dedicated to promote private sector financing in
infrastructure and renewable energy sector.
IDCOL Solar Home System (SHS) Program:
 Program at a glance
 Program Structure
 Fund Flow and Role of Partners
 System Design and Up gradation
 Financing Structure
 Quality Control Mechanisms
 Challenges & Mitigations
 Prerequisites to Develop Similar Program

IDCOL SHS Program at a Glance

IDCOL SHS Program – at a Glance  Program Target  Program Achievement  Number of

Program Target

Program Achievement

Number of beneficiaries

Electricity generation

Fossil Fuel saving

Job creation

generation  Fossil Fuel saving  Job creation : 2.5 million SHS by 2014 : 1.4

: 2.5 million SHS by 2014

: 1.4 million as of Apr 2012 : 7 million : 70 MW

: About 140,000 ton/year

: 70,000

Program Structure

Program Structure Suppliers Supply Pay for Equipment Technical Standards Committee Provides approval Seeks approval
Suppliers Supply Pay for
Suppliers
Supply
Pay for

Equipment

Technical Standards Committee
Technical
Standards
Committee

Provides approval

Equipment Technical Standards Committee Provides approval Seeks approval Equipment PO Selection Committee NGO/PO Pay

Seeks approval

Equipment

PO Selection Committee
PO Selection
Committee
NGO/PO
NGO/PO
Seeks approval Equipment PO Selection Committee NGO/PO Pay down- payment & installment IDCOL Grant & soft

Pay down-

payment &

installment

IDCOL
IDCOL

Grant &

soft term

credit

Provide grant & loan

Applies

& soft term credit Provide grant & loan Applies Seeks grant & loan Select POs Sells
& soft term credit Provide grant & loan Applies Seeks grant & loan Select POs Sells
& soft term credit Provide grant & loan Applies Seeks grant & loan Select POs Sells

Seeks grant & loan

Select POs
Select POs

Sells SHS & provide service

Operations Committee
Operations
Committee
Donors
Donors
Household
Household
Fund Flow and Role of Partners Donor GoB IDCOL PO Household • Provides • Provides
Fund Flow and Role of Partners
Donor
GoB
IDCOL
PO
Household
• Provides
• Provides
• Identify
• Maintain
grant and
• Provides grants to
reduce SHS cost
and for capacity
building
potential
grant and
system
soft loans
customers
soft loan to
IDCOL
• Repay loan
• Installs SHS
in monthly
• Provides
technical
• Provides
• Provides soft loans
installments
• Extends
assistance
policy
needed
support
• Provides training,
promo support
micro-credit
• Monitors
• Provides after
sales services
implementation
Debt Service
Debt Service
Debt Service
Debt Service
 

System Design and Up gradation

 
 

Capacity

Appliances

Operating Hour

 

20Wp

 

Lamp: 2

4-5 hours

20Wp   Lamp: 2 4-5 hours

Mobile Charger: 1

   

Lamp: 4

 

50Wp

B

& W TV: 1

4-5 hours

Mobile Charger: 1

   

Lamp: 9

 

85Wp

B

& W TV: 1

4-5 hours

Mobile Charger: 1

Mobile Charger: 1
Mobile Charger: 1
 

Technology Up gradation

CFL Bulb

 

LED Light

Gel Battery

• Gel Battery

DC-DC Converter to run color television, fan, refrigerator etc.

Financing Structure (a) Market Price of 50 Wp SHS USD 400 (b) Buy-down Grant (Grant
Financing Structure
(a)
Market Price of 50 Wp SHS
USD 400
(b)
Buy-down Grant (Grant A)
USD
25
(c)
System Price for Household [(b)-(a)]
USD 375
(d)
Down Payment from Household to PO [15% of (c)]
USD
56
(e)
Loan Payable from Household to PO [(c)-(d)]
USD 319
Loan Tenor
3 years
Interest Rate
12% p.a.
Monthly Installment Amount
USD 8.5
(f) IDCOL Refinance [80% of (e)]
USD 255
(g)
PO Contribution [20% of (e)]
USD
64

Financing Structure (contd.)

Financing Structure (contd.)  Capital buy down grant  Institutional grant  Refinance amount  Loan

Capital buy down grant

Institutional grant

Refinance amount

Loan tenor

Grace period

Interest rate

: USD 25 per system

: USD 0~12 per system : 70%~80% of POs’ loan to household : 5~7 years

: 6~12 months

: 6%~9%

Quality Control Mechanisms

Quality Control Mechanisms SHS Inspection Training Programs • Technical inspection by technical

SHS

Inspection

Training

Programs

Technical inspection by technical inspectors

Verification of collection efficiency by collection efficiency inspectors

Random re-inspection by IDCOL officials

Independent technical and financial audit

Training for trainers

PO Staff Training

Supplier consultation

Customer Training

IDCOL

Call

Centre

IDCOL Lodges complain Informs PO Household Takes remedial measure PO
IDCOL
Lodges complain
Informs PO
Household
Takes remedial measure
PO
Training IDCOL Call Centre IDCOL Lodges complain Informs PO Household Takes remedial measure PO
 

Challenges & Mitigations

Challenges

Mitigation

 

Countrywide promotional campaign

Lack of awareness

− Extensive network of the POs

Extensive network of the POs

Customer training program

 

Social enterprise model with an ultimate goal of commercialization

Untested business model

Presence of multiple POs ensures healthy competition

Phased reduction nature of grant

 

Institutional development grant

Lack of institutional capacity

Long-term concessionary credit facility

Staff training program

 

Capital buy-down grant

High cost of SHS equipment

Concessionary credit facility

Local support industry development

 

Technical standard committee

Lack of

quality assurance

After sales services provided by the POs

Quality control mechanisms by IDCOL

 

Tax holiday

Lack of fiscal support

Duty free import

Prerequisites to Develop Similar Programs

Prerequisites to Develop Similar Programs  Root level access of private sector agencies i.e. MFI, NGOs

Root level access of private sector agencies i.e. MFI, NGOs

Micro-credit outreach experience of the private sector agencies

Adequate financial support from the donor agencies

Availability of concessionary credit facility to the executing agencies

An agency to monitor quality of products and services

Development of local support industry

Active support from the government

Thank You Q & A Infrastructure Development Company Limited (IDCOL) UTC Building (16 t h

Thank You

Q & A

Infrastructure Development Company Limited (IDCOL) UTC Building (16 th Floor), 8 Panthapath, Dhaka 1215 Phone: +880-2-9102171~8

Fax: +880-2-8116663 E-mail: nhaque@idcol.org www.idcol.org