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Electricity from Solar Panels Transforms Lives in Rural Bangladesh

June 13, 2012

  • Low-cost, clean and fast-track electricity option for rural poor
  • From 7,000 to 1.4 million installations in less than a decade

" Solar energy is changing the face of the remote, rural areas of Bangladesh. The pace of installation has simply skyrocketed in the last couple of years. "

Zubair KM Sadeque

Energy Finance Specialist, The World Bank. He manages the Bank’s on-going rural electrification project that supports the Solar Home Systems program.

In 2002, only 7,000 Bangladeshi households were using solar panels. Today, more than 1.4 million low-income rural households in Bangladesh have electricity—delivered by solar PV panels, most of which are imported from China.

“It’s the fastest expansion of solar energy anywhere in the world,” said Formanul Islam of Bangladesh’s Infrastructure Development Company, which is working with the World Bank to install solar home systems across the

About half of Bangladesh’s 150 million people still don’t have access to reliable electricity, but with the low prices for solar PV panels, among other factors, installations under the Bank-supported project have doubled in the past two years to 40,000 a month.

“It is changing the face of the remote, rural areas of Bangladesh,” said Zubair Sadeque, Energy Finance Specialist in the World Bank’s Dhaka office.

Zubair is the task team leader of the Rural Electrification and Renewable Energy Development project in Bangladesh, for which the World Bank approved a $130 million zero-interest International Development Association (IDA) loan in 2009 and another $172 million loan in 2011. An earlier IDA credit had launched the project in 2002. What has changed is the pace of installations. “It has simply skyrocketed in the last couple of years,” he said.

The combination of competitively-priced solar PV panels and a well-designed financing scheme is now delivering life-changing—and zero-carbon—electricity to bottom-of-the-pyramid families on a scale that was inconceivable only a few years ago.

“It is a remarkable alignment of positive factors,” said Vijay Iyer, Director of the Bank’s Sustainable Energy department, who was instrumental in launching the project almost a decade ago. “This drop in price of solar PV panels, combined with high prices for fossil fuels, slow pace of grid connections, along with the scale of cell-phone penetration among the poor, which is driving demand, has created vast new potential for off-grid solar—not just in Bangladesh, but in many other low-income countries.”

Off-grid solar power, while not considered an option among high-intensity electricity consuming rich-country households, does meet the immediate needs of low-income households and small businesses in developing countries. A 40-to-120-watt solar panel is enough for a couple of lights and to charge a cellphone, which can transform lives in rural areas of Bangladesh.

As leaders prepare for the June 20-22 Rio+20 Summit on Sustainable Development, clean energy solutions like this one that deliver electricity to the world’s poor while also opening market opportunities should attract interest not only among donors, but private investors as well. The Bangladesh solar experience may provide a model to help achieve the goals of the Sustainable Energy for All initiative, namely universal access to electricity, double the share of renewable energy in the global mix, and double the rate of improvement of energy efficiency.

The project is implemented by a partnership between the Bangladesh Infrastructure Development Company (IDCOL) and about 40 non-governmental organizations, including private sector companies and microcredit agencies.

Under the program, NGOs and certified partner organizations procure and install the systems in rural households following standards set by IDCOL. The households pay 10-15% down with the rest financed by a microcredit loan they pay in installments over three to five years. Funds from IDA and other development partners are used to re-finance part of the microcredit extended to the households. Each system also gets a subsidy of $28 (down from the original $90 per system a decade ago).

One beneficiary is Mussarat Farida Begum, who runs a small teahouse in Garjon Bunia Bazaar, a rural community. She bought a solar home system for $457, initially paying $57, and borrowing the rest. She repays the loan in weekly installments with money she earns by keeping her now-lighted chai-shop open after dark. At the same time, her children are able to study at night.

“My business is booming and my family lives much more comfortably with our increased income,” she said. “But most importantly, I now have electricity at home and my children can study at night. They are doing much better at school.” Mussarat Begum is one of several thousand women who have benefited from the positive impact of electricity and lighting in their daily lives.

In addition to IDA support, the solar home systems program in Bangladesh has received financing from the World Bank-managed Carbon Finance Unit, the Global Partnership on Output-Based Aid, and several other donors including the Asian Development Bank, and the German agencies KfW and GiZ. It aims to deliver off-grid solar power to 2.5 million households by 2014, while also promoting mini-grids for rural consumers.

In addition to delivering power to un-served communities, it is helping to reduce carbon emissions from avoided use of kerosene and diesel for lighting. The solar electrification industry and its supply chain in Bangladesh has also helped create, directly and indirectly, a total of about 50,000 jobs.