Bangladesh’s aspiring economy has been heavily dependent on fossil fuels, with over 85% of the total energy generated through the usage of gas and oil. However, the recent embargo on Russian crude oil by the European Union and OPEC+ oil production cutbacks have steepened the global prices of oil and gas.
Bangladesh, being import dependent on the energy sector, has faced soaring inflation and was compelled to cease buying natural gas and shut down many diesel and natural gas-powered power plants as a result. Fossil fuel-based power generation is also known to cause heavy carbon footprints, resulting in adverse climatic impacts that can be partially mitigated by increasing power generation from renewable sources.
The renewable energy sector has had a low share in the country’s energy mix, with only a 3.7% contribution. However, strong strides have been made in the past 5 years, and the country is heavily focusing on incorporating renewable energy, especially solar energy, following the Paris Agreement.
The government had previously envisioned that renewable energy would contribute 10% of the total amount of energy produced by 2020; however, the low adoption rate made the nation pledge to the Climate Vulnerable Forum to generate 40% of the total energy from renewable sources by 2041.
Looking into expanding the possibilities for mutual trade and investments with Bangladesh, The Embassy of the Kingdom of the Netherlands has selected renewable energy as one of the most promising sectors, and the embassy has recently commissioned a solar value chain assessment study, conducted by Larive International and LightCastle Bangladesh.
The study primarily looked into the current status quo of the renewable energy sector, identified intervention streams with growth prospects, and explored opportunities for Dutch players in the local market.
In order to understand the intricacies of the renewable energy sector and map the value chain of different kinds of implementation programs, a market systems assessment was conducted. Key Informant Interviews (KIIs) of various actors in the system were conducted, including EPC contractors, development practitioners, financial institutions, government entities, and industrial players that are adopting solar solutions.
From the insights gathered, LightCastle Partners identified potential growth opportunities in rooftop solar energy with net-metering and distributed renewable energy (DRE) solutions.
While solar parks are major contributors to the renewable energy sector, the scarcity of accumulated land masses can make the implementation process cumbersome. On the other hand, the growing demand for LEED-certified apparel factories and other industries reducing dependency on fossil fuels has shifted demand towards rooftop-based solar.
Along with it, rural-landscape-based interventions such as solar irrigation, cold storage, EV charging stations, and water purification systems can benefit from the net-metering program, as the country has recently reached over 98% grid connectivity.
The consulting team also mapped out opportunities in the Dutch renewable energy ecosystem by identifying potential areas of collaboration between the Dutch and Bangladesh renewable energy sectors.
The Larive-LightCastle team has identified potential strengths of the Dutch players that can be utilized in the country’s landscape. Prospective intervention scopes include solar-powered cold chain storage of perishable products (e.g., agri-food, and pharmaceuticals), a water desalination program, and sustainable greenhouse solutions in the horticulture sector.
Additional possibilities in the floating solar sector and aquaculture fish farming have room for investigation as well. Investment in solar energy is capital intensive, and access to finance can be difficult for small-scale business owners. Therefore, Dutch players can also facilitate OPEX investment models to further facilitate the growth of the solar energy sector in Bangladesh.
With the right support from development partners, Bangladesh has the possibility of achieving its ambitious targets in the medium to long term.