Delay may discourage potential investors

Although large renewable energy projects, especially solar schemes, are being taken in both public and private sectors in line with the government's power sector mega plan, the delay in introducing "feed-in tariff" or FIT may discourage potential investors, according to industry insiders.

They feel that FIT was essential for creating confidence among investors for the sector's development or else they may pull out at one stage.

FIT is a kind of subsidy provided to reduce renewable energy production costs. Under an FIT, eligible renewable electricity generators, including homeowners, business owners, farmers and private investors, are paid a cost-based price for the renewable electricity they supply to the grid.

This was first introduced in Germany to encourage investors to produce solar energy. So far, 80 countries have introduced FIT, but Bangladesh lags behind though it is encouraging green energy.

The government has planned to generate at least 10 percent of the required power from renewable energy by 2020. It now produces 165MW of power from renewable energy sources, which is about 2.2 percent of the total electricity produced in Bangladesh.

The Power Division is now in a process to award contracts to set up 220MW solar power plants in private sector, according to official sources.

They said Bangladesh Energy Regulatory Commission (Berc) recently finalised the draft of a law to introduce FIT as a mandatory provision for the renewable energy producers and electricity distribution agencies.

Asia Foundation, a regional non-government body, has provided financial and technical support and taken stakeholders' opinions in preparing the draft, proposing to fix Tk 13 per unit for solar power which could be provided to the grid under a long-term contract of over 20 years.

It posted the provision on its website to get public opinion.

Now, the final draft is going to the Power Division to accommodate government views. "We are planning to send the FIT draft to the Power Division as part of Berc's legal obligation," said its member Dr Selim Mahmud.

He, however, informed that standard tariff was yet to be finalised. He said once Berc receives the Power Division's opinion, the regulating agency then will send it to the law ministry for legal vetting.

According to Mahmud, the entire process may take a little bit of time. Once the law ministry's clearance is received, Berc will issue a gazette notification to make it into a law.

Power Ministry Joint Secretary and member of Bangladesh Sustainable and Renewable Energy Development Authority (Sreda) Siddique Zobair said promulgation of any tariff related regulation is absolutely under Berc's jurisdiction.

"If they move for any provision, the Power Division stands ready to extend its support," he said, adding that both the power ministry and Sreda will take measures to enforce the FIT.

He informed that once the FIT regulations are in place, the Power Division will move to enforce the power distribution utilities to buy a certain percentage of electricity from renewable energy producers.

Dr Mohammad Tamim, head of Petroleum and Mineral Resources Engineering at the Bangladesh University of Engineering and Technology, said there has to be an obligation for power distributors to buy the power.

"Advancements in renewable energy will be difficult without a feed-in tariff scheme in place," he said, adding, "Big plants are unlikely to be set up if they cannot operate commercially."

Munawar Misbah Moin, managing director of Rahimafrooz Renewable Energy, said the government has to come up with regulations that will help it attain goals and encourage private sector investment. "The regulations need to be simple, clear and transparent," he said.