Out-Law News | 12 Sep 2019 | 4:13 pm | 1 min. read
The government of Bangladesh has signed a $185m financing deal with the World Bank to add about 310 megawatt (MW) of renewable energy generation capacity.
The financing was approved in this March by the World Bank. By avoiding burning fossil fuels, the project will help to provide cleaner electricity and air and it also will help to cut emissions by 377,000 tons of carbon dioxide equivalent a year, according to the World Bank.
The funding will finance Bangladesh’s Scaling-up renewable energy project, which will establish the country’s first large-scale 50MW grid-tied solar PV system in Feni district. The project will be implemented by the Electricity Generation Company of Bangladesh and it will help to unlock private investment and aim to raise up to $212m in financing from the private sector, commercial banks and other sources.
World Bank acting country director for Bangladesh and Bhutan Dandan Chen said: "This project will help expand renewable energy generation capacity. By leveraging all sources of finance, the expanded renewable energy sector is ready to push the country’s growth trajectory further."
Bangladesh's secretary of economic relations Monowar Ahmed said: "The project will be important for Bangladesh to tap into its potential for renewable energy generation. Further, it will help reduce a substantive amount of CO2 emissions per year, which is in line with the country’s nationally determined contribution to the Paris climate agreement.”
The $185 million credit also includes a $26.38 million loan and a $2.87 million grant from the Strategic Climate Fund (SCF) of the World Bank’s Climate Investment Funds (CIFs).
Infrastructure expert John Yeap of Pinsent Masons, the law firm behind Out-Law, said: "The reducing cost of PV is driving solar projects across many developing nations, not just Bangladesh. This development is encouraging in terms of reducing the reliance on thermal power generation. "
"However, issues around intermittency and the implications for the grid’s ability to absorb the power, will mean added investment into the transmission network will be required in order to fully exploit the potential for intermittent renewable energy power generation," he said.
In August Bangladesh set up a $400m joint venture with a Chinese company for renewable energy projects, aiming to provide a total 500 MW of power by 2023. China had proposed more than a dozen dual fuel power plants in Bangladesh and three projects with capacity of 1,320 MW for each are close to completion, costing $4.5 billion in total, according to Reuters.