Cabinet body approves country’s largest-ever solar project
02 October 2015, Nirapad News: The Cabinet Purchase Committee has approved a proposal for setting up a 200 MW solar park in Teknaf, on a build-own-operate (BOO) basis with the private sector.
This will be the largest ever grid-connected renewable energy project in Bangladesh, and be located in the far eastern coastal belt of the country.
SunEdison Energy Holding (Singapore) Pte Ltd, a subsidiary of American solar power giant SunEdison, will set up the green project as an independent power producer (IPP) as part of the government’s mega plan to boost power generation.
The state-owned Power Development Board (PDB) will buy electricity from the project at $0.17 cents per kilowatt hour (each unit), which is equivalent to Tk 13.26 for 20 years.
The government will have to spend about $1.1 billion, which is equivalent to Tk 8,595 crore at current exchange rates.
The Cabinet committee, with Commerce Minister Tofail Ahmed chairing in the absence of some senior members like the prime minister and finance minister, also approved three public procurement proposals on Thursday.
These include extension of the PDB`s power purchase agreement with independent power producer (IPP) NEPC, to buy electricity from its 110 MW dual-fuel plant for the next 2 years at a newly negotiated tariff.
Another is the tender proposal of the Rural Electrification Board (REB) to procure 9,350 km of conductor, ACSR and Bare under its project to connect 1.8 million consumers. The Eastern Cable will supply the goods at a contract value of Tk 44.16 crore.
The Cabinet Purchase Committee is the highest Cabinet body to approve such projects so far.
About the 200 MW solar park project, the officials said the plant will be set up on about 1,000 acres of non-agricultural land in the tourist district of Cox’s Bazar.
The PDB will purchase electricity from the project on ‘No Electricity, No Payment’ basis which means the project does not need to have any capacity payment guarantee which is an obvious provision for other IPP projects like rental and quick rental plants that use traditional fuels.
Officials said that initially, two locations —Teknaf of Cox’s Bazar and Tentulia of Panchagarh —were short-listed for the project. But finally, as per the prime minister’s instruction, Teknaf point has been chosen.
Although the Power Division’s joint secretary and convener of the technical negotiation committee of the project Siddique Zobair said since the Teknaf land is mostly not used for agriculture, and so the committee recommended it for the solar project.
Official sources said SunEdison, having experience of 2000+MWp solar power projects in 25 countries across the world, will implement the Teknaf project on 75:25 debt-equity basis.
The US company has submitted its proposal with financing commitment from the Asian Development Bank and International Finance Corporation (IFC) of the World Bank Group for the project.
Official sources said the Power Division has processed the SunEdison project under the Speedy Power and Energy Supply (Special Provision) Act in order to implement it in an expedient manner.
According to them, the recent success in power generation under this provision prompted the government to go for implementing such solar IPP projects under an unsolicited offer.
The sources said total investment of these firms will be between $280-300 million as normally production of each grid-connected megawatt of solar power needs $1.3-1.5 million while generating each megawatt of solar power needs about 3.5 acres of land on average. The private investors will arrange the required lands for their respective projects.
The move for allowing IPP solar plant has been part of the government’s mega plan on power generation that if implemented would reach 24,000 MW by 2021, the sources added.
Under the plan, a special emphasis has been given to power generation from non-conventional sources. The plan aims to increase the total solar power generation by 5 percent by 2015 (meaning 800 MW), and 10 percent by 2020 (2000 MW).
At the ground level though, the progress has lagged behind as despite Bangladesh being home to the fastest-growing market in the world for Solar Home Systems (catering to off-grid areas), total generation could not yet cross 200 MW though it was supposed to reach over 500 MW by 2015.