The cost of generating electricity through solar power plants gradually dropped across the globe in the last decade, but this is not the case in Bangladesh because the government plans to build two more such facilities having a much higher cost per unit of electricity.
The government will set up two solar plants each with 100MW capacity at the Sheikh Hasina Solar Park in Jamalpur, and the cost per unit of electricity will be Tk8.90-Tk9.33 ($0.10-$0.11) – almost three times higher than the neighbouring India's usual rates.
State Minister of Power Energy and Mineral Resource Nasrul Hamid recently told The Business Standard that a tender was floated to get the cheapest rate, but the ministry did not receive any bids lower than the mentioned rate.
"The cost of land is included in the project, and this might be the reason behind the high unit costs. The rate of per unit solar electricity goes down when land prices are not included in the project's cost," he clarified.
"Apart from this, our country gets less sunlight compared to India and we see rainfall for around six months a year. The generation cost goes up when these variables are added to the rate," Nasrul Hamid added.
In the past 10 years, the price of solar modules has dropped by 90% in the global market, according to the International Renewable Energy Agency. The price drop is allowing solar electricity generation at a rate cheaper than ever before.
On 13 April this year, Adani Solar Energy commissioned a 50MW power plant in Uttar Pradesh, which will cost Rs3.07, or Tk3.57, per unit of electricity – a rate much lower than Bangladesh's existing and planned solar plants.
Why is the cost high?
The Rural Power Company Limited (RPCL), a subsidiary of the Bangladesh Power Development Board (BPDB), will implement one of the two solar plant projects in Jamalpur. The government allotted 326 acres of land to the RPCL in Madarganj upazila of the district for the project.
Speaking to The Business Standard, RPCL's Managing Director Md Abdus Sabur said, "The power plant will be financed by Indian Exim Bank under the third Line of Credit (LoC). The initial evaluation of the project has already been completed."
Explaining the high generation cost, Md Abdus Sabur said the project has some additional cost that increases the per-unit rate.
"We will have to build a 47-kilometre stretch of transmission lines to feed the national grid. The Power Grid Company of Bangladesh will not bear the cost of the lines.
"Solar power generation cost is lower in other countries because the implementing agencies there do not bear the cost of land and transmission lines."
BR-Powergen Ltd – a joint company of Bangladesh Power Development Board (BPDB) and the RPCL – will build the other plant in collaboration with a Chinese company, and both stakeholders will have 30/70 shares.
According to sources, the BPDB has already issued a Letter of Intent to BR-Powergen and the plant's per-unit cost will be Tk9.33.
When contacted, BR-Powergen's Managing Director Md Fakhruzzaman said there has been no progress in the project other than the allotment of 348 acres of land.
"The joint venture company that will implement the project has not been created as yet. We are currently discussing our share with the Chinese firm as we are aiming for an equal partnership," Fakhruzzaman said.
Bangladesh currently produces 149MW grid-connected solar electricity against an overall total capacity of 25,000MW. Solar power produced by existing plants is also very costly compared to the neighbouring country India.
According to the BPDB's annual report, per unit cost of solar power varies between Tk11 and Tk16 in Bangladesh.