In the village of Aharkandhi in northeastern Bangladesh, life has changed since homeowners began installing solar panels on their roofs. At night, families gather at the local grocery store to watch TV, which boosts business. Children study longer than before.
This is due in part to a World Bank-financed electrification project to promote off-grid electricity in rural communities. This year, the project became the first renewable energy program in Bangladesh to be issued carbon credits for lowering greenhouse gas emissions and the world's first Programme of Activities for solar home systems under the UNFCCC’s Clean Development Mechanism (CDM) to generate carbon credits.
With access to electricity, people are finding new ways to increase their income, and the word is spreading quickly across villages.
Mujib, a shopkeeper, saw his income increase by 1,000 Tk per month (about US$13), and his evening business grew after his solar home system was installed.
After Hajra installed solar panels, she was able to power five lights so her children could study, a TV, and a mobile phone charger that allows her to keep in touch with her husband, a laborer. Previously, she used kerosene, and she remembers the fumes that filled her house.
This is one of the fastest growing renewable energy programs in the world – to date, more than 3.5 million solar home systems have been installed in rural Bangladesh, creating 70,000 direct jobs.
Bolstering financing through carbon credits
Solar power is helping to green Bangladesh’s energy mix. Renewable energy accounts for less than 1 percent of the country’s energy generation, but the government aims to have 10 percent of its national grid powered by renewable energy by 2020. Adding solar panels to rural homes is an important part of the country’s sustainable development strategy.
In addition to providing energy, the solar home systems are reducing greenhouse gas emissions and earning carbon credits by reducing the use of kerosene lamps for lighting and diesel generators that had been used to charge batteries.
The program is projected to deliver 1.1 million Certified Emission Reductions, or carbon credits, by 2016, issued under the CDM. The carbon credits are sold to the World Bank’s Community Development Carbon Fund, generating a revenue stream that is shared by the companies involved in financing, installing and servicing the solar panels to expand the program.
It is also the first solar home system Programme of Activities under the UN’s Clean Development Mechanism to generate carbon credits. As an approved Programme of Activities, it is able to combine 13 similar projects under one country-wide umbrella program, lowering transaction costs and creating the possibility to add similar projects in the future in a simplified process.
The sun provides light in rural Bangladesh
Benefits of solar panels abound. Communities are reporting a significant increase in the quality of life thanks to better, safer, and cheaper lighting and the ability to power electrical appliances, cell phones, TVs, and radios. Remote and poor families can now hear weather forecasts on the radio and watch the news on small TVs, which becomes more than just a luxury in a country that frequently faces severe weather.
Night lights are improving safety in the dark, especially for women and children. Replacing conventional kerosene lamps and their toxic fumes helps reduce indoor air pollution, fire hazards, and health risks such as respiratory diseases. And the solar panel industry is booming, including employing Bangladeshi women.
Solar panel subsidies help the poor
The solar panels are subsidized by the Infrastructure Development Company, Ltd. (IDCOL), a state-owned financial institution that provides families with grants and credits to pay for part of the cost and provide electricity in a country where only 60 percent of the population and about 42 percent of rural households haves access to electricity. Around 13 million rural households still live without power. Even those connected to the grid experience black-outs during peak hours because electricity supply can’t keep up with demand.
Installing solar panels has become a reliable and increasingly financially viable solution for more Bangladeshis. A 20 watt-peak system costs about US$150, which is paid by the users over three years and provides enough electricity to power two lights and one mobile charger. Bangladeshis even in the most rural areas rely on cell phones.
Overcoming the affordability barrier has been crucial in allowing for a widespread adoption of solar home systems. The cost of solar panels has come down over time, and today there is a growing trend for very small, 10 watt-peak panels, allowing poorer households gain access to electricity.
The Bangladesh program is one of the most successful solar home system programs in the world. It's a model that is bringing cheaper and more reliable electricity to remote areas of the country and has potential to go beyond Bangladesh to be scaled up in other developing countries.
Photos: Xiaoyu Chang/World Bank
Thank you for the clarification. I knew that Grameen Shakti's carbon credit was under consideration by the CDM board several years ago.
I'd be interested to know whether the project finds any evidence of a direct link between the use of SHS for improved access to energy and increased/enhanced resilience and/or adaptation to climate change, particularly for vulnerable groups?
Thank you for your question and concern about the resilience of Bangladeshis to climate-related events. It is an issue we are very concerned with, especially considering the vulnerability to climate change of the very poor. The Bangladesh Solar Home System program featured in this blog was designed to focus on the mitigation aspects of climate change, mainly by replacing kerosene with solar power. We are not aware of any algorithms that make the direct connection between SHS and resilience and/or adaptation to climate change at this point, however.
The World Bank Group has been working closely with other international and national development institutions to improve the resilience of communities and ecosystems to climate change and we are in the process of developing indicators to measure resilience on the national level. In Bangladesh, specifically, we are financing a system of storm shelters in schools that provide refuge during typhoons. Also, the Global Facility for Disaster Risk and Recovery and the World Bank Group are supporting the strengthening of weather and hydrological information systems in a number of countries, which are key to building disaster and climate resilience, including for cities in Bangladesh and other areas flooded during the monsoon. Furthermore, as of August 2014, all World Bank Group projects financed by IDA include resilience screening. We hope these measures will help strengthen the resilience of countries to the severe impacts of climate change.
This can't be right. Grameen Shakti proposal for carbon credit was submitted to CDM many years ago. It didn't get the approval?
Thank you for your comment. To clarify, a CDM Programme of Activities (POA) comprises a number of sub-projects called “Component Project Activities”, or CPAs. The Bangladesh Solar Home Systems POA and first CPA were registered under the CDM in June 2012 and 12 additional CPAs were registered under the POA in June and August 2013.
Grameen Shakti is the largest Partner Organization in terms of number of SHS installations, and 7 out of the 13 CPAs covered by the POA are being implemented by Grameen Shakti. Grameen Shakti originated the program that installs Solar Homes Systems, which was later scaled up by IDCOL, the entity that manages and coordinates all of the CPAs.
This is the first time the POA has issued carbon credits, which are being purchased by the World Bank Group’s Community Development Carbon Fund, and we are excited about this achievement.
The issuance in January, mentioned in this blog post, is for CERs generated under the first CPA, developed by IDCOL. Grameen Shatki is expected to earn and sell its first carbon credits to the Community Development Carbon Fund later this year.
As to "A 20 watt-peak system costs about US$150, which is paid by the users over three years and provides enough electricity to power two lights and one mobile charger"
Somewhat surprised that it is this high a cost for the system as the prices have been plummeting so much (is the cost heavily associated with the costs for managing the loan/etc?), however it would be good to place this within a context in several ways:
1. How much would a 'typical' Bengali household pay for kerosene and for charging their phone(s) w/out the solar? I have seen figures in the range of $10/month for the kerosene. (For example, http://getenergysmartnow.com/2009/05/08/lighting-up-the-developing-worl…)
2. Related: If this is being partially paid for with carbon credits, is the $150 the cost to the consumer, total cost of the system, ...?
3. The system is paid off in three years. How many years will it last?
4. Great that w/Grameen Shatki & WB that there is carbon credit support to a bundling of household systems. Is there a clear discussion of the process (time, resources, etc ...) that was gone through to get this approved as a POA that can help similar distributed solar programs secure similar support?
Thank you for your questions.
1. How much would a 'typical' Bengali household pay for kerosene and for charging their phone(s) w/out the solar?
The payment for kerosene used for lighting is around 1-2% of the monthly incomes of Bangladesh households. (IFC report, pg 54) Considering that the average monthly household incomes in Bangladesh is 11,480 Taka/month (Bangladesh Household Income and Expenditure Survey, 2010), the monthly expenditure on kerosene is estimated to be around 115-230 Taka or approx. USD 1.5-3.
2. If this is being partially paid for with carbon credits, is the $150 the cost to the consumer?
The carbon credits are allocated to the Partner Organizations (POs) to expand the systems installation and scale up the program. The end-users pay a total of USD 150 for the 20 Wp solar home system through various financing options. The price takes into account the subsidy by IDCOL.
3. How many years will it last?
The typical lifetime of a solar panel is 20 years while the lifetime for battery that stores the power is 5-10 years depends on how well the system is maintained. Currently, customers receive a free 3-year warranty for annual maintenance.
4. Is there a clear discussion of the process to get this approved as a POA that can help similar distributed solar programs secure similar support?
The Bangladesh Solar Home System PoA has potential to be replicated. In the streamlined CDM process under the UNFCCC, future PoAs are expected to require less time for the CDM regulatory process
I enjoy what you guys are up too. Such clever work and reporting!
Keep up the terrific works guys I've added you guys to my personal
Concerning cost, I imagine given that we are speaking of photovoltaic panels the big expenses (oprating cost) is not the panels as such but the battery pack and controller. I am wondering does the amortization over 3 years include reserves so that battery packs that only have a limited lifecycle can be replaced? How is the financing of the battery replacement organized? Is there some sort of recycling/reconditioning/lease program?
Thanks for your question. You are right, battery has now become the single most expensive component of a Solar Home System. No, the amortization doesn't include any reserve for battery replacement. However, under IDCOL's program the suppliers have to provide 5 years warranty for the battery and 3 years for the charge controller. IDCOL carries out inspection of warranty expired batteries on a regular basis. So far, our study has shown that most of the batteries are being used for more than five years (7-8 years). Therefore, the battery replacement requirement is not as urgent.
Yes, we have a comprehensive battery recycling policy in place. IDCOL's Partner Organizations (PO) are required to collect the warranty expired batteries and recycle them through IDCOL approved battery recyclers. Currently, we have 3 such recyclers having ISO 14001 and OHSAS 18001 certification. IDCOL provides a collection incentive of US$5 for each battery collected and another US$5 for each battery recycled. In addition, the Battery Suppliers are required to pay 25% of the cost of new battery as the salvage value for the expired battery, which amount is adjusted against the cost of a new battery. In order to ensure affordability of the customers to replace an old battery with a new one, IDCOL channels US$100 as soft refinancing facility to its POs for each new battery sold. In turn, the POs sell the new battery in monthly installments to the households.
Charge controller is not a very expensive item in Bangladesh. It cost around $10, which the households can easily afford.
Sir,I think your power pack system is so expensive.
150$ even after subsidy means rediculas. 1kv solar system for rooftops may be around 1500$,which may provide 2fans,5lights and TV, mobile charger for entire family, uninterruptedly.NO battery in the world work for 20 yes.
Many thanks for your observation and suggestion. Would appreciate if you could send us details about the proposed $1,500 1kv solar power system. We are open to new technology and innovation.
Warranty for battery under our program is 5 years only.
Great initiative! However, cost is indeed on the higher side! Have you ever tried to set-up SHS connected to rural grid? This would definitely reduce cost dramatically as no battery would be required at the first place.
Thanks for your observation. These systems are installed in off-grid areas only. Therefore, the opportunity of tying them with the grid is not possible. However, we finance 'solar mini-grid' projects as well. These projects produce grid quality electricity which is distributed through a local grid developed under the project. Generally, they are 100-150kw projects serving around 400 small businesses and households.
Thanks for the clarification. What is the typical cost involvement to set-up such a 'solar mini-grid' project? Appreciate if you can put some light on cost comparison between SHS & Mini-grid.
This is a good project from grameen shakti and world bank. How can my owe community benefit from this project? From akure, Nigeria.
This is project of Infrastructure Development Company Limited. Grameen Shakti is one of the 57 partner organizations involved in implementing the project. They are the largest among all partners.
Please keep in touch and follow our website www.idcol.org for information. Would be glad if we are of any assistance to you.
Did your organization have any planing to extend this programe to other countries they are facing same power crises.
I am very pleased to announce that almost 400,000 carbon credits were issued for the Bangladesh Solar Homes Systems Programme of Activities (POA), generated by 12 individual programs owned by Grameen Shatki (the largest Partner Organization) and IDCOL (the coordinating managing entity).
This is the biggest-ever issuance for a POA in a least developed country, and the largest issuance in Bangladesh to date. The World Bank Group’s Community Development Carbon Fund provided support through technical assistance and is purchasing the carbon credits, creating a revenue stream for the program.
As I wrote in the blog above, this program provides access to electricity and jobs in poor rural communities by installing solar panels on the roofs of homes and small businesses. Under this POA, 2.8 million solar home systems have been installed, benefitting over 9 million people.
The reason these renewable schemes are taking hold in the developing world has little to do with their econommic viability, but rather to the political correctness agenda of the World Bank, which rules out more efficient fossil energy schemes.
For the money invested, the Bangladeshis would be able get much more, cheaper electricity, if this political agenda was dropped, and priority given instead to helping people.
is there any official analysis on the overall economic impact of these projects?
I am really pleased to hear these success story of Bangladesh. Thanks to World Bank that they are supporting Bangladesh pervasively. I need an information, can anyone please help me to find this information in my thesis paper? I want to know about the total amount of Solar Panel demand in Bangladesh. I am developing a demand and supply curve for my thesis. How can I will be able to find the information regarding total amount of solar panels are required in Bangladesh? Thanks in advance.
I am a Masters student in Journalism at the University of British Columbia. For International Reporting Program, I would like to contact the author os this article for further information. I would love to make a piece similar to this one (we focus on video journalism) so it would be great to get in touch. Please contact me if you see this message!
Thanks and all the best!
Supplementary information available via this link:
IDCOL Solar Home Systems Program snapshot as recent as April 2016:
I am currently finishing my Master Degree in Economic and Social Sciences at Università L.Bocconi.
For my thesis, I'm considering to do an empirical project on micro-credit. More specifically, I would like assess the performance of green microcredit on some variables, such as human well-being and environmental sustainability. The questions may be: can microfinance contribute to the protection of the environment? What are the effects of green programs on micro-entrepreneurs?
The main obstacle is to collect data in order to run the regressions. May you give me some advice in order to find more information on this topics, in particular for the collection of the data to analyze with statistical and econometric tools (for instance, the amount of grants given to the households..)? Moreover, is there any official analysis of the overall impact of these projects?
BBDF.Org stands for Bangladesh Bio gas Dev Foundation is the premier body of the Biogas trade in Bangladesh.
Can the Biogas projects in Bangladesh be included in this POA or does a new POA need to be floated.Is some funding available for BBDF for its registration,or prepare a POA & submit it to the UNFCC?
Appreciate the efforts of BD in use of Solar energy.Another cheap source can be waste organics garbage,cow dung,bagass,wind power,hydro electricity and probable use of piezoelectriciy and thermocouple in generating electricity.Reducing waste of expensive electricity through AC inverters in Industry and home.I am both an oilfield engineer and scientific researcher.Despite opposition from my fellow petroleum guys I favour unconventional and non fossilized sources of energy.wish you success in your efforts.
We import and supply Pico PV System. We are interested to make a CDM project on PICO PV system. What are the requirements for such projects?
This is a very good initiative. But is this project reaching the poorest of the poor? They cannot afford $150 for the SHS. How can they be brought under the program? Can the carbon credit provide grant to bring them under the program?
Grameen Shakti I believe charges Tk 10000 (approx $120) for two lights and one socket for phone charger. So the Partner Organizations are charging $30 to deliver the SHS. Why the service charge is 20%? Also the price of solar panels are coming down. So there is a need to reduce the price to an affordable amount --$100 and provide subsidy.
Dear sir,I want to set up my building one solar energy pls help.