Bangladesh, Rural Electrification and Renewable Energy Development

June 25, 2002 - The World Bank

*Delivers rural energy services by utilizing off-grid renewable energy technologies
* Rural electrification project being implemented at a significant scale with power distribution cooperatives

Project Overview

The Rural Electrification and Renewable Energy Development project aims to support Bangladesh’s vision of attaining a higher level of social development and accelerating economic growth by increasing access to electricity in rural areas. The project will support the Government’s efforts to expand electricity coverage through both grid and off-grid options. The project will be implemented by the Rural Electrification Board (REB) and the Infrastructure Development Company Limited (IDCOL). The key project components are: (i) assisting the REB to expand the reach and reliability of rural grids, and to improve the operational and financial performance of Palli Bidyut Smity (PBS) (rural electricity cooperatives); (ii) promoting the use of solar home systems in remote rural areas where grid expansion is inappropriate; (iii) facilitating the development of small power projects, using renewable energy sources where feasible, to be owned and operated by the private sector or by NGO/community-based organizations; and (iv) increasing the productive use of electricity as a more effective anti-poverty instrument.

Innovative Concepts

The Rural Electrification and Renewable Energy Development project in Bangladesh delivers rural energy resources through the use of off-grid renewable energy technologies. The success of an ongoing Bank-GEF financed ESD Project has demonstrated that off-grid systems, such as solar home systems and community-level independent grids, are frequently better suited to serve remote, rural communities in an economic and efficient manner. The PBSs, private sector and community based stakeholders (NGOs, MFIs) will receive project support to implement off-grid options rather than a utility-based approach. This choice utilizes the strengths of the vibrant NGO/MFI sectors in Bangladesh and makes off-grid alternatives socially acceptable and commercially sustainable. The utilities are not organized for social mobilization, have limited access at the village level, and are not generally interested in off-grid options, since these constitute a small part of their overall business. The project also incorporates grant financing from the GEF Trust Fund. A portion of the grant will be given to selected PBSs as installation grants to finance the fee-for service solar home system (SHS) provision for rural consumers. The REB will be eligible to draw the grant on an output basis and pass it through to the concerned PBS.