Empowering Bangladesh’s Energy Landscape: Germany’s Support For Sustainable Development Initiatives – Analysis


Germany has committed to providing a financial aid package totaling Tk2,215 crore (€191 million) to Bangladesh, earmarked for the execution of 13 projects spanning energy transition, sustainable urban development, supply chain enhancement, biodiversity conservation, and women empowerment initiatives. Executed through two bilateral agreements in Technical Cooperation and Financial Cooperation, signed on September 03, 2023, the allocation comprises €55 million under the Technical Cooperation agreement and €136 million under the Financial Cooperation agreement.

The agreements, ratified by Sharifa Khan, Secretary of the Economic Relations Division within the Ministry of Finance, and Jan Janowski, Chargé d’Affaires of the Federal Republic of Germany in Bangladesh, signify the ongoing commitment initiated during government negotiations in December 2022. Notable projects under these agreements include endeavors focusing on energy efficiency, renewable energy, vocational training, climate-smart urban development, sustainable supply chains, biodiversity preservation, and support for Rohingya communities in Cox’s Bazar. The projects are carried out through entities such as GIZ, KfW Development Bank, and BGR, overseen by the German Embassy in Bangladesh, with the aim of advancing the sustainable development goals (SDGs) and aligning with the Climate Goals of the Paris Agreement. This initiative builds upon Germany’s longstanding history of financial and technical assistance to Bangladesh since 1972, totaling over €3 billion, with the current portfolio comprising 23 projects amounting to €452.5 million in loans and €161.054 million in grants. 

But this is part of a continuous partnership between the two states. However, this collaboration represents a consistent and ongoing partnership between the two nations. These are a continuation of some remarkable efforts. Collectively, these endeavors will play a pivotal role in advancing Bangladesh’s efforts to diversify its energy mix and establish a reliable and enduring source of energy. The sustained commitment from both parties underscores a shared commitment to addressing the evolving energy needs of Bangladesh and fostering a resilient and diversified energy landscape for the nation’s future.

The Renewable Energy Program (October 2018 – December 2023) with a budget of 70 million Euros, executed by the Infrastructure Development Company (IDCOL) and supported by KfW, is designed to propel the adoption of renewable energy technologies. This initiative employs a dual-pronged strategy: firstly, loan funds are channeled to IDCOL for the implementation of commercial and industrial-scale solar rooftop projects in Bangladesh, positioning rooftop solar panels as financially sound investments with positive economic implications for the broader population.

Secondly, grant funds are allocated to perpetuate the success of IDCOL’s Productive Use of Renewable Energy Program, targeting off-grid renewable energy projects, including solar irrigation pumps, compact solar-powered electricity grids in remote areas, and the promotion of biogas and solar cold storage technologies. IDCOL disburses sub-loans directly to investors, NGOs, or user groups, and accompanying measures involve the allocation of grant funds to support the development of financial products, internal procedures, and the establishment and monitoring of technical and quality standards in the solar rooftop market.

The Productive Use of Renewable Energy Program (PUREP), spanning from April 2014 to December 2021 with a funding of 10.5 million Euros, is facilitated by the Infrastructure Development Company (IDCOL). This initiative strategically offers concessional financing for off-grid renewable energy technologies geared towards income-generating purposes, including solar irrigation pumps, biogas-based electricity generation on poultry farms, and solar minigrids in remote areas and river islands, catering to the energy needs of local populations. IDCOL disburses sub-loans directly to investors, NGOs, or user groups, while KfW, representing the German Government, provides crucial support to enhance the financial viability of projects in an early market, taking into account subsidized electricity and diesel prices for consumers. Additionally, IDCOL receives assistance in developing pertinent financial products, refining internal procedures, and ensuring the vigilant monitoring of technical and quality standards.

The Enhancement of Power Transmission Program in the Western Zone and Energy Efficiency in the Grid-Based Power Supply, spanning from May 2016 to June 2024 with a financial allocation of 139.5 million Euros, is overseen by the Power Grid Company of Bangladesh Ltd. (PGCB). Bangladesh’s transmission sector, demarcated by the Jamuna/Padma River, exhibits an asymmetry in development between the rapidly progressing eastern region (Dhaka area) and the comparatively lagging western side, contributing to regional segregation. To address this, the Western Zone Project focuses on rehabilitating and constructing key substations and transmission lines in the western transmission network, including the establishment of three new substations and three transmission lines. Simultaneously, the Energy Efficiency Project targets the rehabilitation and construction of essential substations and lines in PGCB’s transmission network, involving the creation of 11 new substations and 200 kilometers of new transmission lines nationwide. The overarching objectives encompass contributing to a more reliable and efficient transmission and distribution system throughout Bangladesh, achieving CO2 savings, addressing environmental and social concerns, enhancing staff safety, preserving nature, and establishing equitable conditions for affected communities. Complementary measures involve investment-related training, capacity building activities for PGCB, and the establishment of an environmental and social unit supported by a 2 million Euro fund.

The Modernization of Power Distribution – Smart Grids Phase I, scheduled from October 2021 to December 2025, with a budget of 122.2 million Euros, involves collaborative efforts between the West Zone Power Distribution Company Limited (WZPDCL) and the Bangladesh Rural Electrification Board (BREB). The current downstream transmission and distribution networks lack the capacity to accommodate the burgeoning energy supply, resulting in frequent power outages and extended shutdowns, particularly in rural areas. This situation prompts reliance on traditional yet partially harmful energy sources like biomass or fuel. KfW’s initiative focuses on the refurbishment of 43 substations, the construction and renovation of distribution lines, and the implementation of an automated, data-driven network control system. The overarching objectives include enhancing living conditions for the population, improving working conditions for businesses by minimizing losses, and achieving a more reliable and efficient electricity supply. KfW supports the promotion of safer, reliable, and stable energy through collaborative efforts with WZPDCL and BREB. The investment measures aim to reduce distribution losses, lower CO2 emissions, and enhance overall supply. Additionally, two accompanying measures aim to strengthen WZPDCL and BREB across various operational aspects.

Energising Development Bangladesh (EnDev) operates from January 2021 to December 2023, with a budget of 2.25 million Euros, and is administered by the Bangladesh Bondhu Foundation (BBF). The previous phase involved a pilot project by EnDev to stimulate the market for clean alternative cooking fuels, such as briquettes made from waste biomass, including faecal sludge, and higher-tier stoves. In response to the Covid-19 pandemic in 2020, EnDev undertook initiatives to support affected communities, including assistance for partner entrepreneurs to restart businesses, installation of solar energy systems in local health complexes, and livelihood support through the provision of solar and renewable energy. In the current phase (2021 – 2023), EnDev aims to foster the development of the e-cooking appliance market in Bangladesh through a Result Based Financing (RBF) scheme, offering incentives for manufacturers and importers. The objectives encompass providing efficient and clean cooking, supporting the market for modern energy facilities, including e-cooking appliances and biomass-based improved cooking technologies, and aiding the development of solar battery charging for e-rickshaws. EnDev supports the training of stove builders and sales staff, including local women for repair and after-sales service, referred to as ‘Bondhu Chula doctors.’ Additionally, EnDev seeks to demonstrate business cases for solar battery charging of e-rickshaws through stand-alone or grid-connected net metering systems, collaborating with SREDA, ongoing GIZ energy projects, and the planned transformative mobility DKTI project focusing on e-mobility strategies and regulatory frameworks for the transport sector.

The Renewable Energy & Energy Efficiency Programme (REEEP) II, active from November 2018 to January 2022 with a budget of 4.15 million Euros, collaborates with the Sustainable and Renewable Energy Development Authority (SREDA), Bangladesh Solar & Renewable Energy Association (BSREA), Bangladesh Garments Manufacturers & Exporters Association (BGMEA), and Consumers Association of Bangladesh (CAB) to fortify sustainable energy development in Bangladesh. The initiative focuses on fostering collaboration among the government, private sector, and civil society actors, identifying organizational development needs for SREDA and sector stakeholders in renewable energy and energy efficiency. The Technical Cooperation (TC) module aids the government in formulating conducive energy policies and regulations, supporting SREDA in implementing a national awareness strategy for energy efficiency, and enhancing the capacity of high-potential energy-saving sectors such as the textile and garment industries. With a goal to extensively disseminate grid-connected rooftop solar systems through net metering regulation, the project aligns with national targets. Objectives encompass improving the framework and cooperation among SREDA and stakeholders, implementing the National Energy Efficiency and Conservation Master Plan (EECMP), and providing technical assistance to the government for the solar rooftop program under Net Metering Guidelines. The project contributes to this by establishing a national rooftop solar service desk and an online portal at SREDA, along with standardizing associated equipment and ancillaries and enhancing the capacity of relevant stakeholders for the seamless implementation of rooftop solar projects under the net metering guideline.

Policy Advisory for Promoting Energy Efficiency & Renewable Energy (PAP), active from August 2021 to July 2024 with a budget of 5 million Euros and under the oversight of the Power Division, Ministry of Power, Energy, and Mineral Resources (MoPEMR), addresses the critical role of an effective power supply based on renewable energies (RE) in a successful energy transition. Despite the considerable potential of RE, their contribution has been marginal (approximately 3.0% of electricity generation) in the Power System Master Plan, indicating a lack of a coordinated strategy between public and private market actors. The realization of energy efficiency potentials and conservation measures has fallen short, jeopardizing the implementation of the energy transition in Bangladesh. The project’s objectives encompass enhancing the policy and regulatory framework to augment the share of renewable energy and energy efficiency in the power sector, raising awareness among policymakers regarding the potentials and limitations of RE for power generation, fostering collaboration between public and private institutions for RE/EE market development, and improving conditions for the dissemination of innovative RE and/or EE technologies in Bangladesh.

The Energy Efficiency and Grid Integration of Renewable Energy (EEGIRE) II initiative, active from June 2021 to May 2024 with a budget of 3 million Euros and under the supervision of the Power Division, Ministry of Power, Energy, and Mineral Resources (MoPEMR), follows the successful completion of the first phase, EEGIRE I (05/2018 – 05/2021), which significantly contributed to integrating solar power into the electrical grid and enhancing energy efficiency. The primary focus of the second phase is the enhancement of technical prerequisites for the expanded deployment of grid-connected decentralized solar power plants. In pursuit of this objective, the project employs a multi-stakeholder approach at various levels, structured into three components representing distinct levels of intervention. Level one aims to empower selected distribution companies to operate their electricity grids more reliably and efficiently with an increasing proportion of decentralized solar power plants, achieved through heightened digitalization. Level two concentrates on the systematic evaluation of innovative instruments, processes, or technologies by energy utility companies to boost the share of decentralized solar power systems. Level three facilitates improvements to the transmission grid stability by the Power Grid Company of Bangladesh, serving as a crucial foundation for the further expansion of grid-connected decentralized solar power plants.

In conclusion, Germany’s resolute commitment to providing a substantial financial aid package totaling Tk2,215 crore (€191 million) to Bangladesh, spanning diverse projects in energy transition, marks a significant stride in bilateral cooperation. Signed through two pivotal agreements in Technical Cooperation and Financial Cooperation, the allocated funds, €55 million and €136 million respectively, underscore Germany’s dedication to addressing the multifaceted challenges faced by Bangladesh in the realm of energy. With projects executed by entities such as GIZ, KfW Development Bank, and BGR, the initiative aligns with sustainable development goals and the Climate Goals of the Paris Agreement. This collaboration builds upon Germany’s longstanding support to Bangladesh, dating back to 1972, with the current portfolio comprising 23 projects totaling over €3 billion. The ongoing partnership signifies a continuous commitment initiated during government negotiations in December 2022. As these energy-related projects unfold, they will contribute significantly to Bangladesh’s energy mix diversification, ensuring a sustained and reliable energy source for the nation’s enduring development. The collaborative efforts reinforce a shared commitment to addressing Bangladesh’s evolving energy needs and fostering a resilient and diversified energy landscape for its future prosperity.

Syed Raiyan Amir

Syed Raiyan Amir is a Senior Research Associate at The KRF Center for Bangladesh and Global Affairs (CBGA).

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