Solar House System changes rural economy in Bangladesh

Tuesday, September 13, 2005

The World Bank-funded Rural Electrification and Renewable Energy Development (RERED) project, which has a target to install 50,000 Solar Home Systems (SHSs) in remote rural areas, has achieved a notable success three years ahead of the schedule, reports UNB.

Three special ingredients – creative partnerships, clever technical designs and financing – have contributed to the success of Solar Home Systems, said a World Bank press release.

Infrastructure Development Company Ltd (IDCOL), Rural Electrification Board (REB), Palli Bidyut Samites (PBSs), micro-finance institutions (MFIs) and private sector battery manufacturers and equipment suppliers formed a unique 5-way partnership to bring solar home system to rural areas.

The private sector designed and produced low cost solar panels and battery chargers that could be maintained in local conditions. IDCOL, a creative refinancing scheme, refinanced 80 per cent of the loans extended by MFIs to households for purchasing solar home system and MFIs expanded their rural electrification lending well beyond what they could do with their own resources alone.

The solar electrification programme is already yielding a positive impact on the rural economy. Apart from connecting rural Bangladesh with the rest of the world through television, it has created more than a thousand skilled and unskilled jobs.

Due to the benefits of this project and for its successful implementation, the World Bank is providing additional funding to IDCOL, which hopes to install 200,00 SHSs in remote rural Bangladesh.

Bangladesh lags behind many of other countries in the world in terms of access to electricity as only 35 per cent of the entire population here have an access to electricity. It has an ambitious target to ensure access to electricity for all by 2020.

As conventional grid electricity cannot connect people living in isolated areas, other means of electrification, including renewable energy options like solar and wind is being considered.

It is said electricity is crucial for economic growth. Apart from everyday use such as lighting and watching television, studies have also shown that there is a direct correlation between productive use of electricity and increase in household income.

Source: Financial Express (link opens in a new window)