

Sustainable and Renewable Energy Development Authority (SREDA)’s Energy Efficiency & Conservation Master Plan up to 2030 sets a mid-term energy efficiency and conservation (EE&C) national target as to reduce the country’s energy intensity (energy consumption per production value) by 15% by fiscal year 2020/21, in comparison with fiscal year 2013/14. To achieve this goal, the master plan identifies five major interventions which are: (i) energy audit, (ii) EE&C building (iii) EE&C labelling (iv) EE&C finance, and (v) awareness raising. Energy Efficiency & Conservation Promotion Financing (EECPF) Project comprises the fourth pillar among the necessary interventions. The significance of implementing this EECPF Project is also outlined in the 7th Five Year Plan and EE&C Regulations of the Government of Bangladesh.
SREDA, after its establishment in 2014, has been working for promotion of renewable energy and EE&C in collaboration with the governmental organisations, industry financial sector and international development partners. For EE&C promotion, ADB, GEF, GIZ, JICA KEA, UNDP, WB (in alphabetical order) etc. are the major contributors in terms of technical and financial assistance. EECPF Project fund was created with the support from JICA, Japan International Cooperation Agency, using their 0.01% interest rate loan, with the tenure of 40 years among which the first 10 years is the grace period.
EECPF Project utilises a two-step loan (or financial intermediate lending) instrument for the purpose of policy financing. SREDA extends low interest loan, using this fund, for those who are introducing energy efficient equipment, which are generally more expensive than the conventional type equipment. By offering the benefit of lower financial cost, SREDA is encouraging the investors to select energy efficient equipment as compared with conventional equipment.
Once the borrower introduces energy efficient equipment which was acquired utilising this low interest loan, the borrower reports to SREDA energy consumption data through a designated management information system (MIS). SREDA aggregates and analyses the reported data to calculate energy conservation effect through the implementation of EECPF Project. Along with other EE&C promotion activities initiated by SREDA, progress towards achievement of the set goal is being monitored and reported on regular basis.
There are three executing agencies who are implementing EECPF Project, which are SREDA, Infrastructure Development Company Limited (IDCOL) and Bangladesh Infrastructure Financing Fund Limited (BIFFL). Among these three executing agencies, SREDA is the administrative authority of the Project who is managing the overall implementation arrangements. SREDA is also a technical node for the Project who is responsible for identifying the eligibility of the energy efficient equipment and calculating the energy saving effect from the Project activities. To these ends, SREDA issues the business process manuals for Project implementation, and provides the MIS for data collection and calculation. IDCOL and BIFFL are the implementing financial institutions who extend low interest loan in line with the policies and procedures stipulated in SREDA’s business process manuals. Both implementing financial institutions are provided the loan fund through the Finance Division of the Government. The currency fluctuation risk (between Japanese Yen and Bangladesh Taka) is borne by the Finance Division. The figure below illustrates the basic mechanism of the EECPF Project.
Figure 1: Mechanism of Energy Efficiency and Conservation Promotion Financing Project
As of June 2018, SREDA has given green light to extending low interest loan for seven sub-projects. Table below is a list of the ongoing sub-projects which received SREDA’s non-objection certificates (NOCs). The sub-project proponents are from various industry sectors including ready-made garment (RMG), spinning, cement manufacturing and home appliances assembly. Eligible equipment applied for includes sewing machine, boiler, cement mill, air conditioner, chiller, spinning machine, air compressor, among others. Energy saving effect (on process for which the energy efficient equipment is being introduced) is calculated to be between 10 to 50%. The energy saving ratio varies due to differences in equipment, process and available baseline data. The number of approved sub-projects will be increasing rapidly as the Project is now in full-swing implementation.
So far, for these seven sub-projects, more than 60% of the available fund money has already been allocated. With many applications being submitted, it is likely that the remaining 40% of the entire fund amount will also be earmarked in due course. With considerations for the robustness of demand for this EECPF Project loan, SREDA is currently seeking for additional resources for topping up the fund.
Table 1: List of Sub-projects under EECPF Project
SI |
Sector |
Implementing Financial Institute (IFI) |
Energy efficient equipment (examples) |
Energy saving ratio |
1 |
Ready-made garment |
IDCOL |
Direct drive sewing machine Once-through boiler |
25% |
2 |
Cement manufacturing |
IDCOL |
Vertical roller cement mill |
34% |
3 |
Ready-made garment |
BIFFL |
Direct drive sewing machine VRF air conditioner |
50% |
4 |
Spinning |
BIFFL |
Automatic winder Waste heat recovery & absorption chiller |
50% |
5 |
Spinning |
BIFFL |
PM motor-driven ring spinning frame Pneuma-less roving frame |
11% |
6 |
Spinning |
BIFFL |
Air-jet spinning machine Waste heat recovery & absorption chiller |
22% |
7 |
Home appliances assembly |
BIFFL |
Inverter controlled air compressor |
20% |
Note: As of June 2018
VRF: Variable Refrigerant Flow
PM: Permanent Magnet
Figure 2: Examples of Energy Efficient Industry Equipment
Additional applications for the EECPF loan are coming to IDCOL and BIFFL from a number of companies in a variety of sectors. Some of the examples are: glass manufacturing, food processing, weaving, electronics, and so on. Upcoming applications include proposals to install equipment such as gas-turbine cogeneration equipment, heat reflective glass for building EE&C, centrifugal air compressor, amorphous-core transformer, air-jet weaving machine, LED lights, etc.
Under assumption that all of these seven sub-projects are in full operation, the expected annual energy saving was calculated to be 11,000 toe or 39,000 MWh. Assuming that the unit cost of 1 MWh of electricity is BDT 8,000, the total cost saving from these seven sub-projects will add up to BDT 300 million per year.
Effect from seven approved sub-projects is derived from allocating approximately 60% of the total fund amount. Assuming that entire fund has been allocated, the effect will be 1.7 times as much as the current calculation. Effect from using the entire fund will therefore be calculated as 18,000 toe or 65,000 MWh, which amounts to approximately BDT 520 million per year.
It should be noted that the direct benefit which is calculated here is only on energy bill cost. Additional benefits, by means of improved production efficiency, higher reliability of equipment, factory space saving, emissions reduction, are also expected. Including these indirect benefits, the EECPF Project effect is likely to be more that what is being exhibited in the next table.
Table 2: Expected Energy Conservation Effect of EECPF Project
|
Effect from 7 approved sub-projects |
Effect from the entire fund amount |
Energy |
11,000 toe |
18,000 toe |
conservation |
=39,000 MWh |
=65,000 MWh |
Monetary term |
BDT 300 million |
BDT 520 million |
Note: As of June 2018
toe: ton oil equivalent = 0.283 MWh (Megawatt hour): source = Draft Energy Audit Regulations
The cost of 1 MWh electricity is converted to BDT 8,000.
source = rounded from 2015 electricity tariff for medium voltage general purpose rate
Once the Government’s Energy Audit Regulation comes into force, SREDA intends to integrate the EECPF Project implementation with the energy audit practice. By doing so, the EECPF Project may function as an incentive to promote the conduct of energy audit. Likewise, the EECPF will benefit from the enforcement of the Energy Audit Regulation in that data submission will become a statutory mandate for the industry.
Further, SREDA will also encourage the implementation of Component III of this EECPF Project, which is a mechanism to extend low interest loan for energy efficient home appliances purchase. To have this realised, SREDA is promoting the introduction of energy efficiency star labelling programme.
Through the implementation of this EECPF Project, it was found that energy efficient equipment contributes not only to saving energy but also to improving production efficiency in broad terms. There are also cases where the energy efficiency equipment also brings forth better safety (notably with the case of once-through boiler). Such being the case, SREDA will enhance the EECPF Project scope so that it will bring about benefits to a wide range of industry.