A green shift: Why industries are loving rooftop solar solution
Local and foreign firms have been discussing investments in renewable energy, especially in solar power
Despite the significant increase in national grid capacity – which now exceeds 25,000MW, far surpassing the demand of approximately 15,000MW – industries are increasingly finding alternative energy sources like solar power more attractive.
The Business Standard has talked with at least a dozen major companies who say they have already moved to solar power for meeting partial energy needs or are exploring different investment models for getting on board.
Rooftop solar power, in particular, is becoming popular due to its reliability and cost-effectiveness, industry insiders said. Also, industries are showing a growing interest in rooftop solar power because of the convenient access to financing.
Also, the adoption of this relatively new solar power harnessing method got a boost with the rising power cost and the ability to sell excess generated power to the national grid.
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Major industries are onboard
Meghna Group of Industries has embarked on a groundbreaking rooftop solar power project, investing approximately Tk100 crore for a total capacity of 23MW at its Meghna Ghat industrial zone. The conglomerate is financing the project internally, and Omera Solar is scheduled to commence its execution next week.
Bitopi Group's Tarasima Apparels, situated in Manikganj and recognised as a top green factory, is in the process of installing 3.57MW of solar power on the factory's rooftop. Fakir Fashions, which initially installed around 1.5MW of solar power on its rooftop in 2020, has initiated the installation of another 1.68MW this year. Both these companies are adopting the capital-lease financing model.
Viyellatex Group, one of the largest garment exporters in the country, also has decided to install solar on the rooftops at its all factories and they will begin the work next month. Pacific Jeans Group, a major denim manufacturer and exporter, currently meeting 12%-15% of its total electricity demand from rooftop solar, has decided to extend its solar installations to cover all of its units due to the compelling financial advantages. Giant Group, another garment exporter, is also negotiating with developers to install solar power on their factories' rooftops.
Different financing models
Solar power solution providers and developers cover all associated expenses, including materials, installation, and ongoing maintenance. Users simply pay a tariff comparable to their national grid bills, making the transition to solar power an appealing and hassle-free choice for businesses. This option is commonly referred to as the OpEx model.
Another model available for solar power adoption is the CapEx model, where users bear all the costs upfront and are not obligated to pay monthly tariff bills. Industries with surplus cash prefer this model.
The third option is capital lease financing, wherein a developer company lends money to users, which is repaid with interest over a span of five years, without the need for monthly bill payments.
These three business groups are exploring both CapEx, OpEx, and capital-lease financing models to install solar power, officials of the companies said.
City Group, one of the largest conglomerates in the country, also is negotiating with Idcol to install solar power in its economic zone as it is already using this green power in its tea gardens.
These are just a few industries among hundreds that are rushing to install solar power on the rooftops of their factories.
"We are getting more queries from factories for rooftop solar power now than any time before. We've already installed 66MW rooftop solar power and another 50MW are in the process," said Masudur Rahim, CEO of Omera Solar, a concern of diversified East Coast Group.
He said most industries want the OpEx model, but it is risky for the developers as an industry may default and become bankrupt. In this model, users agree with the developers to pay a monthly tariff, which is 15% less than the off-peak grid tariff, for 20 years. "In the OpEx model, we've to be sure about getting the loans back," said Rahim.
Based on the current demand, Omera alone set a target to set up 200MW of rooftop solar systems by 2025. State-owned Idcol, the largest financier for green energy plants, has so far installed 51MW of solar systems on the rooftops in different industries and it has already bagged orders for setting up another 100MW.
Idcol is confident that it will be able to install 300MW rooftop solar systems by 2025.
Why did this become so attractive?
The surging demand for rooftop solar power can be attributed to several factors, with two prominent ones being the introduction of the net energy metering scheme in 2018 and multiple electricity price hikes in 2022 and the current year. Specifically, in January 2023 alone, the electricity price experienced two increases, reaching nearly Tk8 per kilowatt-hour.
Challenges also emerged for businesses as a result of the Russia-Ukraine war disrupting the global supply chain and leading to a sharp rise in commodity prices on the international markets.
Consequently, the government found it necessary to revise fuel oil and gas prices in order to face losses and reduce the subsidy burden. Nevertheless, industries continued to grapple with intermittent power supply issues, compelling them to seek alternative sources such as solar energy.
Also Read: Govt to buy power from country's largest solar plant at Tk11/unit
Masudur Rahim of Omera said demand for rooftop solar power from industries has been rising because of the net metering system and price hike.
Under the net metering scheme, an electricity consumer will be able to export the additional electricity generated from the solar system installed in his premises after self-consumption to the distribution grid network. Currently, 1,941 rooftop solar users, mostly industries, are included in this net metering system, according to the Sustainable and Renewable Energy Development Authority (Sreda).
In addition to frequent price hikes, uninterrupted supply has also significantly raised production costs, prompting many businesses to explore alternative energy sources.
"We have observed that the return on investment from rooftop solar systems takes only 5-6 years," said Syed M Tanvir, managing director of Pacific Jeans.
Paban Chowdhury, adviser to the City Group, said they are installing solar power because of the unpredictability of prices for the grid power. Interrupted supply and high cost for diesel-powered electricity have prompted the City Group to explore solar power, he said.
Solar saves a lot
Golam Baki Masud, general secretary of Solar Module Manufacturers Association of Bangladesh, said rooftop solar power can save users 30%-40% compared to the tariffs they pay for grid electricity.
Masud, who also serves as the managing director of Greenfinity Energy, said, "We have recently assisted three small industries in Chattogram with the installation of rooftop solar power systems on their factories. Despite their modest size, these factories are achieving substantial monthly savings, ranging from Tk3-4 lakh, through the utilisation of solar energy."
He said the potential of rooftop solar power in the country is enormous. "If industries agree, we can help them generate at least 5,000MW of solar power in the next five years," he noted.
Local and foreign investors interested
Local and foreign firms have been discussing investments in renewable energy, especially in solar power.
Last week, a joint venture of Saudi-based ACWA Power Company and three local firms including the Power Development Board, agreed to set up a 300MW solar power plant in Rampal upazila of Bagerhat, the largest in the country. The plant required an investment of $430 million, equivalent to over Tk4,700 crore.
Also, several foreign companies in partnership with local firms have shown interest in a tender floated by the Bangladesh Jute Mills Corporation (BJMC) to lease rooftop spaces of the factories and warehouses at its 13 jute mills to install solar power systems.
Recently, Teesta Solar Ltd, a venture of Beximco Group, has opened production of its plant, having a capacity of 200MW, largest in the country. Energon Renewables Ltd, another firm, has set up a solar plant with a capacity of 134MW.
How electricity is generated in Bangladesh
Bangladesh's current power sector heavily depends on imported primary fuel sources. Over 50% of the nation's electricity is produced using a combination of domestic natural gas and imported liquefied natural gas (LNG).
As per data from the Power Development Board, coal contributes to approximately 17% of the total power generation, while heavy fuel oil (HFO) accounts for nearly 26%. Imported power sources contribute around 4.66%, whereas solar energy represents a modest 459MW, constituting only 1.84% of the overall installed capacity.
Challenges also emerged for businesses as a result of the Russia-Ukraine war disrupting the global supply chain and leading to a sharp rise in commodity prices on the international markets.
Consequently, the government found it necessary to revise fuel oil and gas prices in order to face losses and reduce the subsidy burden. Nevertheless, industries continued to grapple with intermittent power supply issues, compelling them to seek alternative sources such as solar energy.
