Investors worried as govt plans to scrap 31 green energy proposals

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Renewable energy entrepreneurs are worried about their investments proposed in clean fuel electricity projects as the interim government has decided to scrap 31 letters of intent for several renewable energy initiatives and call for fresh tenders, industry insiders have said.

These letters of intent involved investment proposals of about $5 billion in green energy projects, with $200 million already invested in land acquisition and other project-related steps, said Mostafa Al Mahmud, senior vice president of the Bangladesh Sustainable and Renewable Energy Association (BSREA).

"We will call for fresh tenders for these 31 projects. The old tenders won't work," Muhammad Fouzul Kabir Khan, adviser on power, energy, and mineral resources to the interim government, told The Business Standard on Sunday. Those who will be selected in fresh tenders will be allowed to proceed with the projects, he added. 

The move has cast uncertainty over the future of substantial foreign direct investment that was set aside for renewable energy initiatives in the country. Entrepreneurs' association leaders have said they are not sure if foreign investors, who previously committed investment, will be onboard if fresh tenders are called.

If these projects are cancelled, both foreign and domestic investments will face significant uncertainty, said Mahmud, who is also a renewable energy entrepreneur.

Starting the letters of intent process afresh could take at least a year, leading to investors' frustration and discouragement, he warned.

Renewable energy entrepreneurs have already met with the energy adviser to share their concerns and requested that the Power Division review the letter of intent conditions to help them continue the projects.

A seven-member delegation from BSREA sent a letter to the office of Chief Adviser Muhammad Yunus on 2 September, seeking an appointment to discuss the matter. BSREA members said they are trying to meet with the chief adviser to prevent the scrapping of these crucial projects.

Zahidul Alam, vice president of BSREA, appealed to the chief adviser for intervention, stating that the projects follow transparent procedures and are crucial for the country's development.

"These projects require no capacity charge and are implemented on a 'No Electricity, No Payment' basis, which would save the government a significant amount in the power sector," he added.

Meanwhile, the interim government has formed a national committee to review energy agreements signed under the Quick Enhancement of Electricity and Energy Supply (Special Provision) Act 2010 (Amended 2021), which allowed for the signing of unsolicited energy projects.

The 31 letters of intent include 25 solar, three wind, and three waste-to-energy power projects. Many investors have already made partial investments based on the issued letters of intent. If implemented, these projects would have contributed 2,678MW of electricity to the national grid, playing a crucial role in addressing the country's power shortages.

Currently, Bangladesh's renewable energy generation capacity stands at 1,379MW, with 596MW coming from utility-scale on-grid projects.

Potential foreign investors include countries such as China, France, Malaysia, Singapore, South Korea, Germany, Japan, the USA, and the UAE.

Energy sector experts suggest that the government, instead of cancelling outright, should review the renewable energy projects on a case-by-case basis.

"Since most renewable energy projects are driven by foreign investment, cancelling them will have a negative impact on FDI in the country. The government should review and assess each project individually," said M Zakir Hossain Khan, chief executive of the energy-focused think tank Change Initiative.

According to a BSREA study, if implemented, the renewable power plants could save the government nearly $820 million (Tk9,700 crore) annually in energy bills.