Electricity Access, Decarbonization, and Integration of Renewables

This chapter provides an introduction to the book, identifies different perspectives, and describes the different sections of the book in more detail. It places the research issues in the context of the “great socio-ecological transformation” and defines different elements of this process. The chapter also includes the main take-away messages from subsequent book chapters.

In this paper, we discuss the stylized facts of Bangladesh’s energy sector, critically review the different policies of the government for powering up the nation in the last 50 years, identify existing controversies and finally indicate potential pathways to ensure future energy security. The novelty of the papers is twofold: First, prior literature did not study the in-depth policy analysis of the Bangladesh energy sector. Second, this paper contributes to the existing literature by providing strategic policy suggestions to the Bangladesh government for formulating its own set of energy policies to achieve its vision for 2041 of becoming a high-income country, after having cleared the interim goal of becoming a middle-income country at its 50th anniversary of independence. The paper also provides insights for other developing countries aspiring to become middle-income countries.

In 2002 when over 70% of the country’s rural population had for generations never known electric light, the most dynamic off-grid electrification program in the world was launched. Its purpose: to provide rural households with Solar Home Systems. Within a decade, Bangladesh was on its way to becoming the world’s fastest growing off-grid solar market. This market did not emerge by chance. Here new ideas were at work with both the leadership and the resources to put them into practice: the World Bank as investor; IDCOL, Bangladesh’s financial intermediary, as project manager; and rural entrepreneurs as solar service providers. Yet, there is a further remarkable achievement in the Bangladesh energy market. Over 90% of the people in Bangladesh now have access to the electric grid. What role will solar technology play in future? Will the solar market move away from Solar Home Systems towards grid-connected distributed renewable energy systems? What is next for Bangladesh? These are the topics we want to explore in this chapter. This chapter reports hands-on experience from the insiders of the program, and relates their lessons from the past to perspectives for the future.

In Bangladesh, the peaking power plants that serve the peak time loads use conventional fossil fuels for power generation. These power stations remain idle for a good part of their operating life, which therefore results in a high overhead cost. Continuous integration of renewables into the grid is increasing the dependency on these, so far, feasibility of no other less-expensive options has been studied. In this context, this paper aims to analyze the financial feasibility of different alternative options. Three possible options were analyzed and the levelized cost of energy (LCOE) was compared with that of conventional peaking power plants. It was found that Battery-based storage systems are not financially feasible at this moment, while the nation’s lone hydro power plant promises financial feasibility if solar PV driven pumped hydro storage is implemented. We also report that if the nation continues to add solar PV power stations even with costly peaking power plants using traditional fuels, this hybrid option was counter intuitively found to be financially feasible.

Approximately 40% of the world’s population lived in China, India, Pakistan, and Afghanistan in 2021. These countries were responsible for about 36% of the world’s CO₂ emissions in 2018. Economically, in the same year they represented 20% of the global Gross Domestic Product (GDP). Considering the population, the CO₂ emissions, and the share of their GDP in world economy, actions in these countries regarding fighting climate change and promoting low-carbon energy transformations have global consequences and are key to realization of 2015 Paris Agreement and Sustainable Development Goals (SDGs) (e.g., SDG7 and SDG13). In this article, we review the current energy situation, low-carbon energy targets and challenges to low-carbon energy transformation in each country and provide an overview of general trends and key factors in this transformation. The assessment shows that the above countries are not on the path to achieve the Paris Agreement target. CO₂ emissions and the use of fossil fuels are still high in these countries. However, general trends such as decreasing costs of renewables, a decreasing dependency on fossil fuels imports, additional liquidity for energy infrastructure due to fuel costs savings, and remuneration schemes for renewables are all promising for decarbonisation efforts and low-carbon energy transformation.

There has been an unprecedented impact of COVID-19 outbreak worldwide. To save people from COVID-19, many countries imposed strict lockdown since March 2020 in different phases. In this paper, the impacts of COVID-19 on the power industry of Bangladesh, India and Sri Lanka and its positive impacts on the environment have been investigated through the reduction of power generation and Green House Gas (GHG) emission during a certain part of the lockdown period. It is found that there was a 16.96%, 26% and 22.7% reduction of power generation in May’20 compared with that of May’19 in Bangladesh, India, and Sri Lanka respectively. Carbon dioxide (CO₂), Sulphur dioxide (SO₂), Nitrogen oxides (NO_X) and fluorinated gases are the main components of Green House Gases (GHGs) where CO₂ contains almost 80% of the GHGs. CO₂ emission was reduced by a maximum of 22.29% in May 2020 in Bangladesh compared to May’19. India encountered a CO₂ emission reduction of 29.75% in April’20 compared to April’19. NO_X and SO₂ reduction in India in April’20 were 29.59% and 31.19% respectively whereas in Bangladesh in May’20 during the lockdown, NO_X decreased by 15.57% and SO₂ increased by 23.36%. Hence, from the comparative study presented in this paper, the consequence of lockdown due to COVID-19 on the power sector and environment of three South Asian countries can be realized.

India’s coal contribution to the total electricity generation mix stood at 73% in 2018. To meet India’s NDC ambitions, the federal government announced determined targets to integrate 450 GW Renewable Energy in the grid by 2030. This paper explores the pathways to integrate high RE generation by 2030 with effective balancing of supply and demand and associated challenges of flexibility requirements. A Unit commitment and economic dispatch model, which simulates the power system operation was used. The overall share of variable renewables reaches 26% and 32% in the Baseline Capacity Scenario (BCS) and High Renewable Energy Scenario (HRES) respectively. Improved ramp rates and a minimum thermal loading limit induce flexibility in the thermal fleet. In the HRES, more than 16 GW of coal plants are required for two-shift operations in April and more than 50% of days see an aggregate all-India ramp from the coal fleet in excess of 500 MW per minute. Battery Storage provides daily balancing while reducing VRE curtailment to less than 0.2% in the HRES. Nationally Coordinated dispatch shows increased power transfer from high VRE regions to export power during high VRE generation periods. It is thus found that high RE penetration is possible by 2030 at no extra system costs.

The transition to “SDG7 -modern and sustainable energy for all” may reconfigure the lives of citizens who live “outside the grid” in the rural communities in sub-Saharan Africa. The decentralization approach for developing renewable energy in sub-Saharan Africa has constantly been promoted as a means to rural electrification. This paper reviews the barriers to private sector participation in decentralized electrification projects and the solutions that have been proposed and implemented. It is not only the economic approaches that are analysed but also some of the solutions or drivers that have contributed to rural electrification. There are specific technological pathways which have proven fruitful in sub-Saharan Africa that are unique to its economic and demographic settings and that otherwise would not be adopted or used in developed countries. This paper finally analyses these technological pathways with the objective of matching the drivers and obstacles to potential solutions. Long term energy planning with the integration of regional power pools is instrumental to reduce CAPEX as well as to increase the market size. Blended financing together with already working technologies such as pay-as-you-go, and mobile money will be the pillars to meeting SDG7 goals.

The gains made in increasing electricity access between 2010 and 2018 indicate the benefit of a multi-pronged approach to electrification, which combines on-grid and off-grid electrification approaches and efforts from both public and private actors. The gains still fall short of the rate of increase needed to achieve universal access to electricity by 2030, indicating the need to increase the effectiveness of the multi-pronged approach. To do this the paper applies the triple embeddedness framework theory. Within the scope of Eastern Africa, we consider actors in the delivery of electricity access (irrespective of approach or whether public or private) as delivering similar goods and services, and conceptualize them as a collective entity i.e., firms in the electrification industry. The paper then analyses how these firms are shaped by the industry regime and influenced by the socio-political and economic environments, with a view to identifying where and how external pressure can be exerted to stimulate and facilitate the reorientation and recreation required to make progress towards universal electricity access. Through this exercise we demonstrate that the triple embeddedness framework provides a structured way of laying out the key aspects associated with electrification to create a picture that enables one to ‘see the forest for the trees’ and identify where and how to achieve more effective complementarity between on and off-grid approaches, and public and private firms.

While it is commonly acknowledged that mini-grids are the new pathway to bridging the high electricity access deficit in Sub-Saharan Africa (SSA), comparably few studies have assessed how existing regulations and tariff policies in SSA affect their potentials to attract the number of private investments required to scale-up deployments. Private investors’ participation is particularly crucial to meet the annual electrification investment needs of $120 billons in SSA. We study the regulatory framework, the tariff structure, and the subsidy schemes for mini-grids in Tanzania. Additionally, using an optimization technique, we assess the profitability of a mini-grid electrification project in Tanzania from a private investment perspective. We find that the approved standardized small power producers’ tariffs and subsidy scheme in Tanzania still do not allow mini-grid for rural electrification projects to be profitable. A further study is required to identify successful business models and strategies to improve mini-grids profitability.

Energy inclusion is a major concern in Tanzania, where rural areas are widely lacking access to both power networks and off-grid systems. Different barriers are slowing the achievement of Sustainable Development Goal 7: universal electrification in the country raises concerns in delays and equity. Financial exclusion adds to the complexity of adopting appropriate technological solutions, particularly for rural communities. Solar photovoltaic solutions represent an opportunity to increase energy access and enable growth. The introduction of new technological products requires to establish local power markets, including demand, financial resources and providers, supply mechanisms and after-sale services. The financing of renewable energy solutions for rural households partially relies on microfinance institutions and community financial groups. Technology suppliers are also providing financial services to expand access to solar and photovoltaic products, applying models mostly enabled by mobile payment systems. The paper assesses the effects of an initiative implemented in Malinyi and Kilombero districts to support the establishment of local solar power markets. The involvement of Village Community Banks to engage communities and develop sustainable financial schemes is evaluated, together with the complexity of combining awareness raising on technological solutions and financial education. Results of the implementation are presented and discussed evaluating the different ingredients of the established markets.