Chapter 11 Economic Analysis and Current Projects

7/27/2019 Chapter 11 Economic Analysis and Current Projects

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Study of Solar Module & Its Efficient Use in Bangladesh

133Economic Analysis and Current Projects

Chapter 11

ECONOMIC ANALYSIS AND CURRENT

PROJECTS

11.1 Introduction

The applications of small-scale photovoltaic systems have been a very recentphenomenon in rural areas of Bangladesh. Although systems of 17Wp to 250Wp sizeshave been installed but more than 90% of the application are between 30Wp to 80Wp.The installation of photovoltaics systems has been happening in the backdrop of bleakpossibility of connecting every household to grid power within the next decade.Bangladesh has made very little progress in rural electrification efforts. Back in 1990,

only 12% of total population in Bangladesh had access to electricity (Ramani, 1999).That proportion has move up to only 16% of total population having access to electricity(25% in urban areas and 10% in rural areas) 1999.The grid power supply of is mostunreliable causing disruption production, irrigation and creating all kinds of hardshipin household, who were lucky enough to get a connection in the first place.

The most common fuel for lightning in rural areas in Bangladesh is kerosene. Themonthly consumption of kerosene by rural household varies between 2 to 9 litterscosting Tk. 40 to 180 per month. Dry cell batteries are used for radio and gradually wetbatteries are becoming popular for running TV near grid areas where the charging

facilities are available. Over the years significant technological advances have beenmade in developing renewable energy technologies, especially in the field of solarphotovoltaic and wind energy. In addition, for remote rural areas where theconventional grid system may not be viable, these forms of decentralize alternativeenergy system may be far more adaptable and well suited. Most of the small applicationin rural areas is in the households to meet the basic purpose of lightning andentertainment. The emerging field is to use photovoltaic technology for generatingincomes.

11.2 Installation of solar system and field performance in Bangladesh

Any renewable energy solution has to provide satisfaction to the end users to becomecommercially successful in the practical world. A major factor affecting customersatisfaction is the technical and functional quality of the system. Rural electrificationthrough solar home systems (SHS) has been a successful venture in Bangladesh, wherelarge portions of rural habitations are not connected by grid electricity. The rural


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electrification project under study started in 2003, and has since then seen an amazingaverage annual growth of 104% [26] till date. Till June, 2009 the SHS project has installedover 334,000[27] SHS units all over Bangladesh.[28]

Fig 73: Operational flow diagram of IDCOLs Solar Home Systems Project.

The Solar Home Systems project is run by Infrastructure Development CompanyLimited (IDCOL), a financial institution established by the government of Bangladesh.IDCOL receives soft term loans and grants from donor agencies like the World Bank,Global Environment Facility, GTZ and KFW to fund the project. IDCOL then uses thesefunds to distribute SHS units to rural households through intermediaries like NGOs andPartner organizations (PO). The partner organizations then sell the SHS units to the ruralhouseholds who buy the units over a period of three to four years by paying a downpayment and monthly instalments. After the installation of the SHS units partnerorganizations claim the grants and loans from IDCOL to pay for the SHS unitspurchased from approved suppliers and manufacturers of SHS equipments and

components. The cost to the end user is reduced by the grants from donor agencies.

Up to July, 2009 the number of installed SHS units by partner organizations (PO) aregiven in table 10. Grameen Shakti is the largest PO by number of SHS installed.

TechnicalStandard

CommitteeDonors

SuppliersConsumers /HouseholdsNGOs/

POs

IDCOLCredit &

Grants

Loans &

Grants

Down paymentsand Installments

Sales andServices

Approval

Payment

& Supply


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Table 10: PO wise installed SHS units under IDCOLs RREDP till July, 2009.

Though there is an amazing success of the project, in recent years complains werecoming from customers regarding the SHS units. Some of the SHS units were notfunctioning properly, there was an increase of faulty SHS packages in the market, the

component parts were below standard and there was an increase in customerdissatisfaction with the after sales services. Some of the components parts standarddeviated from the technical specifications [27] of SHSs in Bangladesh. Consequently, anaudit was necessary to address these issues for the sustainable growth of the project. Thescale of the audit was small and was carried out at the level of individual households inrepresentative villages of Bangladesh. The purpose of the audit was to test thecomponents supplied by the manufacturers in operating condition. Some componentswere also sampled from the manufacturers production line. The service quality of the

Name of

the PO

Total installation

of SHS

Installed in

March10

Installed in

February10

Refinance and Grants

applications

Refinance &

Grant

applications

pending

Total Small

SHS

Total Small

SHS

Total Small

SHS

Submitted Approved Installation

Average

(6 months)

Mar

2010

GrameenShakti

310,992 24746 12590 2460 9751 2020 292,561 281,625 11007 2

BRACFoundation

56,444 976 925 14 924 39 54,494 51,508 903 2

RSF 59,216 9343 3625 1071 2773 800 54,562 50,597 2980 2

SRIZONY 15,174 1146 1401 304 910 199 13,715 12,551 769 2

UBOMUS 10,097 1032 545 176 477 131 9,427 8,864 397 2

BRIDGE 7,562 352 455 0 357 104 7,423 6,931 280 1HFSKS 8,539 796 439 109 341 79 7,802 7,244 338 2

COAST 3,869 320 129 22 96 13 3,611 3,431 94 3

IDF 5,137 198 284 27 212 14 4,574 4,236 203 3

CMES 3,547 56 85 2 86 5 3,440 3,126 83 1

Shubashati 2,950 95 56 7 55 6 2,760 2,725 53 4

TMSS 2,870 215 233 34 137 21 2,853 2,548 146 1

PDBF 2,664 105 103 10 83 12 2,540 2,390 93 1

PMUK 900 108 32 9 32 9 868 787 37 1

NUSRA 205 26 105 0 50 13 204 50 - -

AFAUS 43 3 26 3 12 0 43 0 - -

AVA 259 0 115 0 100 0 144 0 - -

DESHA 261 10 124 0 71 0 261 66 - -

RIMSO 477 94 166 39 106 28 477 311 - -

REDI 642 75 110 6 106 10 524 423 - -

INGEN 568 71 240 27 162 27 328 166 - -

Others 389 1 0 0 0 0 363 352 - -

Total 492,805 39,768 21,788 4,320 16,841 3,530 462,974 439,931 17,383


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POs was assessed by examining the proper installation and maintenance of the SHSsystems in households. 60 SHS units randomly picked from four geographicallydistributed locations in Bangladesh were thoroughly checked. The component parts thatcould not be examined with the field equipment were brought to the laboratory fortesting. The performance of the charge controllers, lamp circuits, batteries and panelswere observed and tested. Load calculations were conducted and the switching deviceand wiring were also tested.

Fig 74: Four different geographically distributed locations (flagged) of Bangladesh,where the field visits for SHS inspection were conducted (Map courtesy: Googlemaps)

Out of 15 partner organizations of IDCOL, the SHSs of eight partner organizations wereinspected by the audit team. The inspected partner organizations and the number oftheir inspected SHS are given in table 10.


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Table 11Partner Organization wise investigated SHS.

Partner Organization No. of Inspected SHS

Grameen Shakti 22

RSF 15

Hilful Fuzul S.K.S. 7

Srijani Bangladesh 5

BRAC Foundation 4

UBOMUS 4TMSS 2

BRIDGE 1

Total 60

The audit work was done in a span of eight months starting from July, 2009. Thenumber of visited systems according to panel capacity is given in table 9.

Table 12Panel capacity wise inspected systems

Panel Capacity of the System(Wp)

Number of system

21 1

30 3

40 24

50 22

60 2

65 7

85 1

Total 60

The majority of the SHS systems used in Rural Bangladesh have capacities of 40 and 50Wp.


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11.3 Major PV Programs in Bangladesh

PV Technology in Bangladesh

The photovoltaic modules have been in used by various institutions for several years.

Recently Rural Electrification Board (REB) of Government of Bangladesh (ProkoushaliSangsad, 1998) and Grameen Shakti have installed photovoltaic systems in rural areasfor household applications. Photovoltaic modules are imposed from outsideBangladesh. Local manufactures produce batteries. Other component like chargecontrollers and ballast are made available from local entrepreneurs, which is verypositive sign for development of renewable energy technologies. The importedaccessories have been found to be very expensive compared to locally fabricated items.Small entrepreneurs fabricate charge regulator and ballast for the lamp.

IDCOL Solar Energy Program [26]

IDCOL promotes dissemination of solar home system (SHS) in the remote rural areas ofBangladesh through its Solar Energy Program with the financial support from theWorld Bank, Global Environment Facility (GEF), KfW, GTZ, Asian Development Bankand Islamic Development Bank. IDCOL started the program in January 2003 and itsinitial target was to finance 50,000 SHSs by the end of June 2008. The target wasachieved in September 2005, 3 years ahead of schedule and US $ 2.0 million belowestimated project cost. IDCOL then revised its target and decided to finance 200,000SHSs by the end of 2009. This was also achieved by May 2009. Now IDCOLs target is tofinance 1 million SHSs by the end of year 2012. Up to December 2009, a total of 438,000

SHSs have already been installed under the program.

IDCOLs Solar Energy Program is one of the fastest growing renewable energyprograms in the world. It has brought in positive changes in the livelihood of remoterural areas of Bangladesh by providing access to electricity. Chairman of the SenateForeign Relation Committee of the United States, John Kerry in his speech at the WorldBank Head office on 19 November 2009 mentioned IDCOL Solar Home System (SHS)project as a good example of literally life-altering project of the World Bank. IDCOLimplements the program through 23 partner organizations (POs) including GrameenShakti, BRAC etc.

Rural Electrification Using Photovoltaic Technology

Two Organization REB of the government of Bangladesh and Grameen Shakti, areimplementing projects to popularize PV systems as an alternative approach to ruralelectrification. However these two organizations are following two differentapproaches.REB through its rural electricity cooperative society is selling the power &Grameen Shakti is selling the PV systems.


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Solar PV Program of REB

REB has implemented two different types to the household:

Battery charging facility through central charged station s for a fee;Standalone PV

systems have been installed in the houses of the houses of the customers. Customerspay a monthly fee for the service depending on the capacity of the system. Presently,more than 700 customers are receiving power from the REB project. The project hasbeen financed by the French Government grant and has used all imported hardwarefrom France.

The main feature of REB project is that the systems are owned by the society andcustomers pay a service fee. Systems are mainly used for lighting and operating TV. Theexperience of REB project can be summarized as follows:

Customers prefer standalone system mainly due to higher quantity of energy availablefrom the system and for convenience; batteries need not to be brought to the chargingstation. Customers prefer relatively larger systems (46Wp and above)

Charging stations may be considered as a failure. Customers do not like to frequentlycharge batteries from charging stations. It is very inconvenient to bring batteries fromfar-flung areas. Many batteries have been damaged due to excess discharge(Prokoushali Sangsad, 1998).

Solar PV program of Grameen Shakti

Solar photovoltaic system is highly decentralized and particularly suitable andeconomically viable for remote and inaccessible areas. Grameen Shakti (GS) selectsthose areas where there is no source of conventional electricity, or areas with lowcoverage by Rural Electrification Board (REB) or areas where there is no chance of REBexpanding within the next 5-10 years. That automatically forces GS to select remote andunder developed areas.

Branch offices of GS install systems, provide after-sale service and collect installments.Solar photovoltaic system is still very expensive in Bangladesh compared to the averageincome of rural population. To make the system affordable and accessible by ruralpeople, GS provide medium term financing to its customers. It has followed a gradualand learning approach in devising its financial scheme. At the beginning, GS used totake 50% of the system price as down payment and the remaining 50% was recoveredwithin 6 month, in 6 equal monthly installments. Later, the down payment was reducedto 25% of the price and repayment period was extended to 2 years. Currently, thefinancing scheme has been further relaxed. The present financing scheme is as follows:


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Customers pay 15% of PV system price as down payment.Outstanding 85% is paid in monthly installment within a period of 3 years.Customers pay 12% per annum as service charge on outstanding amount offinance.

GS has been marketing in different district 1996.Up to November 2000, GS has installed3380 systems having installed capacity of 167.6KWp .Although in absolute term thisfigure is small but for a new organization like GS, it is quite encouraging. The mostcommon size is the 50Wpsystem that can power three lamps and a Black White TV for 4hours per day. GS has installed systems in the range of 13W to 225W for differentapplication like lighting, operating fan, TV, computer, cellular phone, repairing radioTV etc. In some places solar systems are also used for emergency lighting purpose evenwithin grid areas. The applications of PV systems are overwhelmingly for householdpurpose lighting and entertainment. Business and institution are also trying PV systemto extend their working hour at the evening and for operating computer system.

Examples of institution are Grameen Bangladesh Office, some college andnongovernmental organization (NGO).The buyers of the system remain mainly fromthe high income households in the rural areas. GS is yet to reach the poor with therenewable energy service. The average monthly income may vary be between Tk 4000-8000.Some of the customers use photovoltaic systems for income generation. Examplesof such applications in the village are follows: cellular phone service, micro utility andradio/TV repairing shop etc.


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Grameen ShaktiDistrict: GazipurTotal Unit: 1000

Table 13

Data of solar panel at Gazipur district[29]

Over all Performance of Solar panel at Gazipur district

Sub -district Solar (Total) DamageBattery

Damagepanel

ActiveSolar

Performance

Mawna 10000 100 30 9870 98.7%

Amrail 500 2 2 496 99.2%

Kandipara 400 1 1 398 99.5%

Trisal 60 51 85%

Valoka 59 1 58 ~


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Figure 75: Overall scenery at Gazipur (Based on data 31 January 2010)

Grameen ShaktiDistrict: Savar

Table 15Data of solar at Savar

Over all Performance of Solar panel at Savar district

Sub -district Solar (Total) DamageBattery

DamagePanel

ActiveSolar

Perpormance(%)

Damrai 4500 25 10 4465 99.2

Singaer 1500 10 2 1488 99.2

Saturia 800 2 1 797 99.6

Caliakoer 150 x x 150 100

Savar 1500 3 2 1495 99.6

Gazipur

100%

Mawna

98.7%

Sokhipur

99.25

Amrail99.2%

Trisal

85%

Kandipur

99.5%

Volaka

98.3%


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Figure 76: Overall scenery at Savar (Based on data 31 January 2010)

Solar Photo Voltaic System By RAHIMAFROOZ

All of we are aware, only 15% of the country gets power from national grid electricsupply and it reaches mostly urban cities and townships. And that too, is not consistentbut irregular due to old any worn out power generation equipment and systems.Keeping in mind our acute scarcity of conventional energy sources, Rahimafroozventured into solar photo voltaic systems in 1985 main behind solar mission was toprovide electricity for the rural mass, by utilization of our battery manufacturingfacilities. [30].

Activity Details: Thus we pioneered supply of solar photo voltaic systemsand have so far installed systems generating approximately 95.0 kW. [30].

Progress Review and Inference: Solar panel is the vital item of solar system.R.A has constant lobby with government over the years have enabled us toreduce duly on the item from 100% to 45% and then with Grameen lobby tocurrently 2.5%. This has played a great role in making solar system moreaffordable to rural mass.

R.A has spent millions of Tk. in advertisements and special events to create awarenessamong target customers, individuals and development agencies. Solar energy no longeris unknown in our country at least among the policy and decision makers. Some of thedevelopment agencies have already come forward and installed solar power systemsfor rural home lighting, cyclone shelters, schools, hospitals and other applications. Ourfirst sales were to an individual in Faridpur district. EDM was the first to use solarenergy among few other development agencies that also came forward gradually NowGrameen Shakti has also undertaken. Solar PV home lighting systems in the remote

Saturia

99.6%

Damrai

99.2%

Singaer

99.2%

Geor

99.4%

Caliakoer

85%

Kaligon

97.5%

Savar

99.6%


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village of Bhaluka in the district of Mymensingh where in Gremeen Shakti is expectedto utilize the expertise of Rahimafrooz for providing lights for 100 homes through solarPV systems. To Gremeen also Rahimafrooz is subsidizing the cost to make their ventureinitially successful.

Our national experts must also induce government to provide solar lights in allgovernment establishments outside grid supply areas for greater involvement in solarawareness build up. It is a matter of great hope that our government has recently putdue attention on the issue and appreciating the need of solar PV application in thecountry. Rahimafrooz is committed to sustain its efforts of solarization in Bangladeshand do everything realizable in this respect in the days to come to eradicate darknessand alleviate poverty from rural Bangladesh. [30]

Solar System By SIEMENS

Though it is quite recent SIEMENS Bangladesh Ltd. (SBL) has stepped into solarbusiness in Bangladesh, it is like year 1996, last year, when SIEMENS solar worldwidehas completed its installation of 100 MW cumulative solar energy system. This provesits pioneering role in the advance of solar power utilization for the benefit of mankind,from small solar home lighting system to huge grid connected one; SIEMNES is theworld's leader solar PV system having 24% market share in the world. SIEMENS solarproducts hold international high standard in ISO 9001 verification & SIEMENS has 150years of reputation for its quality product, after sales service & technical support allaround the world.

In our country, solar PV application primary concentrates on rural home lighting. Asper statistic about 85% of total population in Bangladesh is deprived of electricity. PalliBidyut Samity (PBS), a Govt. rural electrification project has almost covered the wholeBangladesh in its drive for rural electrification. Yet we should understand that PBSs arerunning under heavy govt. subsidy and it will not be also economically viable for PBSto expand electricity to every end-user of remote & isolated places. As a result, standalone solar PV home-lighting system can be a viable solution to this huge electricitydemand.

As an introduction SIEMENS activities in Bangladesh it has already made a good

investments in solar PV system e.g. constancy research and experiments, solarlaboratory, practical installation works, after-sales service employing skilled personnel'sengineers & sincere endure. Providing the most reliable, robust & competitive pricedproducts and well designed system, the company has already surpassed its initial targetand installed more than 50 PV units around the country and the rate installation andsale is increasing in superlative manner day by day. SBL in collaboration with ourworldwide partners can anyone with the best products, good service, technical


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assistance and offer solar training manuals program in view to enable customers useand understand solar sound & effectively.[31]

SBL has all the technical back-up & installation support providing solar application forthe following fields of application.

Solar home lightingWater deliveryTelecommunicationsRural health clinicsUtility grid supportNavigational aids

SIEMENS has a variety if standard solar modules of different sizes & electrical outputdesigned to meet most requirements. SIEMENS modules use single crystalline silicon

solar cells, processed using state-of-the-art technology, which assures high efficiency inconverting light into electricity.

SIEMENS solar modules are designed & tested to provide continuous reliable powereven under extreme environmental conditions (In very dry weather & in as low as 5%sunlight condition) ensuring high standards for performance, safety, and durability.SIEMENS has the best quality module having maximum AH/watt/day i.e. gives totalAH in a day is higher than modules of other companies. SIEMENS solar modulesguarantees 20 year expected life with 10 years of under graded output power, which isnot warranted by many other solar module manufacturers.

Good solar services mean supplying reliable & lasting solar system assuring less cost onthe side of our customers. The components of simple solar home lighting are:

Solar moduleCharge regulatorLampBattery etc.

SIEMENS Bangladesh Ltd. has all its preparation i.e. technical support skilled

personnel, back up service and international good will as well as to meet up thechallenges for solar revolution up coming in Bangladesh. [31]

Program of Other Organizations

The Local Government Engineering Department (LGED), a governmental entity, hasrenewable energy program under which it has installed photovoltaic systems in severalcyclone shelters in coastal areas. This is mainly for the purpose of disaster preparedness


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and to face emergency situation.A local small NGO has installed several systems inThakurgaon district. The system configurations are as follows. Very recentlyBangladesh Rural Advancement Committee (BRAC), the largest non-governmentalorganization (NGO) in Bangladesh, has launched its photovoltaic program aftercompletion of pilot program. The program is somewhat similar to the Grameensprogram. However, BRAC depends on a local supplier for supplying the full systemincluding balance of systems and installation. BRAC provides customer financing for 2years.

Besides, the Center for mass education in science (CMES) [32] has been trying variousmode of financing PV systems on pilot basis. It has targeted both household and shopsin rural bazaar.

It has sold PV system on credit to households as well as rented/leased the systems onthe basis of annual rent. In Markey places it has established micro-utilities where it sells

power to the shop owners for daily payment basis.

Besides for mass education in science (CMES) [32] has been trying various modes infinancing PV systems on pilot basis. It has targeted both households and shops in ruralbazaar. It has sold PV systems on credit to households as well as rented/leased thesystems on the basis of annual rent. In market places it has established micro utilitieswhere it sells power to shop owner for daily payment basis.

There have been reports that Bangladesh Power Development Board (PDB) will alsoinitiate photovoltaic program in Chittagong Hill Tracts where grid power system may

not be viable due to hilly terrain. Other small private organization and NGO arecontemplating introduction of PV program as supplier, fabricator, of balance andinstaller.

11.4 Investment Analysis

This section illustrates the method of analyzing photovoltaic application fromcustomers/ investors point of view, especially those from the rural areas. We havealready mentioned the type of customers buying the photovoltaic system and

applications of those systems. It is important to note that rural customers obviouslyneither go for formal investment analysis before buying the systems nor have the skillsto do so. They normally take buying decision based on the perceived benefits of thesystem, experience of other users of the systems and their ability to pay the installmentsfor the system when they buy on credit. Some of the customers who invest to earnmoney do some intelligent guess, especially regarding annual income that the systemcan generate. But they in no way go for sophisticated analysis like Net present Value


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system. The revenue will depend on the nature of application. If a micro-utility is setup,the annual energy bills will b the revenue. On the other hand if the system is used forhousehold purpose our approach would be to estimate the present expenditure forenergy, for example expenditure for using kerosene lamps and compare that figure asreference for opting for photovoltaic systems.Also we will argue thatcustomers/households are willing to pay a premium price for better light, convenienceetc, the estimate for premium price could be used a cost saving and therefore, could beused as revenue for computation of various indicators using different method.

The fundamental principle of appraisal method is to compare costs against benefits.Although the principle sounds simple but the analysis may become somewhat difficultbecause of the fact that costs and benefits are spread over a very long period of time forphotovoltaic systems, over a period 25 years. For photovoltaic systems costs are easy toestimate. The cost of system has to be made up front. But the cost of replacement will bemade some time in distant future, which makes the estimation difficult. But the more

controversial issue is to estimate benefit/revenue/cost saving over a period of 25 yearsbecause scenarios may radically change over the long period of time. For example,photovoltaic application is found viable in remote areas where grid power may notreach soon. But within 5-10 years grid power may reach many parts of the country.Then the assumption about revenue earned by selling power may not be at all valid.The point is that the appraisal methods are based on some implicit & explicitassumption about income and expenditure stream, which may change dramaticallyover the life of system or a project.

Different types of investment techniques are:

Simple Payback PeriodDiscounted Pay-back PeriodNet Present Value (NPV) methodInternal Rate of Return Method

0

Chapter 11 Economic Analysis and Current Projects

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