Corporate Electricity Procurement from Renewables in Bangladesh

Historically reliant on fossil fuels, the country faces challenges such as supply shortages, environmental degradation, and energy security concerns. Bangladesh is transitioning to a more sustainable energy mix, emphasizing renewables like solar, wind, and biomass. However, progress in increasing the share of renewables in the electricity mix remains slow, at less than 5 percent. Commercial and industrial (C&I) companies globally are increasingly adopting renewables to achieve sustainability goals, leverage cost savings, and improve their energy supply in places with an unreliable grid. C&I energy consumers resort to various energy procurement models and innovative business models, facilitating the low-carbon transition and eventually carbon-neutral products. Developing models for the C&I sector at the national level can help complement national renewable energy targets. C&I consumers in Bangladesh are also exploring various energy procurement models to achieve their sustainability targets. Specifically, textile manufacturers exporting ready-made garments (RMG) to the European Union (EU) are committed to ambitious sustainability goals, driven by investor and consumer pressures. Switching to renewables will provide long-term benefits to C&I consumers, including cost savings, energy security, and the ability to offer additional value to customers seeking more sustainable products. Options for corporate renewable energy sourcing include self-generation and consumption, off-site generation, and energy attribute certificates. Self-generation and consumption involve producing renewables on-site or nearby to meet energy needs, utilizing sources such as solar panels, wind turbines, or biomass projects. These corporations can consume electricity from their own power plant fully or supply excess energy to the grid under a feed-in-tariff (FiT) or net energy metering framework, depending on local regulations. Off-site generation has three mechanisms: physical power purchase agreements (PPA), corporate power purchase agreements (CPPA), virtual power purchase agreements (VPPA), and green tariff programs. Both PPAs and CPPAs involve physical delivery of electricity and renewable energy attributes, whereas VPPAs constitute a financial contract without physical delivery of electricity to the customer premises from the renewable energy plants but transfer renewable energy attributes. Bangladesh's regulatory framework for corporate renewable energy sourcing is still evolving. The Bangladesh Energy Regulatory Commission (BERC) has established a framework for renewable energy procurement, but it lacks clarity on key aspects, such as the role of the grid, the definition of renewable energy attributes, and the treatment of renewable energy certificates. Developing a clear and comprehensive framework for corporate renewable energy sourcing is essential to facilitate the growth of the sector and achieve national renewable energy targets. The report identifies several challenges to corporate renewable energy sourcing in Bangladesh, including the lack of a clear regulatory framework, limited access to financing, and high upfront costs. To address these challenges, the report recommends developing a comprehensive framework for corporate renewable energy sourcing, providing incentives for renewable energy adoption, and promoting public-private partnerships to facilitate the growth of the sector. Bangladesh has the potential to become a leader in corporate renewable energy sourcing in the region. With a clear and comprehensive framework in place, the country can attract investments in the sector, create jobs, and achieve its national renewable energy targets. The report provides a roadmap for achieving this vision, outlining key recommendations for policymakers, regulators, and private sector stakeholders.