Dhaka: Centre for Policy Dialogue (CPD) today recommended blended green financing, faster regulatory approvals, and cluster-based investment models to accelerate rooftop solar adoption in Bangladesh's ready-made garment (RMG) sector and attract Chinese foreign direct investment (FDI).
According to Bangladesh Sangbad Sangstha, these recommendations were presented at the Fifth Bangladesh-China Renewable Energy Forum, titled "Industrial Rooftop Solar in RMG Sector: Investment Potential for Chinese FDI," held at the BRAC Centre Inn Auditorium in the capital. Moderated by CPD Research Director Dr. Khondaker Golam Moazzem, the event featured study findings presented by CPD Research Associate Abrar Ahammed Bhuiyan and Programme Associate Noor Yana Jannat.
The study suggested that IDCOL and other financiers establish blended green financing facilities, integrating concessional loans at 5-7 percent with Chinese green investment capital to extend loan tenors and enhance the bankability of rooftop solar projects. For the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), it proposed creating a dedicated bilateral facilitation desk and expediting incentives for member factories collaborating with vetted Chinese engineering, procurement, and construction (EPC) firms.
Additionally, the study advised the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) to develop cluster-based investment models by pooling small and medium-sized knitwear factories in industrial hubs such as Narayanganj into consolidated multi-megawatt portfolios to attract Chinese renewable energy service company (RESCO) investment. Factory management was urged to leverage early-adoption incentives to minimize upfront capital requirements and shield against potential hikes in grid electricity tariffs.
The study further called on EPC companies and investors to develop bundled RESCO and build-own-operate-transfer (BOOT) financing models for small and medium-sized factories. It also recommended that the Sustainable and Renewable Energy Development Authority (SREDA) ensure quicker and more predictable interconnection approvals.
Industry associations were encouraged to raise awareness among non-adopter factories by organizing visits to factories with existing rooftop solar systems, especially those owned by Chinese firms. The recommendations are set against the backdrop of significant rooftop solar potential in Bangladesh's RMG and textile sector.
The study estimated the sector's rooftop solar potential at approximately 2,815 megawatt-peak (MWp), necessitating an investment of about Tk 12,669 crore. It identified a near-term opportunity of 879 MWp across 1,016 candidate companies. Financing conditions were identified as a key determinant of project viability, with capital expenditure, electricity tariffs, interest rates, and loan tenors playing substantial roles in achieving the necessary 1.25 times debt-service coverage ratio for bankability.
Furthermore, the study identified several operational and institutional barriers, including high financing costs for SMEs, delays in SREDA approvals, structural limitations of older factory buildings, import and letter-of-credit costs, payment and foreign-exchange risks, and uncertainty over grid interconnection. It noted that only around 3 percent of electricity consumed by surveyed RMG factories comes from renewable sources, although rooftop solar could potentially meet a significant share of their electricity demand.