Different state-owned distribution utilities have signed a power purchase agreement (PPA) with five private solar mini-grid companies.
The latest move from the government to buy electricity from solar mini-grid power projects came against the backdrop of their continuous financial losses following the expansion of the national grid in off-grid project areas, Sustainable and Renewable Energy Development Authority (SREDA) said.
The signing ceremony took place at Biduyt Bhaban in Dhaka Monday.
Of the five mini-grid companies, Green Housing and Energy signed a PPA with the state-owned Bangladesh Power Development Board (BPDB) to sell 100kW of electricity from its mini-grid in Kutubdia, Cox’s Bazar.
The distribution utilities will receive Tk10 crore annually as a subsidy to buy electricity from the mini-grid companies. Following the contracts, the consumers will get electricity from the mini-grids at the same rate applicable for other areas.
Earlier, the solar mini-grids, set up by private sector investors, were selling electricity directly to consumers at their rates settled under the remote area power supply system (RAPSS) where the tariff was about Tk30 per unit.
However, after the expansion of the national grid to these areas, consumers seemed reluctant to continue buying power from the mini-grids. They now prefer buying power from national grids. So, the mini-grid companies started becoming commercially weak and pursued the government to buy electricity from them.
SREDA said the solar mini-grid power projects were implemented in the off-grid areas under the RAPSS where private investors installed the projects for 20 years with financial support from the Infrastructure Development Company Limited (IDCOL).
IDCOL funded 80 percent of the projects and private investors 20 percent, it added.
During the implementation of the projects, the government said the power distribution companies would not reach the areas with their service within the project tenure of 20 years.
But the distribution utilities, especially the Rural Electrification Board, expanded their power supply to those areas amid political pressure from the local lawmakers, SREDA said.
Against this backdrop, the Power Division has stepped forward to save the mini-grid sponsors by taking a decision that the distribution utilities will buy electricity from the solar mini-grids like the BPDB which is now buying electricity from the independent power producers.
Source: United News of Bangladesh