IDCOL RE Programs: Successful Models For Transforming Rural Energy Access

Islam Sharif
Chief Executive Officer

Infrastructure Development Company Limited(IDCOL), Bangladesh

Asia Clean Energy Forum
Game Changers: Institutional Models for Transforming Rural Energy Access Markets

22-24 June, 2011

AN OVERVIEW OF IDCOL
  IDCOL is a Government-owned financial institution mandated to promote private sector financing in infrastructure and renewable energy sector. It provides long-term financing to private sector infrastructure projects and RE Projects.

Objectives:
  Promoting renewable energy technologies businesses on commercial basis. Encouraging micro-finance and income generation activities and raising standard of living of rural people through RE.

Board of Directors :
   Public Sector – 3 Directors Private Sector – 3 Directors Executive Director and CEO

Management:
      Economists Lawyers Financial analysts Chartered accountant Engineers Environmentalist

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IDCOL’S INVESTMENT PORTFOLIO
Total investment portfolio: USD 440 million RE investment portfolio: USD 174 million
Telecommunicat ion and ICT 14% Renewable Energy 40% 1.20% 0.28%
1.27%

Other Solar Applications Biomass Biogas

Power 45%

97.25 %

Solar Home Systems

Others (ports, ETP) 1%

BACKGROUND
Limited Govt capability to connect whole country to the grid
Solar Home System (SHS) a feasible solution : adequate radiation IDA and GEF facilitated the establishment of SHS program in Bangladesh Rural Electrification Board (REB) and IDCOL was selected as the coordinating agencies for the execution of the program.

WHY IDCOL ? The public-private partnership model of the institution; Capable workforce with the capacity to assess technical and financial feasibility and due diligence of projects; Expertise in Project Finance; Experience of dealing with multilateral agencies and working as fund manager; Conviction and public perception as a transparent institution.

IDCOL SOLAR PROGRAM – AT A GLANCE
The initial target (50,000 SHSs) was achieved 3 years ahead of completion date and US$ 2 million below the estimated cost funded by World Bank & GEF Subsequently, GTZ, KfW, ADB and IDB extended support. IDCOL revised its target to 2.5 million SHS by 2014.
Solar Home System Installation Status
350000 300000 250000 200000 150000 100000 50000 0 2002 2007 2006 2008 2004 2005 2009
772 20,635 14,973 27,579 169,916 115,101 69,562 37,151 325,067
1,000,000 900,000 800,000 700,000

No. of SHS

600,000 500,000 400,000 300,000 200,000 100,000 0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Installation up to May 2011: 974,620 (48.73 MW). It is the fastest growing off-grid program in the world (70% YoY).
2010 5

2003

COMMITTEES AND THEIR RESPONSIBILITIES

Technical Standard Committee

Provides approval Seeks approval

Suppliers

Supplies equipment Provides Grant A, B & refinancing

Pays for equipment

IDCOL
Seeks Grant & refinancing

MFIs

Sell systems & channels Grants

Makes down payment and monthly installments

Operations Committee

Households

SYSTEM SAMPLES

Capacity 20Wp

Total Load Lamp: 2 (5W each) Mobile Charger: 1 Lamp: 4 (7W each) Black & White TV: 1 Mobile Charger: 1 Lamp: 9 (7W each) Black & White TV: 1 Mobile Charger: 1 Lamp: 11 (7W each ) Black & White TV: 1 Mobile Charger: 1

Operating Hour 4-5 hours

Cost (in USD) 170

50Wp

4-5 hours

380

85Wp

4-5 hours

580

130Wp

4-5 hours

940

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FINANCING OF A SOLAR HOME SYSTEM
Financing Method ( Sample of a 50 Wp System)
Cash Sale
Only Grant A (buy-down grant) is provided to the PO Credit Sale
SHS cost System buy-down Grant A: USD 25 Remaining Cost Household Down payment (15%) Credit to customer (Tk) IDCOL refinance (80%) PO Contribution (20% of loan amount) Institutional Development Grant B : USD 3
USD 380 USD 25 USD 355 USD 53.25 USD 301.75 USD 241.40 USD 60.35 USD 3

Financing terms of loans from PO to household
Loan (Tk)
Loan duration Total Interest charge (12% p.a. flat) Total household payment Monthly household installment

USD 301.75
3 years USD 108.63

USD 410.38

USD 11.40

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DEVELOPMENT IMPACT
Financed 974,620 Solar Home Systems:

Beneficiaries:
4.87 million, 3% of population. Savings:

78,866 tons of kerosene worth USD 60 million per year .
Job creation: 15,000 direct and 30,000 indirect. CO2 reduction: 223,609 tons of CO2 per year .

 IDCOL is exploring similar model for solar irrigation pumps.

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Thank You