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Bangladesh Rural Electrification and Renewable Energy Development II (RERED II) Project

(IDA Credit 5158-BD and 5514-BD, GPOBA TF096552 and TF098472,

USAID TF015034, BCCRF TF015077)

Implementation Review Mission

October 21-30, 2014

Aide Memoire

I. Introduction and Acknowledgements

1. An Implementation Review Mission for the Rural Electrification and Renewable Energy

Development II (RERED II) was carried out from October 21-30, 2014 to review progress of

implementation of the project.1 The mission met with the officials of the Power Division and Power Cell

of the Ministry of Power, Energy and Mineral Resources (MPEMR), and Infrastructure Development

Company Ltd. (IDCOL). A list of officials met during the mission appears in Annex 1. The team wishes

to express its deep appreciation to the Power Division, Power Cell, IDCOL and others for the productive

discussions, access to information and excellent cooperation during the review mission. The findings of

the aide memoire were discussed and agreed through a virtual wrap-up meeting. The government

requested this Aide Memoire to be classified as Public document under World Bank’s Access to

Information Policy.

II. Key Project Data

Key Dates

Project Performance Ratings IDA Cr. 5158 IDA Cr. 5514

Board Approval September 20, 2012 June 19, 2014 Achievement of PDO Satisfactory

Signing October 23, 2012 June 30, 2014 Implementation Progress Moderately

Satisfactory

Effectiveness February 20, 2013 September 28, 2014 Financial Management Satisfactory

Closing December 31, 2018 December 31, 2018 Procurement Satisfactory

Allocation 102.8 million SDR 50.585 million SDR Environment and Social Satisfactory

Disbursed 102.78 million US$ 0

Grant Funds 2 GPOBA SHS SIDA

(TF098472)

GPOBA Mini-

Grid (TF096552)

USAID

(TF015034)

BCCRF

(TF015077)

Signing 03/02/2011 05/12/2010 07/10/2013 09/30/2013

Effectiveness 04/28/2011 08/09/2010 07/28/2013 12/18/2013

Grant Amount (US$ million) 6.75 1.1 3.765 10

Disbursed (US$ million) 6.75 0.456 3.061 0.644

Disbursement % 100% 41.42% 81% 6.44%

Grant Closing 6/30/2014 6/30/2015 06/30/2016 12/31/2016

1 The mission members were: Messrs. Zubair K M Sadeque (Senior Energy Finance Specialist and Task Team Leader), Ashok

Sarkar (Senior Energy Specialist), Koffi Ekouevi (Senior Economist), Christopher Purcell (Renewable Energy Consultant), Dr.

M. Khaliquzzamn (Technical Consultant), Ishtiak Siddique (Procurement Specialist), Mohammed Atikuzzaman (Financial

Management Specialist), Iqbal Ahmed (Environment Specialist), Sabah Moyeen (Social Safeguards Specialist), and Md. Tafazzal

Hossain (Program Assistant).

2 Grant financing amounting to US$3.565 million is made available from the US Agency for International Development

(USAID) as the first tranche to support the access to electricity component of the project. An amount of US$10 million is made

available from the Bangladesh Climate Change Resilience Fund (BCCRF) for grant support to the solar irrigation pumps under

the access to electricity component. Two GPOBA Grants (TF096552 and TF098472) have been providing matching grant to the

Solar Home Systems (SHS) and mini-grid schemes supported under the project.

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III. Achievement of Development Objectives

2. The original project development objectives (PDO) were to increase access to clean energy in

rural areas through renewable energy and promote more efficient energy consumption. A project

restructuring was approved by IDA board in June 2014 (along with an additional financing to support

further scale-up of the SHS program) that involved dropping the Efficient Lighting component of the

project and revising the PDO as ‘to increase access to clean energy in rural areas through renewable

energy’. The project has provided access to electricity to about 590,000 households by September 2014.

The PDO is likely to be achieved and the overall rating for achievement of the PDO is Satisfactory.

Annex 2 provides the results framework of the project and progress achieved to date.

IV. Current Implementation Status

3. Overall implementation is on track. The SHS program continues satisfactorily. The SHS

installation continues at over 50,000 systems per month supported by IDA and other development

partners. A total of 6 mini-grids for a combined capacity of 0.86 MW are under construction. A total

about 191 solar irrigation pumps have been approved by IDCOL for financing and 69 have been installed

funded from USAID, GPOBA and other financing sources. Out of the remaining 122 pumps, 70 are

expected to be financed from BCCRF. Another 230 pumps are in the pipeline for consideration for

BCCRF financing. The overall implementation progress of the project is Moderately Satisfactory given

the slow initial uptake in the mini-grids, solar irrigation pumps, and the household energy component.

4. Disbursement Progress. The project already disbursed US$102.8 million in IDA credit (68% of

the original credit). To meet the funding needs of the fast growing SHS program, an additional financing

of US$78.4 million was approved with a target to reach an additional 480,000 SHS (beyond the original

target of 550,000) by the project closing of December 2018. Disbursement projection for FY15 is

US$47.5 million (including additional financing), which is expected to be met. The additional financing

also included a project restructuring that included dropping the efficient lighting component and re-

allocating to access to electricity (US$12 million) and to sector technical assistance component (US$5

million). An additional US$15 million in grant financing is being processed from the Global Partnership

for Output Based Aid (GPOBA) trust funds to meet the capital buy-down grant requirements for the

access to electricity component.

5. Against the first tranche of US$3.765 million of USAID trust fund (TF05134) for access to

electricity component, US$3.06 million has been disbursed providing grant support to 113,858 SHS.

Total commitment from USAID is US$7.565 million and a second tranche of US$1.5 million is in the

processing from USAID. Some re-allocation to SHS from other renewable options will be needed from

this second tranche to meet the needs of the growing SHS program. An amount of US$0.45 million has

been disbursed against GPOBA trust fund for mini-grid (TF096552) supporting 20 irrigation pumps. The

remaining amount is expected to be fully utilized by the closing date of June 30, 2015 that would support

a total of 36 irrigation pumps and one mini-grid (currently under construction). After the special account

was opened, an initial advance of US$0.644 million was processed in June 2014 against the BCCRF trust

fund (TF015077). Some 4 irrigation pumps have been so far been supported under the fund with another

70 pumps under construction that would utilize about US$1 million. The allocation of US$10 million

from the BCCRF funds is expected to be fully utilized by the closing date of December 2016.

6. GAAP Implementation. The Governance and Accountability Action Plan (GAAP) was revised

dropping the actions related to the dropped efficient lighting component. The major activities under the

matrix of actions outlined in the GAAP are continuing (Annex 3) to mitigate the risk of inadequate

competition that could result in poor quality and service to SHS customers. The SHS market

competitiveness survey indicated adequate competition by the POs in the market. An impact evaluation

survey conducted earlier did not find any discernible difference in the quality of service delivery across

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the POs. IDCOL continues to focus on strong inspection and monitoring to ensure quality installations. A

follow-up survey under a Bank-administered trust fund (CARTA program) to seek beneficiary feedback

is on-going (the first survey indicated a customer satisfaction rate of 97%).

Component-wise Implementation Status

7. The restructured project now has three main components: i) access to electricity (total cost

US$374 million, IDA US$128 million from original credit and US$78.4 million from additional

financing); ii) household energy (total cost US$46 million, IDA US$12 million); and iii) sector technical

assistance (total cost US$10 million, IDA US$10 million). The following section summarizes the

component-wise implementation issues.

Component 1: Access to Electricity

8. The access to electricity component is providing continued support to the solar home systems

(SHS) program and also supporting other renewable energy options (mini-grids, solar irrigation pumps,

captive biogas plants for electricity etc) implemented by IDCOL.

9. Increased share of smaller SHS. There has been an increased uptake of smaller SHS ever since

the capital buy-down grants were limited to smaller systems only. In order to better understand the

market dynamics (whether it is the result of the demand pull from the poorer households who are only

able to afford smaller systems, or the sales push by the POs as only the smaller systems are eligible for

subsidies), market surveys have been initiated by IDCOL through call centers. A recent pilot on ICT

based customer surveys was done under a Bank-executed trust fund that had established call centers to be

the most cost-effective channel for collecting feedback from SHS customers.

10. Pico-solar kits: There has been interest recently from some development partners on introducing

pico-solar kits in the IDCOL program. Globally, in the many places outside of Bangladesh where SHS

programs have been less than successful for reasons of unaffordability, upfront costs barriers, lack of

access to finance, poor quality, high supply chain costs, lack of access to installation and maintenance

services etc, the solutions being promoted are plug & play pico-solar kits (and solar lanterns). The

characteristics of pico-kits are typically: no complex installation requirements, small system components

due to ultra-high efficiency LEDs, enabling use of small long life Li-Ion batteries, kits quality tested and

certified (usually) to Lighting Global standards with 2 year warrantee. Sizes range from 5-10Wp. The

introduction of pico-solar to Bangladesh raises several questions particularly on the cost-effectiveness of

the pico-solar when compared to smaller (10Wp) SHS in the IDCOL program. IDCOL will need to

explore answers to these carefully before introducing such pico-solar kits. Details are in Annex 4.

11. Solar lanterns: Lanterns are also seen, globally, as part of a solution to the challenges of failed

or challenged SHS programs, as they have almost all the characteristics of pico-solar kits, except they are

integrated units providing for one lamp only and usually cellphone charging. Since they cost much less

than $50 in almost all cases, they cannot be financed by IDCOL and are intended for cash sales only. IFC

and GIZ have jointly launched the ‘Lighting Bangladesh’ program on October 29, 2014 that is aimed at

providing support to private sector to reach the poorest of the poor who cannot afford even IDCOL

financed-SHS. IDCOL is coordinating closely the SHS program with the IFC-GIZ lighting Bangladesh

program.

12. Service level of older SHS. Given the fact that there are a large number of systems that are

already paid off with older CFL light packages, it would be important to understand to what extent they

are still being used or maintained by the customers. It will also be important to understand the

effectiveness of the battery recycling process that IDCOL introducing by surveying older customers if

they had recently replaced their batteries through the IDCOL POs or through others. The customer

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surveys through call centers have been initiated recently.

13. Mini-grids. A total of 6 mini-grids are at various stages of construction. Given the site-specific

nature of the mini-grids, uptake has been slow. The mission reiterated the need for IDCOL to identify

potential sites (in discussion with Power Division) and carry out feasibility studies for such sites. The

potential sites can then be offered through bidding for private sponsors interested in setting up mini-grids.

IDCOL agreed to initiate selection of the feasibility study consultant by December 15, 2014.

14. The mission visited the site of one 141 kWp solar Mini Grid at Paratoli Island, Raipura Upazila,

Narshingdi District by Souro Bangla (SBL). The project was approved in January 2014 with the targeted

commercial operation by June 2014. There have been delays and the project is now due for commercial

operation by end-Nov. The civil construction, electrical works, and distribution network construction

were all found to be of high quality. Possible concerns include some spatial planning issues that should

have been anticipated (battery room layout, array shading). The mission reiterated the need to keep a

close supervision by IDCOL on the battery and control room installations, which will ultimately

determine the actual quality of services.

15. Solar irrigation pumps. After some initial delays, the pace of installation of irrigation pumps are

finally picking up. Out of 191 pumps that were approved by IDCOL for financing, 69 have been installed

already with support from USAID, GPOBA and other funding sources. Out of the remaining 122 pumps,

70 are expected to be financed from BCCRF. Another 236 are in the pipeline for consideration for

BCCRF financing. These are in the 7-11kWp sizes that would require 30 acres of 3-crops irrigation

needs. Such large areas require agreements with 25-30 farmers for each pump location, which is a time-

consuming and difficult task. IDCOL is currently assessing the feasibility of smaller (3 kWp) sized

pumps that would require smaller land sizes with agreements with 2-3 farmers for each pump. Once such

smaller sized pumps are found to be economically cost-effective compared to diesel pumps, these will be

considered for financing contributing to faster pace of installation. With the continued panel price decline

and increased diesel costs, there is a possibility that individually owned pumps will be most economical

in the near future that will allow for replication of the ownership model of SHS in the irrigation pumps.

16. IDCOL has been using funds from GPOBA, USAID and kFW for the irrigation pumps that have

been installed so far. Going forward, mostly BCCRF funds will be utilized for the irrigation pumps to

fully utilize the allocation of US$10 million by the fund closing date of December 31, 2016.

17. Captive biogas generation: Three captive biogas generation proposals have been reviewed by

IDA and were cleared for financing. Biogas formed from cattle or poultry farms is used within those

farms to offset grid electricity consumption or diesel consumption – with benefits to the greater economy.

There are several thousand such captive generation opportunities, which can be explored.

18. Technical Assistance (TA) Progress and Actions. a. Transition to Commercial Financing Study: The task got delayed due to the non-availability of

the international consultant. IDCOL is exploring the option of finishing the study with a new

consultant that will identify options for introducing commercial financing to the SHS program

while ensuring poorer segments of the market are not left out of the program due to increased

costs. The mission reiterated the need to engage an appropriate consultant by January 31, 2015

and complete the study by June 30, 2015.

b. PV Testing Laboratory: Agreement has been signed with the Bangladesh University of

Engineering and Technology (BUET) for operating and maintaining the testing laboratory while

the lab equipment will be supported under the project funds. The technical specifications for the

equipment are being finalized in consultation with the technical consultant of IDCOL, IFC

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consultants, and BUET. The equipment will include test equipment for small/pico PV systems

that would be supporting IFC-GIZ Lighting Bangladesh program.

c. 220 V DC Mini-grid Testing Facility: The revised proposal from the United international

University (UIU) has been finalized and agreements reached. UIU agreed to initiate the civil

works for such lab immediately with a target to establish the facility by June 30, 2015.

d. SHS Technical Standards Upgrade: The standards now include specifications for LED lamps.

The LED lamp specifications are rudimentary and could benefit from the work done to develop

solar LED lighting standards under the Lighting Global Program, which are now incorporated

into the international IEC Standard, IEC TS 62257-9-5 Ed. 2. IDCOL will request the Technical

Standards Committee to review the IEC standard for low voltage LED lights, and incorporate

appropriate elements into the IDCOL SHS Specification by December 31, 2014. SHS using

better ultra-high specification LED of 90lumen/watt could significantly reduce system size and

cost.

e. Audits: Several audits have been initiated: i) audit of procurement practices of POs to check if the

procurement comply with economy and efficiency principals is on-going; ii) selection of auditor

is at final stage for the environment and social audit to monitor the environmental and social

compliance in field level implementation as well as compliance with the battery recycling

process; and iii) technical audit is on-going.

f. Baseline Surveys for Impact Evaluation. Contract negotiation with the first ranked survey firm is

on-going. An IDCOL team participated in a workshop in Lisbon on impact evaluation surveys

sponsored under a Bank-executed trust fund. The team has benefited from a better understanding

of the scope and methodology to be used in the impact evaluation for the different activities

(mini-grids, solar irrigation pumps, improved cookstoves, and biogas plants for cooking). It was

agreed that some modifications in the TOR will be incorporated based on the workshop learning

and contract negotiation will be done based on the revised TOR.

g. Technician training program. The rapid growth of the program resulted in a shortages of trained

technicians. IDCOL has recently contracted several technical institutes to offer certification

courses for technicians. The task team introduced IDCOL team with the Project Director of the

Bank-funded education project (Skills and Training Enhancement Project) who showed keen

interest to work with IDCOL to introduce certification courses in the curricula of the Technical

Education Training Institutes. IDCOL’s own curriculum has been shared with the education

project. IDCOL agreed to follow-up with the education project.

Component 2: Household Energy Component.

19. Improved Cookstoves: Overall, the implementation progress of the dissemination of improved

cookstoves is satisfactory. A call for expression of interest for selection of partner organizations (POs) for

dissemination of ICS has resulted in responses from 198 POs. IDCOL shortlisted 102 and selected 33 POs

for the first round launched in December 2013 and 16 others for a second round expected to be launched

in December 2014. Consultations, adjustment of operational modalities, ICS selection, testing and

certification delayed the physical dissemination of the ICS. However, the initial round is now under

effective implementation with about 2,800 ICS already purchased by households. The ICS

implementation rate is currently low for timely achievement of the project target. The mission

acknowledges initial difficulties in setting up production facilities and supply chains. A higher

implementation rate is expected in the next six months. The mission noted the operationalization of

SREDA and recommended that IDCOL takes up the support of SREDA the for mobilizing support from

local government agencies to promote ICS in the communities.

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20. Biogas Plants: Implementation of the biogas plants is also progressing satisfactorily. The biogas

program is benefiting from the organizational modalities initiated earlier under SNV financing. Overall

about 1,453 biogas plants have being constructed under the project. A cluster construction approach is

also adopted for the biogas component to help POs concentrate their activities, to increase efficiency in

collecting revenues, to reduce operating expenses, and to provide smooth after sales services. It was

agreed that POs will make the best use of dry season starting from November and increase monthly plant

construction.

21. Detailed implementation progress and an action plan for the next six months appear as Annex 5.

Component 3: Sector Technical Assistance.

22. The component is continuing satisfactorily. An amount of US$2.7 million already disbursed

against the original allocation of US$5 million. During the additional financing and project restructuring

in June 2014, an amount of US$5 million was re-allocated from the cancelled allocation for the efficient

lighting component.

23. The mission was pleased to note the operationalization of SREDA with the appointment of a full-

time Chairman, members, and other key staff. The mission met with the new SREDA officials and

agreed to explore options to develop a national-level Energy Efficiency (EE) Implementation/Financing

Strategy linked to the EE Action Plan. The potential of earmarking some dedicated TA funds

(implemented by Power Cell) to SREDA for EE activities was also discussed. SREDA will work with

Power Cell and Power Division for such earmarking. SREDA could benefit from knowledge sharing

with some global experts in the field of EE, which can be funded from the TA component. Details for the

potential EE engagement are in Annex 6.

24. It was further agreed that a comprehensive approach will be designed including development of a

large scale household level LED lamp deployment program through a Demand Side Management (DSM)

modality; formulation of an Incandescent Lamp Phase out Policy; and design of a comprehensive

consumer awareness program on promoting LEDs and other energy efficient appliances. A feasibility

study and options analysis needs to be undertaken that will identify the most effective means of

addressing the market barriers for LED. Details are in Annex 6.

25. Re-fund of CDM preparation costs for the efficient lighting component. IDCOL signed an

Emission Reductions Purchase Agreement (ERPA) with the Bank as the trustee for a carbon finance fund

for the emission reductions from the efficient lighting component (now dropped). The ERPA stipulated

that the preparation costs for Clean Development Mechanism (CDM) project would be borne by the Bank

as the trustee that would be recovered from the carbon revenues generated from the CFLs distributed

under the component. In the event of a failure to generate the carbon revenues, IDCOL was liable to

refund the preparation costs. Accordingly, an amount of Euro 315,000 is claimed by the Bank as the

carbon finance trustee. The mission discussed the issue in detail and requested IDCOL to explore options

for such refund. IDCOL agreed to revert back by December 15, 2014.

V. Fiduciary and Safeguards

Environment and Social Safeguards

26. Recycling of SHS Batteries. IDCOL is continuing to monitor the collection of warranty expired

batteries with the working committee meeting regularly. The database for tracking of warranty expired

batteries has been developed. The on-going customer surveys will also provide more information on the

status of the warranty expired batteries. IDCOL is continuing to monitor the progress in establishing

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recycling facilities in all the remaining 14 battery suppliers with a June 30, 2016 target date. Only 3

currently have their own facilities.

27. Mini-grids, irrigation pumps and biogas plant. It was informed that the site-specific

environment assessment/screening (EA) for 6 mini-grids, 110 solar irrigation pumps and 5 captive biogas

plant were carried by the proponent and duly reviewed and cleared by the IDCOL. The Bank also

reviewed the EAs of 2 mini-grids, 8 irrigation pump and 2 biogas plants on sample basis, and found these

to be in compliance with Bank requirements.

28. Institutional Strengthening on Safeguards. With a view to strengthen the institutional capacity

of IDCOL on environment safeguards, a new Environment Specialist has been appointed who has

commenced work from May 1, 2014.

29. Development of National Guidelines for CFL disposal. A draft guideline has been developed by

the consultant. The Bank reviewed the draft and suggested for further consultations with the stakeholders

including the Department of Environment (DoE) to ensure their buy-in for implementation of the action

plan. Despite dropping the efficient lighting component from the project, this work of developing the

national guideline would continue to ensure safe disposal of CFLs throughout the country.

30. Updating of ESMF. The ESMF has been updated for the additional financing, which was

disclosed in-country on April 20, 2014 and in the World Bank Infoshop on April 21, 2014. The ESMF is

now applicable for the whole renewable energy program of IDCOL incorporating the requirements of all

the different development partners supporting the program.

Fiduciary

31. The fiduciary performance is rated Satisfactory. The financial monitoring reports (FMRs) are

being submitted on time. The audited accounts for the project and of IDCOL are expected to be submitted

by the due date of December 31, 2014. The procurement performance of Power Cell (sector technical

assistance) and IDCOL (for technical assistance under access to electricity and household energy

components) is satisfactory. IDCOL and Power Cell have agreed to update their procurement plans using

the electronic procurement plan monitoring system (SEPA) by December 15, 2014; which will enable

real-time monitoring by the implementing agencies as well as the Bank of implementation of procurement

activities under the project.

VI. Agreed actions to address issues.

Annex 7 has the list of agreed actions.

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Annex 1

List of Officials Met

Ministry of Power, Energy and Mineral resources (MPEMR)

1. Mr. Taposh Kumar Roy, Additional Secretary, Power Division, and Head, SREDA Cell

2. Mr. Mohammad Hossain, Director General, Power Cell

3. Mr. Md. Monwar Hasan Khan, Senior Assistant Chief, Power Division

Infrastructure Development Company Ltd. (IDCOL)

1. Mr. Mahmood Malik Executive Director and CEO

2. Mr. S.M. Formanul Islam, Deputy Chief Executive Officer

3. Mr. S. M. Monirul Islam, Chief Financial Officer and Head of Operations

4. Mr. Md. Enamul Karim Pavel, Director (Loans) and Head of Renewable Energy

5. Mr. Md. Wahidur Rahman, Unit Head (Technical), Renewable Energy

6. Mr. Nazmul Haque Faisal, Unit Head, Household Energy

7. Mr. A F M Shahed, Monitoring Officer, ICS

8. Mr. Md. Abdullah Hell Baki, Monitoring Officer, ICS

9. Mr. Molla Anisur Rahman, Senior Field Coordinator, ICS 10. Dr. A M Hasan Rashid Khan, Consultant, ICS

Partner Organizations (POs) and Others

1. Dr. M Shahidul Islam, Consultant, Grameen Shakti 2. Mr. Md. Belayet Hossain Miah, Deputy Director, VARD

3. Mr. Chandan Bose Mukto, Program Coordiantor, AID

4. Mr. Md. Abdul Mannan Sarkar, AGM, AVA

5. Mr. ABM Masudunnabi, Coordinator, SMS

6. Mr. Robiul Islam, Executive Director, DESHA

7. Mr. Mr. Md. Mominur Rahman, Assistant Professor, Department of Chemical Engineering, BUET

8. Mr. Craig VanDevelde, Chief of Party, USAID CCEB Program

9. Mr. A.K.M. Anowar Hossain Mollah, Senior ICS Advisor, USAID CCEB Program

10. Mr. Md. Masud Hassan, Coordinator, VERC

11. Ms. Laila Ishrat Jahan, Assistant Coordinator, VERC

12. Ms. Lila Gomez, Field Worker, VERC

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Annex 2

Results Framework for RERED II Project

(Figures in parenthesis are achievements)

Project Development Objectives

The proposed project development objective is to increase access to clean energy in rural areas through renewable energy

Project Development Objective Indicators

Indicator Name Core Unit of

Measure

Baseline

(Dec 2012)

Cumulative Target Values

2013 2014

2015

(As of Sept

2014)

2016 2017

2018

Number of households,

farmers, and businesses having access to clean

energy services

Number 0 100,200

529,000

935,000

1,322,000 1,663,000 2,069,000

Achievements 183,066 499,529 590,183

Generation Capacity of

Renewable Energy (other

than hydropower) constructed- Solar

MW 0 6 20 33 43 49 56

Achievements 6.42 16.73 19.87

Direct project beneficiaries

Million 0 0.5 2.4 3.8 4.8 5.3 5.7

Achievements 0.9 2.73 3.12

Female beneficiaries

Percentage 0 44 51 50 54 55 59

Achievements 44.73 43.17 45.48

People provided with

access to electricity by

household connections Million 2.4 3.7 4.5 4.7 4.7

Achievements 2.73 3.12

People who gained access

to more energy-efficient

cooking and/or heating facilities

Million 0 0 0 0.1 0.3 0.6 1.0

Achievements 0 0.005

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Intermediate Results Indicators

Cumulative Target Values

Indicator Name Core Unit of

Measure Baseline

(Dec 2012) 2013 2014

2015

(As of Sept

2014)

2016 2017 2018

Number of solar home systems installed

Number 0 100,000 524,000 824,000 1,001,000 1,030,000 1,030,000

Achievements 182,550 497,855 586,525

Number of connections

made through mini-grid

systems and captive plants

Number

0 150 250 1,000 2,500 4,500 7,500

Achievements 0 0 3

Number of solar irrigation pumps installed

Number 0 30 40 190 440 790 1,250

Achievements 2 9 25

Number of improved cook stoves purchased by

households Number 0 0 0 100,000 300,000 600,000 1,000,000

Achievements 0 0 2,800

Number of biogas plants

installed Number 0 100 4,400 10,220 18,340 29,700 33,000

Achievements 301 1,453 1,453

Collection efficiency of the

SHS POs Percentage 90% 90% 90% 90% 90% 90%

Achievements 96% 96%

Enabling policy for renewable energy

development Text

SREDA

not operational

SREDA not operational

SREDA established

SREDA

operational with

core staff appointed

SREDA

operational with core staff

appointed

SREDA operational

with core

staff appointed

SREDA operational

with core

staff appointed

Achievements

SREDA

Chairman appointed

SREDA operational with

core staff

appointed

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Annex 3

Matrix of Actions

Governance and Accountability Action Plan

Issues/Risks/

Objective

Actions Agency

responsible

Timeline Early Warning

Indicators to Trigger

Additional Action

Current Status

Service Delivery Risk

Ensure

adequately

competitive

market for

effective service

delivery

Carry out a market assessment to

gauge the extent to which

customers have options in

choosing the service provider

IDCOL

Early in project

implementation

Delays in initiating the

assessment

Assessment completed. It

indicates adequate competition in

the market.

Complete impact evaluation study

that includes an assessment of PO

performance

Study

consultant

Early in project

implementation

Delays in report

submission

Study completed. The study did

not indicate any discernible

differences in service delivery

quality across the POs.

Based on the assessments, take

appropriate interventions for

ensuring an adequately

competitive market

IDCOL Early in project

implementation

Delays in implementing

appropriate

interventions

IDCOL has strengthened its focus

on ensuring quality particularly

given the growth of the program

and introduction of new POs.

Conduct Technical audit by an

independent auditor on installation

quality

IDCOL

appointed

auditor

Every year during

project

implementation

Delays in appointing

auditor, non-

cooperation by the POs

BUET has been contracted.

Inception report expected shortly.

Ensure

enhanced

reporting and

feedback

Undertake regular reporting by the

implementing agencies on

implementation

IDCOL/

BREB/ Power

Cell

Quarterly Lack of focal point or

frequent replacement

The financial monitoring reports

are submitted timely by the

agencies.

Ensure RTI Designated Officer in

place and proactive information

dissemination conducted

IDCOL/BREB

/Power Cell

Within three

months of

effectiveness

No designated officers

in place; check of

websites reveals lack of

information

Designated officers have been

appointed.

Introduce third party monitoring

system

IDCOL Within the first

year of project

implementation

No initiative by the

implementing agency

A third party monitoring under a

Bank-executed trust fund

submitted its report indicating

12

Issues/Risks/

Objective

Actions Agency

responsible

Timeline Early Warning

Indicators to Trigger

Additional Action

Current Status

97% satisfaction rate amongst

consumers. Follow-up survey is

ongoing.

Introduce IT based systems for

reporting installation data and for

collecting customer feedback

IDCOL/POs Within the first

year of project

implementation

No initiative by the

implementing agency,

non-cooperation by the

POs

A small pilot from a Bank-

executed trust fund was

completed. A call center has been

contracted for customer surveys.

Survey is on-going.

Capacity Risk

Strengthen

institutional

capacity for

effective

implementation

Complete review of the

organization structure of IDCOL

Institutional

Development

Consultant

Early in project

implementation

Delays in

implementation of the

study recommendations

A separate department for

renewable energy is now

adequately staffed.

Develop a credible and time-bound

action plan for strengthening

BREB/PBS program

BREB Within the first

year of project

implementation

Delays in finalizing the

action plan

Action plan developed and under

implementation. This is being

followed up under a separate

project (T&D). The action item

is dropped from this project as

BREB is no longer an

implementing agency in this

project.

Appointment of Assistant Director

(Accounts)

Power Cell Before

disbursement of

the component

Delays in initiating

selection process

Appointment completed.

Reduce risk of

corruption in

procurement.

Conduct procurement audit by an

independent auditor on PO

procurement practices

IDCOL

appointed

auditor

Every alternate

year during

implementation

Delays in appointing

auditor, non-

cooperation by the POs

Procurement audit on-going.

For the energy-efficient lighting

component, develop i) a time

bound action plan with close

monitoring by REB and the Power

BREB

Before initiating

CFL procurement

Delays in developing

the action plan and

terms of reference,

delays in appointment

The action item is dropped as the

efficient lighting component is

cancelled.

13

Issues/Risks/

Objective

Actions Agency

responsible

Timeline Early Warning

Indicators to Trigger

Additional Action

Current Status

Division; (ii) a thorough terms of

reference for the bid evaluation

committee; (iii) appointment of a

competent international technical

specialist to support REB during

bid invitation, evaluation, and

post-award inspections; iv)

appointment of a competent

international procurement

consultant to support REB during

bid invitation and evaluation; v)

selection of competent bid

evaluation committee members

with inclusion of the international

procurement specialist; and (vi)

establishing strict confidentiality

arrangements for bid evaluation.

of the international

technical specialist,

complaints received

Appointment of a procurement

consultant and training for

procurement focal point

Power Cell Early in project

implementation

Delays in initiating

selection process

Procurement consultant on board.

14

Annex 4

Pico-solar PV systems in the context of IDCOL SHS program

The global niche for pico-solar PV

1. SHS provide many potential benefits to off-grid end-users, with services ranging from quality

lighting, cell-phone charging, radio, and TV. SHS of different sizes may provide important steps up

the energy ladder: from traditional smoky fuels and kerosene, disposable torches, rechargeable

batteries on the one hand, en-route to grid comparable electricity by mini-grids and main utility

connection services on the top of the ladder.

2. But globally, in many places outside of Bangladesh, SHS delivery programs have often been

less than successful, or have not reached desired levels of scale-up for a variety reasons now well

documented, including the usual suspect list of:

high imported equipment costs exacerbated by long supply chains and supply chain mark-ups

unaffordability and upfront costs barriers for potential consumers

lack of access to consumer finance in the project areas

poor quality of equipment and high failure rates of key components, including batteries

lack of spares and replacement components in rural areas

lack of access to installation and maintenance services etc.

3. One of the solutions being widely promoted to begin to address many of these challenges is

the plug & play pico-solar PV kit and solar lanterns. These are lower in absolute cost than small SHS.

4. Pico-solar PV kits3 are good quality lighting products that are small enough not to present a

very high upfront cost barrier and thus not require much financing, which can be self-installed by the

consumer. They are small but scalable - if more lights are required, then the consumer can

incrementally purchase more of these units as and when affordable. Cost can range from $70-$200,

average $140. The physical characteristics of pico-solar PV kits are typically:

no complex installation requirements – simply plug and play,

2-4 lights and cellphone charging outlet using USB

ultra-high efficiency LEDs, low power draw, resulting in smaller system component

requirements

enabling use of small, long-life Li-Ion batteries

quality tested and certified (usually) to Lighting Global standards with 2 year warrantee.

fully imported fully assembled - manufactured typically in China, with some kits assembly

elsewhere (e.g. Kenya)

Sizes range from 1-10Wp typically.

5. Pico-solar PV capacity is not normally measured in terms of Wp, but rather in terms of output

performance based on the light brightness for a measured number of hours per day (lumen-hr/day).

This has been done for various reasons, and avoids awkward simple cost or Wp comparisons with

some less efficient SHS.

6. The highly efficient technical characteristics often result in lower cost, higher performing

pico-solar PV system systems, than competing commercially available small SHS in the 15-20Wp

range which might use lower efficiency CFLs and lead-acid batteries.

Bangladesh context for pico-solar PV

3 For a short paper on pico-solar promotion refer to “Pico Solar PV Systems for Remote Homes, A new

generation of small PV systems for lighting and communication, IEA PVPS Task 9, Report IEA-PVPS T9-12:

2012”

15

7. Bangladesh SHS program of IDCOL has overcome all known barriers to SHS implementation

making it the fastest growing program the world. The considered introduction of pico-solar PV to

IDCOL program raises several questions:

Is there even a market for the smaller 10Wp SHS or pico-solar? The IDCOL program

currently markets 20Wp as its smallest offering, with high efficiency LED.

Is there a need for pico-solar kits in order to reach these “customers”? Can pico-solar

compete on price/performance basis with an equally performing Bangladesh IDCOL SHS?

How much effort and grant money should be spent getting these to market? IDCOL currently

provides small grant of less than $0.6-1/Wp for upto 30Wp systems.

Is pico-solar actually a step up the energy ladder in Bangladesh context? Can this step be

skipped?

Why introduce Li-Ion battery recycling challenges when Bangladesh has innovated low cost

tubular lead-acid batteries that are recycled, and why import when there is a buoyant local PV

manufacturing industry?

Can small SHS and pico-solar financing transaction costs be accommodated in the highly

efficient IDCOL financing schemes, or are fixed transaction costs too high to make them cost

competitive?

There are many questions as to whether pico-solar PV present a real economic opportunity for

Bangladesh, or will simply displace potential local economic production activities in SHS

with imported problems.

8. Solar lanterns: Lanterns are also seen, globally, as part of a solution to the challenges of

failed or challenged SHS programs, as they have almost all the characteristics of pico-solar kits,

except they are integrated units providing for one lamp only and usually cellphone charging. Since

they cost much less than $50 in almost all cases, they cannot be financed by IDCOL and are intended

for cash sales only. Lighting Bangladesh launched in 29th October with IFC, and will provide support

to private sector to reach the poorest of the poor who cannot afford even IDCOL financed-SHS.

Technical challenge is primarily, the recycling of the Li-Ion batteries.

Fixed costs of PO in IDCOL program

9. One of the key success factors of the IDCOL program is the huge networks of the PO’s for

sales, delivery, fee-collection and maintenance. Analysis of PO costs and margins indicates that a

significant part of PO costs is sales and marketing, and a significant part of their cost and risk is fee

collection – both of these are more or less independent of system sizes. Therefore there is a fixed cost

per system that needs to be covered for POs to consider any systems profitable. 20Wp systems

estimate these to be at least BDT 4,000- 5,000 per system.

IDCOL costs

10. IDCOL too has fixed transaction costs which are independent on system size. These include

the cost of capturing the PO financing transaction, and ongoing monitoring costs. Therefore, it is

probable that even in the most efficient SHS programme globally, there is a minimum system size

below which transactions are not attractive for either PO or financier IDCOL.

Grants approach in Pico-solar PV programs

11. The level of grant is typically based on the certified lumenr-hr/day. GIZ- financed programs

(SNV in Tanzania and 7 other global locations) and World Bank financed programs (SSMP2 in

Tanzania) offer generous grants, sometimes fixed for the program duration, or decreasing as the

program matures.

16

Program Year 1 Years 2 Years 3 Year 4

SSMP2

(World Bank)

$0.019/lm-hr/day $0.019/lm-hr/day $0.019/lm-hr/day 0

SNV (GIZ) $0.056/lm-hr/day $0.042/lm-hr/day $0.028/lm-hr/day $0.014/lm-hr/day

12. When converted to a $/Wp grant, these pico-solar program grants are high, translating to

about an equivalent $7/Wp-$23/Wp, averaging $10/Wp (compared to typical global SHS program

grants of $2.5/Wp to $5/Wp). In comparison, the IDCOL SHS program offers a grant of $0.6-1/Wp

for upto 30Wp systems only. No other IDCOL systems receive any grants, and thus the IDCOL

program is run practically on a full cost recovery basis.

Comparison of pico-solar and SHS performance in Bangladesh program

13. In the table at the end of the annex, the cost/performance of pico-solar PV systems is

compared with the existing IDCOL product offering. Included for comparison are possible new

IDCOL program offerings comprising of smaller SHS (5-15Wp) using smaller recyclable lead-acid

batteries and very high efficiency LED of 80lumen/watt and 120lumen/watt, all of which could be

locally manufactured and assembled.

14. The table below illustrates the likely trade-offs, but there are several assumption that need to

be confirmed, these are:

Capital costs of the pico-solar PV (assumed $75-$140 for 2.5 to 5Wp), but may be higher

Battery costs for the small solar SHS

Fixed mark-up for pico-solar and small SHS alike assumed to be about BDT4,000 ($50)

Grant for pico-solar as per GIZ proposals. Grant for small SHS fixed at $20

Lumen/watt for small LED for small SHS is 80 lumen/watt.

Discussion of costs and performance

15. Absolute costs of 5Wp pico-solar after all costs but before grant are very comparable with

10Wp SHS, although application of a large grant portion may make pico-solar appear cheaper.

Mark-ups are percentage-wise much more for smaller systems, due to the fixed cost aspects.

Grants for pico-solar are very high on a $/Wp basis.

Relative costs ($/Wp comparisons):

$/Wp cost for any SHS below 20Wp begins to climb dramatically with decreasing size from

$6/Wp, and this trend continues into the pico-solar range up to more than $20/Wp.

Even the higher grant levels assumed may not make sales price/Wp lower for pico-solar.

16. The efficient 5Wp pico-solar provides only a little less light (lumen-hr/day) than the 10Wp

SHS at assumed 80 lumen/watt. But comparing cost/lumen-hr/day, the 10Wp system seems to be

cost effective against the pico-solar, before grant application. By attending to LED efficiencies in the

SHS, and if the SHS were simply to improve to 120lumen/watt (similar to the pico-solar LED), then

the lumen-hr/day output of the 5Wp and 10Wp SHS rise dramatically, and appear to cost less than the

pico-solar in absolute terms, as well as providing far better value for money in terms of cost/lumen-

hr/day. In fact, if the pico-solar grant of about BDT 4,000 were applied to the efficient 10Wp SHS,

then these would seem to be the best solution by quite some way in absolute and relative cost terms.

They could reach the poorest of the poor almost as cost effectively as pico-solar based on the

calculations.

17. Given the above, in the Bangladesh context, a 10Wp SHS with efficient components could

17

deliver almost twice the performance of a 5Wp pico-solar, for almost the same price. And therefore it

could be argued that these grants would be better applied to the 10Wp SHS. This may in part answer

the questions: How much effort and grant money should be spent getting the pico-solar systems to

market?

Unquantified costs

18. The introduction of Li-ion batteries remains an unquantified environmental and recycling

challenge.

19. The economic benefits of locally assembled SHS versus imported pico-solar PV have not

been quantified at this stage.

Conclusion

20. Based on the assumptions listed above (that would need to be verified), but appears that the

space for pico-solar PV in Bangladesh is very small compared to some other countries in Africa for

example. There may be limited benefits on introducing pico-solar kits compared to developing home-

grown 10Wp SHS.

18

ParticularsAzzuri indigo

(2.5Wp)

Barefoot

Power pack

5W

Fosera pico

5Wp5Wp 10Wp 15 Wp 20 Wp 30 Wp 40 Wp 50 Wp 60 Wp 75 Wp 85 Wp 100 Wp 130 Wp

Solar panel 390 780 1170 1,500 2,250 3,000 3,750 4,500 5,625 6,375 7,500 9,750

Battery 2,000 3,000 3,000 3,690 3,690 4,800 5,900 5,900 8,000 9,800 9,800 12,800

Charge Controller 450 450 450 550 550 550 550 550 550 550 550 550

Lamp 500 500 500 750 750 1,000 1,250 1,750 1,750 1,750 1,750 2,000

Other accessories, mobile charger,

transportion, etc. 2,000 2,000 2,000 2,326 2,528 2,820 2,970 4,494 4,037 3,775 3,775 4,067

Mark-up (profit, and fixed costs for

marketting & distribution, cost/risk

related to monthly fee collection)

4,000 4,000 4,000 4,000 4,000 4,000 4,944 5,732 6,820 5,768 7,396 9,028 9,740 14,315 12,523

Sub-total 9,460 11,800 11,000 9,340 10,730 11,120 13,760 15,500 18,990 20,188 24,590 28,990 31,990 37,690 41,690

Subsidy / grant portion 4,269 4,964 4,964 3,000 3,000 1,560 1,560 - - - - - - - -

Total 5,191 6,836 6,036 6,340 7,730 9,560 12,200 15,500 18,990 20,188 24,590 28,990 31,990 37,690 41,690

markup % 73% 51% 57% 75% 59% 56% 56% 59% 56% 40% 43% 45% 44% 61% 43%

Grant equivalent ($/Wp) 21.9 $/Wp 12.7 $/Wp 12.7 $/Wp 7.7 $/Wp 3.8 $/Wp 1.3 $/Wp 1.0 $/Wp

BDT cost /Wp 2,184 1,560 1,400 1,068 673 475 441 326 304 288 287 266 262 234 224

BDT marked up/Wp 3,784 2,360 2,200 1,868 1,073 741 688 517 475 404 410 387 376 377 321

BDT Sales price/Wp 2,077 1,367 1,207 1,268 773 637 610 517 475 404 410 387 376 377 321

USD cost/Wp 28.00 20.00 17.95 13.69 8.63 6.09 5.65 4.17 3.90 3.70 3.67 3.41 3.36 3.00 2.88

USD marked up/Wp 48.51 30.26 28.21 23.95 13.76 9.50 8.82 6.62 6.09 5.18 5.25 4.96 4.83 4.83 4.11

USD sales price/Wp 26.62 17.53 15.48 16.26 9.91 8.17 7.82 6.62 6.09 5.18 5.25 4.96 4.83 4.83 4.11

lights 2 2 2 3 3 4 5 7 7 7 7 8

power 5 5 5 5 5 5 5 5 5 5 5 5

lumen/watt 80 80 80 80 80 80 80 80 80 80 80 80

Wh/day calculated 16 32 48 64 96 128 160 192 240 272 320 416

lumen-hr/day 1,176 1,340 1,980 1,280 2,560 3,840 5,120 7,680 10,240 12,800 15,360 19,200 21,760 25,600 33,280

BDT/lumen-hr/day

cost 4.64 5.82 3.54 4.17 2.63 1.85 1.72 1.27 1.19 1.13 1.12 1.04 1.02 0.91 0.88

marked-up 8.04 8.81 5.56 7.30 4.19 2.90 2.69 2.02 1.85 1.58 1.60 1.51 1.47 1.47 1.25

sold 4.41 5.10 3.05 4.95 3.02 2.49 2.38 2.02 1.85 1.58 1.60 1.51 1.47 1.47 1.25

USD/lumen-hr/day

cost 0.0595 0.0746 0.0453 0.0535 0.0337 0.0238 0.0221 0.0163 0.0152 0.0144 0.0144 0.0133 0.0131 0.0117 0.0112

marked-up 0.1031 0.1129 0.0712 0.0935 0.0537 0.0371 0.0345 0.0259 0.0238 0.0202 0.0205 0.0194 0.0188 0.0189 0.0161

sold 0.0566 0.0654 0.0391 0.0635 0.0387 0.0319 0.0305 0.0259 0.0238 0.0202 0.0205 0.0194 0.0188 0.0189 0.0161

lumen-hr/day 1,176 1,340 1,980 1,920 3,840 5,760 7,680 11,520 15,360 19,200 23,040 28,800 32,640 38,400 49,920

BDT/lumen-hr/day

cost 4.64 5.82 3.54 2.91 1.82 1.28 1.20 0.88 0.82 0.78 0.78 0.72 0.71 0.63 0.60

marked-up 8.04 8.81 5.56 4.99 2.86 1.97 1.84 1.38 1.27 1.08 1.11 1.04 1.01 1.00 0.86

sold 4.41 5.10 3.05 3.43 2.08 1.70 1.64 1.38 1.27 1.08 1.11 1.04 1.01 1.00 0.86

USD/lumen-hr/day

cost 0.0595 0.0746 0.0453 0.0373 0.0233 0.0164 0.0153 0.0113 0.0106 0.0100 0.0101 0.0093 0.0091 0.0081 0.0077

marked-up 0.1031 0.1129 0.0712 0.0640 0.0367 0.0253 0.0236 0.0177 0.0163 0.0139 0.0142 0.0133 0.0129 0.0129 0.0110

sold 0.0566 0.0654 0.0391 0.0440 0.0266 0.0218 0.0210 0.0177 0.0163 0.0139 0.0142 0.0133 0.0129 0.0129 0.0110

with 80 lumen/watt LED's

with 120 lumen/watt LED's - ultra high efficiency

5,460 7,000

Current IDCOL SHS offerings with LEDSmaller SHS (new)Pico-solar kits

Certified results

7,800

19

Annex 5

Detailed Implementation Progress of Household Energy Component

21. Preparatory Activities. The consultation process of the POs was elaborate as the clustering

approach adopted by the RERED-II project is new. This approach is based on a principle of developing

small and medium size entrepreneurship to deliver clean cooking solutions to communities with in-depth

coverage. Each PO is required to conduct a baseline survey of its assigned cluster before starting the

dissemination of the ICS. A total sample of 251,141 respondents participated in the baseline survey from

97 upazilas. Some key results are the following: i) about half of the respondents are involved in

agricultural work; ii) more than half of the respondents monthly household income is less than 10,000

Takas ; iii) over 90 percent of respondents currently use traditional cookstoves; iv) about 67 percent of the

respondents use mixed fuel in the form of fuel wood, agricultural residues, straw, and cow dung cake; v)

only 19 percent of respondents purchase fuelwood for cooking; and vi) most of the respondents are

willing to purchase an ICS but do not want to purchase it now. During the course of the project, follow

up survey would be conducted to assess trends from this baseline.

22. IDCOL has conducted training activities to familiarize the POs with the operating guidelines of

the project. About 17 training sessions have been organized so far with about 455 participants.

Preparatory activities involving the POs also included adjustments of operating modalities to account for

perceived field realities.

23. The mission had discussions with a selected group of POs and participated on an Operational

Committee meeting involving all selected POs of the first round. After an initial preparatory phase that

involved many adjustments, POs are now proceeding to sales of the ICS and their physical installation in

households. Key implementation challenges reported are: i) the competition faced by POs from other ICS

programs such as the Grammen Shakti and the GIZ programs; ii) high transportation costs for POs that

do not have cluster based production facilities; iii) difficulties in implementing the cluster approach by

some POs.

24. The mission recommended an adaptive approach in coordinating activities. Basically, it was

suggested that IDCOL remains open minded to adapt monitoring and administrative requirements to field

realities and implementation constraints. In view of the time needed for preparatory activities, the

mission recommended a call for the second round of POs to be initiated as soon as possible to engage

with them early in the process to minimize implementation delays.

25. Technical Committee, Testing and Standards. IDCOL’s Technical Committee in charge of

providing technical oversight of ICS standards, testing, and certification is now fully operational. The

Technical Committee provided its insights and recommendations to IDCOL in the selection of a first

wave of 7 ICS models that are being disseminated by the POs. This selection was made based on

screening of 72 initial models and test results of 11 models. The testing was made at the Village

Education Resource Center (VERC) and at the Bangladesh Atomic Energy Commission.

26. The mission visited the Bangladesh University of Engineering and Technology (BUET) to review

progress in the on-going work as part of agreement signed with IDCOL. Currently, two models of ICS

approved by IDCOL have been installed at the BUET. They have been tested using Water Boiling Test

(WBT) protocols. Two incrementally improved designs are almost ready to be tested. These are

designs with cast-able creaming lining and with ceramic sleeve lining. With better insulated hot surface,

these designs are expected to give incrementally higher efficiency in WBT tests. The mission noted the

progress in the R&D program for incremental improvement of current models of ICS and pellet fuels at

BUET.

27. The BUET laboratory is however handicapped by lack of appropriate equipment especially an

20

emission measurement set-up of international standards. The mission recommended that project resources

should be eventually allocated to finance BUET laboratory facilities so that a reasonable quality of work

on ICS related R&D can be performed. The estimated resource requirement is about $300,000. This

should be done upon satisfactorily completion of the current contract with the BUET.

28. The mission also visited the Ceramics Department of BUET. It has an excellent facility to

characterize materials using X-ray Fluorescence Spectrometry and Electron microscopy. The mission

encouraged the BUET teams to continue collaboration to help IDCOL implement its quality tier

improvement plan. The plan stipulates that the percentage of the current generation of “improved” stoves

will increase gradually every year: goals would be 0% first year (current year), 5% second year, 20%

third year, 50% fourth year, and 100% fifth year. ”The definition of an improved stove will be one that

meets the benchmarks of tier 2 stove (fuel use): tier 3 (indoor air pollution): tier 3 (total emissions).

29. The mission was briefed on the take-away lessons from the knowledge exchange visit organized

in June 2014 for 3 cookstove experts supporting the IDCOL program at the Energy Institute of the

Colorado State University in USA. The mission recommended remaining in contact with the researchers

of the Institute to pursue research and development opportunities.

30. Selection of Additional ICS models. POs are currently disseminating a first set of ICS model

recommended by the IDCOL Technical Committee. This initial set of ICS will be supplemented by a

second set that will be factory produced ICS. The set could include rocket stoves and gasifier cookstoves

proven to be of higher quality than the ICS commonly used in Bangladesh. The idea is to provide a menu

of solutions and choice to households. It is expected that households will eventually decide on the type of

ICS that are suitable to their cooking needs. The market will therefore decide on the level of uptake of

these cookstoves. IDCOL and the Bank supervision team will continue to closely monitor quality,

performance and testing aspects to ensure that the agreed tier graduation plan is effectively being

implemented.

31. National awareness raising. The mission noted satisfactorily that work is being done by many

POs on awareness raising on the benefits of clean cooking to health outcomes, environmental protection,

and climate change. Awareness level at the level of clusters is one of the key activities of the household

energy component as behavior change is imperative for adoption and sustained use of new cooking

appliances. The mission was also informed that IDCOL is at an advanced procurement stage to contract

for a large scale awareness raising campaign. The mission encouraged IDCOL to follow up closely this

activity as it will reinforce work done by the POs and help stimulate demand for ICS in the country. As

recommended in the last December 2013 aide memoire, a close collaboration between IDCOL, GIZ, the

CCEB program and Grammen Shakti to coordinate messaging is necessary to avoid creating confusion at

the level of households.

32. Capacity development of the POs. The mission recommended that IDCOL continue the

implementation of capacity development activities to strengthen managerial, technical, and monitoring

skills of POs. Contents of capacity development activities need to be periodically reviewed based on

feedback received from POs and also from findings of IDCOL monitoring team.

33. Donor coordination. The mission noted satisfactorily that IDCOL and the USAID Catalyzing

Clean Energy in Bangladesh (CCEB) program have signed a letter of collaboration. A meeting was held

between IDCOL and the CCEB during the mission. When IDCOL introduces higher quality cookstoves in

its program, the convergence of objectives between the two programs will become more apparent. The

mission encouraged the two teams to articulate their collaboration on specific activities. The mission

recommended a similar collaboration with other donors involved in the clean cooking sector in

Bangladesh. In particular, it was suggested that IDCOL fully capitalizes on the opportunities offered by

the Sustainable Energy for All (SE4ALL). This Initiative has now completed an investment prospectus

21

and it is attracting many investors to the energy access sector in Bangladesh. The mission participated at

the opening of the Bangladesh SE4ALL Investor Forum and noted the importance given to clean cooking

issues as part of the universal energy access by 2030 goal.

34. Field Trip Observations. The mission visited VERC’s concrete ICS production center at

Anandapur and dissemination site at Kamalpur on October 25th. The findings of the team are given

below.

(i) At the production center at Anadapur, about 30 units of all types of approved models are

produced per day. With the newer molds (i.e., casting frames), the problems encountered

earlier (i.e., dimensional accuracy) has now been resolved. One mason and a helper are

employed at the facility currently. The curing facility consisted of a large water tank with

sufficient volume to match the production level. The production capacity of the center is

more than the current dissemination requirements. In fact, some of the productions are being

offered to non-allocated areas in the project without IDCOL marking and serial number. So,

here is the opportunity for the POs with limited production capacity to get their supplies as

pure business proposition; subsidy being not involved in production and distribution.

(ii) The ICS dissemination area visited was a small community in Kamalpur, which is located in

one of the assigned clusters of VERC. The community consists of 30 households. Two lady

volunteers were found to be working in the area on behalf of VERC. They appeared to have

proceeded quite systematically by doing a household mapping of the community and then

even doing a poverty mapping (i.e., rich, middle class, poor and ultra-poor). On enquiry, it

was found that they were trained prior to their assignment to the community. They succeeded

in involving local community leaders in the motivation program. The demand generated is

100% i.e., all the households has agreed to enlist for the purchase of the ICS of different

models (mostly two mouth ones). ICS have now been installed 15 households (i.e., 50%) and

the rest are expected to be installed in next one month.

(iii) The team visited several households to inspect the installed ICS. Most of them were found to

be in actual use. The kitchens appeared to be clean with no smoke and ladies were found to

be happy with the ICS use. While some of the ladies said that less fuel was required in the

ICS, others were not sure. All of them agreed that cooking was faster with ICS. In one

kitchen, rice was found to be cooked in the 2nd mouth in the simmering mode after initial

boiling in the first mouth which is fueled. In one case, smoke could be seen from the

chimney although kitchen was smoke free. It is possible that wet fuel was being used which

produces more smoke. It was interesting to note that the household in the community has

supply of fuel wood from their own sources.

(iv) In one case, the kitchen had an opening/ window on the side of the chimney. This could

result in the chimney take out the smoke out of the kitchen with the possibility of some

smoke coming back through the window. It will be important to sensitize households on this

aspect.

35. Following is the agreed work plan for the next six months for the ICS.

22

November – 2014 to April – 2015 Work Plan for ICS

Sl# Activity Description Deadline

1 Onboarding NEW

POs

IDCOL will sign participation agreement

with 16 selected organizations. The

clusters will be allocated to these

organizations after due consultation.

December 17, 2014

2 Training Programs

for NEW POs

Initially the new POs will be provided with

one mason training, one technician

training, one IT training and one field

promotion training.

December 12, 2014

3 Baseline Survey in

NEW clusters

The new POs will conduct baseline

surveys in the allocated clusters and

IDCOL will assign installation targets after

verification.

January 31, 2015

4

Inclusion of Tier – 2

ICS under the

program

To include tier – 2 ICS under the program

IDCOL will rely on two streams of efforts:

As per the contract, BUET will

produce a Tier – 2 concrete stove by

January, 2015.

CCEB will facilitate the testing of

manufactured stoves in collaboration with

IDCOL.

February 28, 2015

5 Promotional

Activities by POs

IDCOL staffs will attend at least 50

courtyard meetings, 15 school sessions, 15

CBO meetings, 10 mike announcements

and 10 Exhibitions conducted by the POs.

April 30, 2015

6 Refresher Trainings

IDCOL will conduct one mason training,

one technician training, one IT training and

one field promotion training for all of the

POs.

April 30, 2015

7 OC Meeting IDCOL will conduct six OC Meeting. April 30, 2015

8 Installation

Inspection

IDCOL will inspect more than 50% of the

ICS installed by the POs. April 30, 2015

9 ICS Installation

IDCOL will facilitate POs to ensure

installation of following numbers of ICS

per cluster per month:

October, 14: 50

November, 14: 75

December, 14: 100

January, 15: 125

February, 15: 125

March, 15: 125

April, 15: 125

April 30, 2015

10 Production Center

Visits

All of the production centers

established/contracted by the POs will be

visited twice to ensure the quality of

production. First round of visits will be

conducted within January, 2015.

April 30, 2015

23

Annex 6

Support to SREDA and Energy Efficiency Engagement

1. The mission met with the Chairman and Member (Energy Efficiency) of Sustainable and

Renewable Energy Development Agency (SREDA) to discuss about the status and plans of SREDA

Action Plan, and progress made on various fronts, including energy efficiency (EE) policies, programs

and initiatives. SREDA staffing has been approved and is under way, with nine staff already started and a

total of sixty-one to be on board by June 2015. SREDA has been established as a nodal organization

under the Power Division of Ministry of Power, Energy and Mineral Resources (MPEMR) and is

empowered through the SREDA Act of December 2012. Although there is an enormous potential for EE

across all sectors – both supply and demand side - which can play an effective role in Bangladesh’s

energy sector and its energy security, and the momentum for formulation of new EE policies and

regulations and their implementation have picked up with the emergence of SREDA, there remains

barriers to large scale EE adoption and market transformation, particularly across various demand side

sectors.

2. There are several development partners, main ones being GIZ and JICA, which are currently

already supporting specific EE activities and programs. Of significance is the JICA- supported Energy

Efficiency Master Plan which is currently under way and the draft Report is expected by December 2014.

SREDA team expressed to the mission that there is a need for support in various areas and actions from

the Bank to support the actions under the SREDA’s EE Action Plan, as well as developing SREDA’s own

organization development and strategic business plan, particularly in the area of EE policy

implementation and financing. In the meantime, the mission also followed up with SREDA and

Bangladesh Chemical Industries Corporation (BCIC) on the latter’s recent formal request to World Bank

(through ERD) to provide financial support for the setting up of new more efficient urea fertilizer plants

(in lieu of Ghorashal and Palash Fertilizer Units). The mission responded to BCIC by agreeing to support

an investment-grade feasibility study from the TA component of the project without any commitment for

investment in increasing efficiency of the fertilizer plants (details in para 8 below).

3. The mission agreed in principal to support SREDA to help develop a national-level EE

Implementation/Financing Strategy linked to the EE Action Plan that SREDA would pursue. This

intervention will draw from global experiences and practices adopting a comprehensive approach along

the four pillars that could covert much of this potential into investments, that is, (i) through EE policies

(appliance EE standards and labels, EE building codes) (ii) financial incentives (through EE credit lines or

EE funds, in terms of soft loans or even risk sharing) (iii) EE awareness and capacity building and (iv)

institutional framework for implementation (e.g., for utility DSM, or market-based EE through ESCOs ,

energy auditor certification program, etc.)

4. The mission agreed with SREDA to engage in specific EE areas on several fronts under the

purview of the RERED II project. The potential of earmarking some dedicated TA funds from RERED II,

which is with the Power Cell, to SREDA for EE activities was also discussed. SREDA will take up this

option internally with Power Division/Power Cell of earmarking a portion of that TA to SREDA. In

addition, it was also agreed that the AAA on Bangladesh’s overall energy sector strategy being pursued

by the World Bank (with AusAid support) would include a component on Energy Efficiency which will

complimentary to the work under the TA components of RERED II project.

5. Institutional Strengthening, Capacity Building and Implementation of Action Plan of

SREDA: SREDA could benefit from global experiences and best practices in EE institutional

development in other developing and developed countries like South Korea, Malaysia, Thailand, Japan,

India, etc. A SREDA Organization Development and Strategic Business Plan is the next logical step and

should be developed. It was agreed to have the following as next steps in coordination with activities

being supported by other development partners like GIZ: (i) Explore the potential for organizing South-

24

South Knowledge and Operational Exchanges with EE Agencies like Korea Energy Management

Corporation (KEMCO) in South Korea and Bureau of Energy Efficiency (BEE) in India for helping with

institutional development and capacity building of SREDA. This would include visits of EE officials from

SREDA and other organizations in Bangladesh to KEMCO, BEE, etc. to exchange information and best

practices in implementation and financing strategies linked to specific EE areas of EE policy, financing,

marketing, and market development; (ii) Under the RERED II TA, SREDA plans to have long-term

advisors (one EE Institutional Development Expert and second one EE Sector Consultant) who will be

based in SREDA for a duration of 9-12 months. Based on initial, separate discussions between KEMCO

and the World Bank in September 2014, wherein KEMCO has expressed interest in assisting SREDA and

Bangladesh on the energy efficiency front, it was agreed that the TOR for the Institutional Development

long term advisor consultant will be prepared by SREDA and will be shared with KEMCO to pursue this

option.

6. LED Lighting Deployment Program and Incandescent Lamps Phase Out Policy

Development: While the large scale CFL distribution (and incandescent lamp replacement) program by

REB and other utilities in 2010 was successful in terms of demonstrating implementation approach, the

CFL quality became a problem. Several attempts for bidding for the second phase failed due to various

reasons. Thanks to the awareness campaigns for the first phase CFLs, there was an increased uptake of

CFLs by customers making a free distribution of CFLs by the government not necessary. Government

decided to drop the CFL second phase and instead explore the possibility of implementing an LED lamp-

based pilot DSM program for households. This would be a household EE program (door-to-door

replacement) with the possibility of partial cost recovery through electricity billing systems similar to the

programs done elsewhere like in Puducherry and AP in India, or in Mexico (where procurement was done

for both the supply of lamps and their distribution also), along with developing an incandescent lamp

phase out policy. Over recent years, LED lamp costs have dropped dramatically and efficacy levels have

improved significantly making them as a financially attractive and feasible alternative to both ILs and

CFLs. Based on global experiences with such programs, including World Bank’s several programs in the

past, it was agreed that under RERED II a comprehensive approach will be designed including

development of a large scale household level LED lamp deployment program through a DSM modality;

formulation of an IL Phase out Policy; and design of a comprehensive consumer awareness program on

promoting LEDs and other energy efficient appliances. A feasibility study and options analysis needs to

be undertaken that will identify the most effective means of addressing the market barriers for LED.

7. Energy Efficiency Component under the Bangladesh Energy Sector AAA: The EE

Component under the AAA (Bank-executed AAA funded by AusAid) would be used to review the

ongoing studies, including the JICA-supported Energy Master Plan (the draft for which is expected to be

available in December 2014), SREDA’s own EE Action Plan, and to update the work done under the

Bank-supported “Road Map for Energy Efficiency Improvements and Demand Side Management”

prepared in 2009. The objective is to have a better and more robust understanding of the full landscape of

EE opportunities, using best practice, systematic sectoral and main end-use EE improvement assessment

involving comparisons across indicators such as Energy Intensity (Energy/GDP), Cost of Energy Savings

(Taka/KWh saved), etc between existing stock and regional/global benchmarks. One this is done,

specific sectoral end use (demand side) EE measures can be identified, interventions prioritized based on

their costs and benefits, the size of energy savings and the practical feasibility of large scale

implementation. This analysis will provide a refined estimate of the aggregate potential energy savings

(ideally in the form of a common metric) from implementing energy efficiency measures in Bangladesh

vis-à-vis regional and global benchmarks, and prioritize among the top interventions (based on total

potential savings or potential savings/unit of investment in EE) so that they may form part of the

Government's action agenda on energy efficiency as well as inform the strategy for investment in

additions to generation capacity. This work will be complemented with bottom up survey evidence on

usage to actually calculate the total amount of energy that can be saved and develop a basis for

prioritizing among industries/processes and interventions so as to generate both power savings and

25

savings in the use of gas and diesel. This AAA work will also attempt to capture the economic and fiscal

benefits of demand side energy efficiency, in terms of employment benefits, increased competitiveness,

etc. The TOR for the EE Component of AAA will be finalized after the JICA- funded EE Master Plan

Report is available to avoid any redundancies. This work would also inform the bank’s future lending

program in the area of EE in Bangladesh, and could lead to the next logical step on developing a PCN for

a potential EE financial intervention (FY16-17) by the Bank in the future (such as EE investment loan

or a EE Line of Credit)

8. Fertilizer Industry Energy Efficiency: Fertilizer industry EE improvement is one of the most

important priorities from both energy security and gas sector perspective. The mission learnt during

meetings with BCIC that an in-house preparation of a complete feasibility study is already under way, by

an inter-ministerial Committee led by BCIC/ Ministry of Industry. It was agreed that the Scope and ToR

of this Feasbility Study will be shared with the World Bank by BCIC. Furthermore, under RERED II,

with SREDA as the focal point in coordination with BCIC, a review of the Feasibility Study could be

done by an international expert, and then the study could be expanded and updated with the TA support to

include sensitivity analysis, additional economic analysis, environmental and social impact analysis,

and assessment of alternative options (such as importing fertilizer for outside Bangladesh) to make it

more comprehensive and investment-grade for BCIC to explore financing options more effectively. The

update will also identify measures related to elements of ISO 50001, the new internationally accepted

global benchmark for energy management in industrial enterprises

9. The following table summarizes the short-term and medium term EE actions that will be pursued

in the future, as agreed with SREDA.

Proposed EE Activity Responsibility Funding Source

and Support

Start

Date

South South Knowledge Exchange

(KEMCO, BEE, etc)

SREDA, World Bank RERED II TA

ESMAP

(potential)

Feb 2015

Long Term Advisor (EE Institutional

Development)

SREDA, World Bank RERED II TA,

ESMAP

(potential)

Apr 2015

LED Lighting Deployment Program –

Feasibility Study and Options Analysis

SREDA, REB, Utilities,

World Bank

RERED II TA Mar 2015

Incandescent Lamps Phase Out Policy

Development

SREDA, World Bank RERED II TA Aug 2015

Consumer EE Awareness Program SREDA, World Bank RERED II TA Mar 2015

Energy Efficiency Component under the

Bangladesh Energy Sector AAA

World Bank World Bank

(AusAid)

Jan 2015

Fertilizer Industry Energy Efficiency

Feasibility Study

BCIC, SREDA, World

Bank

RERED II TA Mar 2015

26

Annex 7

List of Agreed Actions

N Actions Responsibility Agreed Date Revised Date Status as of December 31, 2013

Access to Electricity Component

1. Initiate Procurement Audit of the

POs

IDCOL April 30,

2012

April 30, 2014 Audit ongoing.

2. Initiate technical audit IDCOL July 1, 2013 April 30, 2014 Audit ongoing.

3. Setting-up Environmental and

Social Safeguards Management

Unit

IDCOL June 30, 2012 June, 2014 Organogram approved. A new

environment specialist joined from

May 1, 2014.

4. Six-monthly monitoring report of

expired battery collection of SHS

IDCOL June 30, 2012 June 30, 2014 IDCOL is collecting reports through

its regional offices on monthly basis

and sharing those in each OC meeting.

Database completed and being

updated.

5. Half-yearly monitoring report on

working condition of battery

recycling plant

IDCOL March 15,

2012

Every six

months

Reports are submitted.

6. Appointment of a consultant for

Environmental and Social Audit

IDCOL March 31,

2012

December 31,

2014

Consultant at final stage of selection.

Household Energy Component

1. Signing agreement with

BCSIR/VERC/BUET/ICDDRB for

testing and other R & D activities

IDCOL August 2013 May 15, 2014 BUET was selected after an

assessment by the international

consultant. Agreement signed in June

2014.

2. Execution of Bangladeshi stove

Camp

Local

consultant Sept 2013 April 30, 2014 An IDCOL team visited the Colorado

State University and exchanged their

views with the cookstove experts of

the university

Technical Assistance to Access to Electricity Component

1. Testing Center equipment

procurement, installation and

training

IDCOL Nov 2012 December

2014

Participation Agreement between

IDCOL and BUET signed. Technical

specifications for equipment at final

stage of development.

2. Access to Commercial Financing IDCOL Dec 2012 June,

2015 A new consultant will be appointed.

3. Accreditation program for

technicians

IDCOL June 15, 2012 June 30, 2013 Completed. A total of 1,618

technicians have been trained so far.

4. 220 V DC Mini-grid testing facility IDCOL June 30, 2013 November,

2014

Agreement signed between IDCOL

and UIU.

5. Initiate impact evaluation baseline

survey

IDCOL June 30, 2013 December,

2014 Contract negotiation with the selected

firm on-going. Scope to be finalized

based on learning from DIME impact

evaluation workshop.

Efficient Lighting Component

1. Development of national guideline

for safe disposal of CFLs

Power Cell June 15, 2012 June 2014 Draft guidelines prepared and under

review by Power Cell.

Sector Technical Assistance

1. Process TAPP revision Power Cell June 30, 2014 Completed.

27

N Actions Responsibility Agreed Date Revised Date Status as of December 31, 2013

2. Revised organogram of BERC Energy

Division

Existing staff of BERC to be

regularized.