A new report by EY Singapore highlights the need to address policy and regulatory barriers in Bangladesh to unlock huge volumes of renewable energy finance for utility-scale wind and solar projects.
Asia, one of the fastest developing regions in the world, is expected to see overall energy demand grow by about 80 per cent by 2050, says a press release issued on Thursday.
The study highlights the significant impact of the recent rating downgrade on Bangladesh's renewable energy financing landscape, identifying the availability of finance as a major barrier.
The analysis focuses on barriers to financing utility-scale solar and wind energy projects in Asia, drawing on data from 170 consultations with various stakeholders, including developers, lenders, investors, and industry associations.
Apart from financial barriers, the study also points out non-financial obstacles, including lengthy permit processes, challenges in land acquisition, a lack of local supply chains, and demanding content requirements that are difficult to fulfill.
The findings emphasize the importance of addressing both financial and non-financial challenges to facilitate the growth of renewable energy projects in Bangladesh and other Asian countries.
The report suggests that despite the challenges posed by the recent rating downgrade affecting the availability of finance, overcoming non-financial barriers can enhance the viability of financing for renewable energy projects in Bangladesh.
The study underscores the interconnected nature of various factors, including lengthy permit processes, land acquisition difficulties, and content requirements, which collectively impact project risks, timelines, costs, and overall bankability.
Addressing policy and regulatory barriers is emphasized as a crucial step to unlock significant volumes of renewable energy finance for utility-scale wind and solar projects in Bangladesh.
This approach aims to improve the overall investment climate and facilitate the development of sustainable and cost-effective renewable energy projects in the country.
For Bangladesh, the study identifies specific barriers, including an underdeveloped local supply chain for equipment, declining creditworthiness affecting power purchase agreement (PPA) bankability, and challenging macroeconomic conditions hindering investment.
The report suggests developing renewable energy procurement frameworks, year-wise action plans, and seeking support from international development agencies in the form of risk insurance and grants to enable renewable energy financing.
Bangladesh is recognized for its significant solar and wind potential, and leveraging these resources can bring benefits such as energy security, economic growth, and emissions reduction.
Meanwhile, Gilles Pascual, Ernst & Young Energy Transition and Climate Partner, noted: "While Bangladesh needs to resolve the broader macroeconomic challenges, renewable energy plays an important role in reducing the reliance on imports of fossil fuel.
Working with development finance institutions and investors willing to invest in projects, the Government can play a lead role in identifying suitable plots of land to accelerate the deployment of renewable energy.