RMG sector should focus on renewables  

The RMG sector of Bangladesh could cut its average monthly energy costs by 15.7 percent if renewable energy meets 30 percent of its electricity demand, a new study said.

Dr Khondaker Golam Moazzem, research director, Centre for Policy Dialogue (CPD), unveiled the study report on Sunday, based on data from 350 RMG factories, saying that the sector needs to accelerate its transition to renewable energy as growing dependence on LNG exposes manufacturers to higher costs, supply risks and increasing pressure from global buyers.

“BGMEA, BKMEA, BSREA, Petrobangla and all other relevant stakeholders should come together under a joint committee to find solutions to the crisis and take concerted steps to remove the barriers to the transition towards renewable energy,” Dr Khondaker Golam Moazzem said.

“Relying solely on imported LNG will not be sustainable in the long run,” he said.

The CPD argues that renewable energy should no longer be viewed merely as an environmental initiative. For Bangladesh's export-oriented RMG industry, it is increasingly a matter of energy security, cost stability and global competitiveness.

He noted that BGMEA was already encouraging its members to explore renewable energy but said more comprehensive information on financing and technological options was needed to help manufacturers understand the transition.

CPD modelling shows that meeting 30 percent of a factory's electricity demand through solar power could reduce average monthly energy costs from Tk 998,190 to Tk 846,435, a saving of 15.7 percent.

Even a 10 percent solar offset could reduce average monthly energy costs by 5.5 percent, the study found.

A Monte Carlo simulation involving 1,000 possible scenarios for each factory also found that renewable-energy adoption could reduce monthly energy-cost volatility. Costs became less volatile in 96 percent of the factories in the model, it said.

Vidiya Amrit Khan, vice president of BGMEA and deputy managing director of Desh Garments Ltd, said the shift from traditional energy to renewable energy had become a global requirement for the RMG industry.

"There are multiple EU and UK directives and regulations coming into enforcement in the coming years that require energy transition, so we have very little time in hand," she said.

Mostafa Al Mahmud, president of the Bangladesh Sustainable and Renewable Energy Association (BSREA), said although the government has set a 10,000MW renewable-energy target but policy bottlenecks remained, particularly regarding taxation of solar technologies.

"The NBR's SRO is still a bottleneck, where more than 50% VAT remains on solar technologies," he said.

Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said Bangladesh was lagging behind global competitors in renewable-energy adoption. "There are many EU regulations. We have many funds but those are not accessible. We must explore those pathways to access those funds," he added.

The smallest factories had an estimated energy-saving gap of 57.3 percent compared with the efficiency frontier, while the gap for the largest factories was only 8.9 percent.

The CPD says machinery replacement alone cannot deliver deep decarbonisation, as capital and energy function as complements rather than substitutes in the RMG sector. Sewing accounts for 85.2 percent of installed machinery, much of which is technically essential and difficult to replace.

Mohammed Zahidullah, chief sustainability officer of DBL Group, said solar energy would be central to Bangladesh's decarbonisation efforts.

He said Bangladesh risked losing orders to competitors such as India, Pakistan and Vietnam because they were advancing faster in integrating renewable energy into production.

The CPD identified high upfront investment, limited information about alternative technologies, long payback periods and risk aversion as major barriers to renewable-energy and energy-efficiency investments, particularly for smaller factories.

With global brands increasingly imposing supply-chain decarbonisation requirements and carbon-sensitive trade measures emerging, the CPD warns that continued investment in fossil-fuel infrastructure could create stranded or underutilised assets.

It recommends expanding rooftop solar, promoting renewable electrification, incentivising energy-efficient machinery, developing alternatives for energy-intensive thermal processes, conducting regular energy audits and streamlining approval procedures for renewable-energy projects.