Bangladesh - IDCOL Solar Home Systems Project

Objective of the project is to support Bangladesh's efforts to raise levels of social development and economic growth by increasing access to electricity in remote rural areas and to reduce atmospheric carbon emissions by overcoming market barriers for renewable energy development. IDCOL's Solar Energy Program has the mission of fulfilling basic electricity requirements in the rural areas of Bangladesh and supplementing government's vision of 'Electricity for All' by the year 2020. IDCOL, with support from IDA, GEF, GTZ and KfW, is channeling funds to small scale renewable energy projects under this program. The program is being implemented through sixteen NGOs/MFIs referred to as Participating Organizations (POs). POs select project areas and potential customers, extend loans, install the systems and provide maintenance support. IDCOL provides grants and refinance, sets technical specification for solar equipment, develops publicity materials, provides training, and monitors PO's performance. IDCOL offers soft loans of 10-year maturity with 2-year grace period at 6% per annum interest to its POs. The households buy Solar Home Systems (SHS) either in cash or on credit. POs extend loan to the households for purchase of SHSs. The loan tenor varies from 1 to 5 years, and interest rate varies from 8% to 15% per annum. In all instances, the repayment frequency is monthly. IDCOL had an initial target of financing 50,000 SHS which it achieved in August 2005, three years ahead of the project completion date and US$ 2 million below the estimated costs. Following the success of IDCOL's solar program, the World Bank has extended its support to this project and KfW has signed an agreement to provide EUR 16.5 million as grant to government to be used for further expansion of the program. GTZ has also provided grant for 33,660 SHSs. However, the revised target has been set at 200,000 to be achieved by December 2009. Up to February 2007, a total of 105,048 solar home systems have been installed under IDCOL solar program. Recently the World Bank has indicated its interest to provide USD 100 million to be used for financing of further 300,000 systems. Mr. Zubair Sadeque took over the task leadership from Mr. Arun Banerjee on October 2010.