Selection and financial eveluation of appropriate solar package for rural electrification and renewable energy development project in Bangaldesh

Abstract

"Rural E1cctrification and Renewable Energy Development Project (REREDPr is, so far, the largest solar energy based electrification project in Bangladesh and it is one of the fastest grO\\iing renewable energy projects in the world. Witb the help of fifteen partner organizations, mainly NGOs, almost 250,000 solar home systems have already been installed in rural areas. This success has bccn possible due to availability of soft loan and grant and social entrepreneurship approach~s by several dedicated NOOs. The study has been focused to select the most appropriate package of solar home ~ystem for REREDP project. This selection process has been conducted through Analytic Hierarchy Process (AHP) model, developed by Saaty (1980). Three different packages (30 Wp, 50 Wp and 75 Wp) have been considered under three ditferent attributes: i) cost, ii) meeting the demand of the basic household electricity need, iii) availability of package. After analysis of AHP model, it has been found that 30 Wp system is the most appropriate package of solar home system, rhe percentage of priority for 30 Wp, 50 Wp and 75 Wp systems are 42.19%, 29.43% and 28.37% respectively. Financial analysis of selected packages of solar home syStem has also been ealellialed under the srndy. Net present value (NPV), internal rate of return (lRR) and pay hack period ha,-e been considered for conducting this financial analysis. Considering the IRR, 30 Wp system is the most appropriate package for partner organizations and considering the NPV, 75 Wp system is the most appropriate package of solar home system. Financial evaluation has also been conducted for electrification of one rural market, called Manikgang Bazaar situated in Dinajpur district. This financial evaluation indicates that project related to rural market electrIfication through solar energy is not a very suitable area for corporate investment. But, it can be an appropriate social business for NGOs.