The infection status of COVID-19 in Bangladesh saw a rapid improvement from August and September. Following the betterment of working activities, the Project Implementation (PI) Consultant Team hastily resumed their activities. Three international experts of the team, the Team Leader, Chief Engineer and the Finance Expert worked in collaboration with the national experts of the team and the SREDA officials during the month of October. Major activities performed during the months were, Component III preparation, Project loan expediting, energy audit capacity development, Support for GoB portion activities, as well as documentation of knowledge on related topics.
1. Component III Formulation
Top priority issue to be addressed by the PI Consultant team, with the aim to enhance the Project scope, was to formulate Component III for the residential sector EE&C, utilising A-type loan. Resuming the communications with the identified air conditioner and refrigerator manufacturers (assemblers), which have been pending since June, restarted. Altogether, 6 out of 14 identified local manufacturing companies were contacted, enabling the PI Consultant Team to prepare a tentative finding report (Appendix 26-1).
The findings from the communications showed that the many of the manufacturers have already invested heavily on the production facilities, possessing excessive capacity, not in a need for investment. Nevertheless, the basic market survey conducted in parallel with the communications with the manufacturers revealed that the market is booming, and the demand, which is around 400,000 units per year, can be increasing sharply. Further, with a better awareness raising on the benefit of inverter-controlling, it was found that there is a good chance of a strong shift to inverter-controlled air conditioners. The PI Consultant Team recommended SREDA to wait till the consumers’ purchasing power returns, and to consider introducing a standard for the air conditioners, such as the seasonal energy efficiency ratio (SEER) which will exhibit the benefit of inverter-controlled products.
2. NOC Request Expediting
(1) PCC meeting
The 18th Project Coordination Committee (PCC) meeting was held on 10th of October 2021, with the participation of SREDA, IDCOL, BIFFL, and JICA. The last PCC meeting to be held before this one was back on 14th January 2020, which means that there was a long interval of 21 months. The resumption of a face-to-face meeting between the three executing agencies of the Project turned out to be a meaningful turning point for the implementation of the Project, in that their direction, current concerns and desires were respectively shared.
The major decision made at the PCC18 was to lift the restriction on the number of loan application to be submitted by a company. Now, an existing sub-project owner can apply for more of Project loan. The decision was made based on the understanding that the scarcity of the loan money availability has been relieved with the introduction of the Phase II Project Loan. Opening the loan money door to the existing sub-project owners, it is expected that the companies who are benefitting from the Project loan will further seek for more of EE&C promotion opportunities, contributing to diversification of the loan money utilisation.
(2) New NOCs request
On the occasion of this PCC meeting, IDCOL and BIFFL, both submitted their Project loan NOC requests to SREDA IDCOL submitted one for the introduction of gas engine cogeneration (in response to the eligibility list enhancement achieved in April), AD21051801, and another one for a set of equipment for RMG factory, AD21100401. BIFFL submitted a NOC request for a spinning mill, AF21100301, which is also in response to the eligibility enhancement. Among these three NOC requests received, SREDA could issue an NOC before the end of the month for IDCOL’s gas engine application. It exhibited the result of streamlining of the technical appraisal process at SREDA, which is expected to contribute to expediting the upcoming loan fund utilisation.
3. SOEs Walk-through Audits
Three of the PI Consultant Team, Mr. Yoshihiko Kato, Mr. Ershed Jaman Khan, and Mr. Muhammad Zakir Hossain completed the site visits at Chattogram with SREDA officials. It was a three-day visit from 17/October to 19/October. The teams visited three state owned enterprises (General Electronic Manufacturing Company Ltd., Chittagong Urea Fertilizer Ltd. & Gazi Wires Ltd.) which can be a potential proponent of EECPFP. Summary of the program is presented below:
(1) General Electronic Manufacturing Company Ltd. (Reported on Appendix 26-2)
Date and time: 17/October/2021
Location: Potenga, Chattogram
Participants: SREDA (Member-EEC, PD, APD), PI Consultants (Mr. Yoshihiko Kato, Mr. Jaman & Mr. Zakir) Activities:
1) Brief presentation on EECPF project.
2) Discussed overall system of the GEMCO. As well as discussed on the products, capacity utilization, production process and utility system.
3) Walk through audit (according to the production flow chart, taking some of the equipment’s power consumption through power logger).
4) Discussed the findings and recommendations at the closing meeting with the SOE officials.
(2) Chittagong Urea Fertilizer Ltd. (Reported on Appendix 26-3)
Date and time: 18/October/2021
Location: Anowara, Chattogram
Participants: SREDA (Member-EEC, PD, APD), PI Consultants (Mr. Yoshihiko Kato, Mr. Jaman & Mr. Zakir)
Activities:
1) Brief presentation on EECPF project.
2) Discussed overall system of the CUFL. As well as discussing on the production capacity utilization factor, production process and utility system.
3) Walk through audit (according to the production flow chart, collected previous day energy consumption and production for both the utility and for the process).
4) Discussed the findings and recommendations at the closing meeting with the SOE officials.
(3) Gazi Wires Ltd. (Reported on Appendix 26-4)
Date and time: 19/October/2021
Location: Kalurghat, Chattogram
Participants: SREDA (Member-EEC, PD, APD), PI Consultants (Mr. Yoshihiko Kato, Mr. Jaman & Mr. Zakir)
Activities:
1) Brief presentation on EECPF project.
2) Discussed overall system of the Gazi Wires. As well as discussed the products, market demand, production process.
3) Walk through audit (according to the production flow chart, taking some of the equipment’s power consumption through power logger).
4) Discussed the findings and recommendations at the closing meeting with the SOE officials.
4. Energy Balance Booklet Preparation (FY 2019-20)
Following the decision at the Workshop on the National Energy Balance: Bangladesh Perspective, held on 8th June, SREDA has become the official guardian of the demand-side energy data. It was in the next month that SREDA officially published the national energy balance booklet for FY 2017-18 on its website. The PI Consultant Team has been asking SREDA to publish the very first version of the national energy balance booklet, which was for FY 2016-17, prepared back in October 2019, also to be uploaded on SREDA website to show that SREDA has been working on it for some years. While waiting for the publication, the PI Consultant Team has decided to support SREDA to issue the latest version for FY 2019-20.
In preparing the latest version, the PI Consultant Team suggested various updating and quality improvements. Among the proposed improvements, sub-sectoral data disclosure could not be realised due to unavailability of the data. Apart from it, the incorporated improvements are as follows:
- National Energy Balance table to be added.
- Elaboration on energy transformation data, especially on oil refinery.
- Energy intensity calculation using more comprehensive energy data.
- Visualisation of cross-sectional energy consumption data
- Elaborated comparison of primary energy basis and supply basis data.
5. Institutional Capacity Development
The draft was submitted by the end of the month for SREDA to add its policy related contents and to be published on their website.
(1) Lectures and Discussions
Mr Iida, Chief Engineer of the PI consultant Team, contributed to the capacity development activities for SREDA through two training programmes. The programmes for the SREDA officials were comprised of lectures, followed by discussions. The training programme dealt with two topics as follows, and were held on 5th and 6th of October, respectively.
- Date: 5th October 2021
- Promotion of Energy Efficiency Labelling System (especially for home appliance)
- Date: 6th October 2021
The outline of these two presentations is summarized as follows:
< Evaluating the Impact of Energy Efficiency Measures on National Economy >
The PI Consultants presented the methodology of evaluating EEC technologies quantitively from the aspect of their impact on the national economy and explained the importance of prioritizing these technologies with this regard.
In the presentation, the PI Consultants emphasized two key issues to be noted in analysis. The first one is that the expected economic benefit of EEC technologies shall be evaluated as the reduced cost of fossil fuel consumption, and the befit should overperform the incremental costs of implementing these EEC technologies. In other words, those technologies that are highly overperforming in this cost-benefit analysis shall be prioritized and low-performing or underperforming technologies shall be less prioritized or disregarded. And considering the limitation of policymaking resources, policy tools should be employed intensively for highly prioritized technologies, especially at the initial stage of EEC policy development.
Another key issue is that such benefit for the national economy may not directly lead to the benefit for end-consumers. While the benefit for the national economy is evaluated in international price of fossil fuel whereas the benefit for end-consumers is based on the domestic energy price. And when the domestic energy price is lower than the international price, consumers may not be motivated sufficiently to choose EEC technologies. In such cases, policy measures for motivating their willingness to pay for EEC measures such as subsidization may need to be considered.
Then the PI Consultants showed an example of economic analysis referring to the past project in Qatar, which was sponsored by Qatar General Electricity and Water Corporation (Kahramaa) and was undertaken by Mitsubishi Research Institute.
In this analysis, it was assumed that all the country’s air conditions would be replace by highly efficient inverter models in 8 years and the total incremental costs of inverter models and the expected benefits for Qatar’s national economy was estimated. The dark-blue bar in 2018 is the total initial costs incurred by the replacement in the first year and the dark-green bars from 2018 to 2032 are the present value of lifetime benefit deriving from the first-year replacement. The light-blue bars and the light-green bars indicate the total costs and benefit for the national economy when all the replacement is made as scheduled.
The comparison between the dark-blue bar and the dark-green bars indicates that the incremental costs of inverter AC can be recovered in 8 years (by 2025), much shorter than the lifetime of AC. That is, deploying inverter AC in Qatar is highly recommended.
Needless to say, the weather conditions and prices are different from country to country and the analysis results of Qatar project cannot be applied to Bangladesh as they are. However, considering that the electricity demand for AC cooling has been rising in Bangladesh recently, it is highly possible that inverter AC would be also selected as prioritized EEC technology in Bangladesh.
< Promotion of Energy Efficiency Labelling System (especially for home appliances >
Labelling system to indicate the performance of energy-consuming appliances already started in Bangladesh, but the PI Consultants observes that there’s still space for improvement. Through the comparison with the practices in other countries, key points for improvement can be summarized as follows.
- Labelling is still voluntary (many products do not have a labelling seal)
- No clear description about the definition of star rating (at the retail shops only products with “five-star label” or “no label”)
- No information about annual energy consumption (and energy billing)
Then, the PI Consultants presented the labelling system in Japan as one of world’s good practices. Japan adopted a Top-runner Programme, based on the concept that the efficiency of energy-consuming appliances will improve as time goes on. Under this programme, manufacturers are obliged to achieve certain target (in this example, 6.0 as the weighted average of all products in the same category) by the target year.
Following the amendment of Japan’s Energy Conservation Law in 2006, electronics retailers are also mandated to disseminate the information of energy efficiency of products proactively. According to this, the standard format of Uniform Energy Saving Labelling for Retailers is provided. The labelling format indicates the achievement of energy efficiency (against the aforementioned target value as 100%), expected annual energy saving (kWh/year), expected saving of energy cost (JPY/year) as well as the overall performance score (from 1 to 5 stars). The labelling format was slightly amended in 2020 so that the products’ performance can be more easily recognizable.
The PI Consultants also briefly introduced the practices of other countries, such India (as the advanced practice in neighbouring countries) and Saudi Arabia (as the country that started the labelling system rather recently but has been challenging its improvement aggressively). In conclusion, the PI Consultant Team summarized the implications from the experience of Japan (and other countries) as the lessons for Bangladesh.
- Labelling system should start with appliances that have strong impact on the country’s energy consumption (and those that can be easily standardized in performance evaluation) such as AC, and then gradually extend to other products.
- Performance targets should be set ambitiously (based on the best available technologies) but realistically (not to discourage the consumers’ willingness to buy).
- Performance targets also should be revised periodically to reflect the advancement of technologies (so that the manufacturers can catch up with them timely).
- Cooperation of retailers is indispensable for disseminating consumers’ knowledge of energy efficient appliances and the expected energy saving.
- Needless to say, organizational capacity to develop the labelling criteria and update the information is the key factor of success.
(2) Documentations
The PI Consultant Team’s financial expert, Mr Ide worked closely with both IDCOL and BIFFL to gather information on the current status of the sub-projects and on the preparation for the Loan NOC requests. During his discussions with the IFIs, he gave advice on the NOC requests and on resuming the loan disbursement for the existing sub-projects. In parallel with the consultations with the IFIs, Mr Ide prepared documents with the aim to strengthen SREDA’s capacity on understanding the following three topics:
1. Challenges in the Financing of Energy Efficiency Projects in Bangladesh (Appendix 26-5)
2. SME promotion and development of energy efficiency in industries (Appendix 26-6)
3. Green Finance (Appendix 26-7)
Although there were no opportunities for presentations to SREDA officials, the documents are expected to be useful pm the occasions of future trainings on EE&C financing, targeting not only SREDA but also the Ministry of Planning and Ministry of Finance officials. Bangladesh Bank, NBFIs and also the private banks will also benefit from the planned lecture to be hosted by SREDA in the near future.
6. Energy audit equipment procurement
All the energy audit equipment in the procurement list, except for one item, was delivered by the supplier (Power Tech Electric) to the PI Consultant Team in August 2021. Taking the opportunity of Japanese consultants’ stay in Dhaka, the delivered items were handed over to SREDA. The handover ceremony between both parties was held at SREDA office on 6th of October 2021.
Upon confirming that the items are exactly the same as the procurement list and that they work properly, SREDA PD and the PI Consultant Team signed the handover certificate as shown below. Because the handover ceremony would originally have been held in September, the date of handover in the certificate was set on 30th September 2021. From then on, the PI Consultant Team is allowed to use the energy audit equipment upon the approval of SREDA.
The remining item yet to be delivered, which is a thermo camera (FLIR C5) to be procured from another supplier (Express Systems Limited) was still stuck in the storage in India due to the closure of land border between Bangladesh and India. According to the supplier, the land border restrictions have been eased recently and the item would possibly be delivered in November.
7. Contribution to GoB trainings on EE&C
In response to SREDA’s request to support the development of their training module for energy managers, The PI Consultant Team prepared a short-term energy manager training programme based on the examples in other countries, notably India and Japan. The PI Consultant Team’s Technical Advisor, Mr Shah Zulfiqar Haider, through a series of communications with SREDA, proposed a three-days training programme to be offered for the energy managers (Appendix 26-8).
8. Awareness Raising Activities
(1) Billboard advertisement (design finalisation)
The PI Consultant Team, in consultation with SREDA, finally reached consensus on the billboard’s design for SREDA, as shown in Fig 17. Following the final decision on the design, the advertising company was given a firm instruction to start working on their part. It is anticipated that four out of the eight billboards are ready to be erected, as their exact locations are agreed with SREDA, while four others will be prepared later after the final decision on the locations.
The PI Consultant Team may conduct site inspections once the billboards have been erected. The inspections may be conducted during Ms Tomoe Shimada, one of the international team members’ activity in Bangladesh during November, if time permits.
Attachments
Appendix 26-1: Expediting Component III using A-type Loan (interim)
Appendix 26-2: Energy Efficiency in Industries Scope Enhancement (General Electric Manufacturing Company Limited) 17/Oct/2021
Appendix 26-3: Energy Efficiency in Industries Scope Enhancement (Chittagong Urea Fertilizer Limited) 18/Oct/2021
Appendix 26-4: Energy Efficiency in Industries Scope Enhancement (Gazi Wires Ltd.) 19/Oct/2021
Appendix 26-5: Challenges in the Financing of Energy Efficiency Projects in Bangladesh
Appendix 26-6: SME promotion and development of energy efficiency in industries
Appendix 26-7: Green Finance
Appendix 26-8: Draft Energy Manager Training Contents for SREDA (3 days training)