Denmark’s $1.3 Billion Investment Proposal: Diversifying Bangladesh’s Energy Landscape

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In November 2023, approval from the government was granted for Denmark’s investment plan of $1.3 billion, aimed at establishing Bangladesh’s inaugural offshore 500MW wind energy initiative. This milestone allows the project to progress to a thorough feasibility study, representing a substantial advancement in Bangladesh’s shift towards sustainable energy. The green light followed the submission of a foreign direct investment proposal in July of the same year by Copenhagen Infrastructure Partners (CIP) and Copenhagen Offshore Partners (COP), in collaboration with Bangladesh’s influential power entity, Summit Group.

This June, Bangladesh and Denmark endorsed a collaborative strategy for the upcoming five years within the framework of the “2022 Sustainable and Green Framework Engagement.” In a recent visit to Dhaka, Danish Minister for Development Cooperation and Global Climate Policy, Dan Jørgensen, affirmed a commitment to a cooperative venture focused on green and clean technologies, as well as investment for sustainable development.

Upon becoming operational, the 500MW wind energy initiative will enhance Bangladesh’s green energy infrastructure by directly supplying electricity to homes and businesses through an onshore substation, contributing to the national grid. Senior Secretary of the Power Division, Habibur Rahman, disclosed on November 4, 2023, to The Business Standard that approval has been granted to the consortium for an in-depth feasibility study. The outcomes of this study will guide the determination of subsequent actions. This offshore wind project situated in Cox’s Bazar offers a distinctive opportunity for Bangladesh to optimize the utilization of its coastal resources, fostering the advancement of the blue economy.

The Institute for Energy Economics and Financial Analysis (IEEFA) anticipates a yearly funding requirement of $1.7 billion for the green transition. Insiders are optimistic that this multibillion-dollar initiative has the potential to initiate a fresh influx of both foreign and domestic investments, propelling Bangladesh toward a future marked by climate prosperity. According to Md Mozammel Hossain, managing director of Summit Power Limited, upon its implementation, this pioneering offshore wind project will stand as the inaugural endeavor of its kind in Bangladesh—and potentially across South Asia. Hossain suggests that this initiative will facilitate a transfer of technology, expediting the learning curve for an emerging industry and diminishing technological barriers for subsequent projects.

He mentioned that they received approval from the authorities in October. Regarding the duration and cost of the study, he explained that such endeavors require a considerable amount of time, approximately two to three years, given that the study must be conducted at sea. He emphasized that the consortium will bear the expenses associated with the study.

Concerning Summit’s involvement in the project, he clarified that the details have not been finalized yet. Mr. Mozammel highlighted that the consortium had previously conducted a preliminary study, and based on those initial findings, they decided to proceed with a more detailed and comprehensive study.

The preliminary results indicate the potential creation of numerous jobs, both direct and indirect, during the construction phase, alongside the prospect of establishing several high-skilled permanent positions for the project’s 30-year operational period.

Given that the viability of wind energy is constrained to coastal regions, offshore islands, riversides, and other open inland areas with robust wind patterns, the Power Division and the Bangladesh Power Development Board have identified 22 potential sites for Wind Resource Mapping in Bangladesh. Plans are underway to install wind monitoring stations at these locations to conduct a thorough Wind Resource Assessment.

The Bangladesh Power Development Board (BPDB) is strategically expanding onshore wind power plants along the country’s coastline to harness the potential of wind energy in coastal areas, offshore islands, riversides, and other inland open spaces characterized by strong wind regimes. Implemented projects include a grid-connected Wind Plant with a 900 KW capacity at the Muhuri Dam area in Sonagazi, Feni, and a 1000 KW Wind Battery Hybrid Power Plant on Kutubdia Island completed in 2008, featuring 50 Wind Turbines with a 20 kW capacity each. Ongoing efforts involve repairing the existing 900 KW grid-connected Wind Power Project at Muhuri Dam and maintaining the Kutubdia 1000 KW Wind Battery Hybrid Power Project. Steps have been taken to install a 15 MW Wind Power Plant in coastal regions following a one-year Wind Resources Assessment in various areas, with ongoing wind mapping activities conducted by Regen Powertech Ltd. of India. Installation of Wind Monitoring Stations is underway at multiple locations under a USAID TA project. Future projects in planning include a 50-200 MW Wind Power Project at Parky Beach in Anawara, Chittagong, on an Independent Power Producer (IPP) basis. The Power Division and BPDB have identified 22 potential sites for Wind Resource Mapping, with plans to install wind monitoring stations for comprehensive Wind Resource Assessment (WRA). BPDB also envisions expanding onshore Wind Power Plants along the coastline of coastal regions in Bangladesh. These initiatives reflect Bangladesh’s commitment to fostering a diversified and environmentally friendly energy portfolio.

As of now, Bangladesh possesses an electricity generation capacity of 25,951 MW, and the government has set a target to derive 10% of its electricity from renewable sources, such as solar, hydro, and wind, by the year 2025. Presently, only about 2% of the country’s electricity generation capacity comes from renewable sources. Meeting the Sustainable Development Goals (SDGs) necessitates an increase to at least 12% of electricity generated from these sustainable sources. The introduction of the Danish initiative will play a pivotal role in enhancing the diversification of Bangladesh’s energy sector, particularly in the realm of wind power projects.

Denmark’s green investment proposal not only symbolizes a significant step in Bangladesh’s transition to sustainable energy but also sets a precedent for international collaboration in fostering green technologies. As the feasibility study progresses, the nation anticipates unlocking the full potential of its coastal resources, ushering in a new era of economic growth, environmental stewardship, and technological innovation. The offshore wind energy project stands as a testament to the collective commitment towards a climate-resilient and prosperous future for Bangladesh.

– Syed Raiyan Amir is a Research Associate at the KRF Center for Bangladesh and Global Affairs (CBGA).

Published in Eurasia Review [Link]