Situation Analysis; BRESL Project - Bangladesh

Draft Report

Prepared for

BRESL Project Bangladesh and UNDP Bangladesh

By

Dr Shahab Qureshi

International Consultant – Situation Analyst

July 2011

Situation Analysis; BRESL Project - Bangladesh – Final ReportJuly 2011

Table of Contents

1Introduction

1.1BRESL Project

1.1.1Main Objectives

1.1.2Key Goals

1.1.3Expected Outputs

1.1.4Key Players on ES&L in the Region and Nationally

1.2Bangladesh Context

1.2.1Project components

1.2.2Project Financing

1.3Scope and Objectives of the Assignment

2Situation Analysis

2.1Comprehensive Desk Review

2.1.1Overview of Energy Efficiency Activities up to the Date

2.2Situation Assessment – Policy

2.3Situation Assessment – Institutional Setup

2.4Situation Assessment – Appliance Market

2.5Situation Assessment – Capacity Building Needs Assessment

2.5.1Product Vendors and Retailers22

2.6Situation Assessment – Other General Observations

2.7Conclusions – Situation Analysis

2.7.1Policy

2.7.2Institutional Setup

2.7.3Testing Facilities

2.7.4Appliance Market and Market Data

2.7.5Capacity Building

2.7.6Other General Observations

3Recommendations/Action Plan

3.1Policy

3.2Institutional Setup

3.3Energy Performance Testing Facilities

3.4Appliance Market and Market Data

3.5Capacity Building

3.6Other General Observations

List of Tables

Table 1: Roles of various institutions in the implementation of S&L programs and current status in Bangladesh

List of Appendices

Appendix 1: List of Persons and Organizations contacted during the mission

Appendix 2: Review of Finalized and Draft Energy Performance Standards Developed by BSTI

Appendix 3: Proposed Strategy to Implement Pilot S&L Program on Voluntary basis

Appendix 4: Proposed Stepwise Approach to Working of TWGs

Appendix 5: Documents Used for Desk Review

1

Situation Analysis; BRESL Project - Bangladesh – Final ReportJuly 2011

1Introduction

Energy use of electric appliances and equipment accounts for a significant percentage of the region's total energy consumption, and demand for major appliances are expected to continue to grow. Nearly half of all Energy Standards & Labeling (ESL) programs worldwide are in Asia, although there is a large variation among countries in the region in terms of program development and implementation. Regional cooperation is envisioned to promote greater market transparency, reduce costs for program development, monitoring and evaluation (M&E), product testing, and enhance trade and technology transfer.

1.1BRESL Project

The BRESL project is expected to rapidly accelerate the adoption and implementation of energy standards and labels (ESL) in Asia, and in so doing bringing about energy savings out of the use of energy efficient appliances/equipment. The project will also facilitate harmonization of test procedures, standards and labels among developing countries in Asia, where appropriate. The project is expected to cost-effectively deliver an average of 10% reduction in total residential and commercial energy use in partner countries at the time of peak impact by the year 2030, thereby ensuring more environmentally sustainable and economically efficient development. BRESL will facilitate the transformation of the manufacture and sale of energy-consuming appliances and equipment through:

  1. A regional initiative in Asia, with provision for general information, tools and training to all interested developing countries in the region plus customized efforts, all with a focus on regional cooperation.
  2. National technical assistance to 6 developing countries in Asia

BRESL is a UNDP-GEF regional project with participation of 6 countries – Bangladesh, China, Indonesia, Pakistan, Thailand and Vietnam. All countries participated in the formulation of the regional project document including Bangladesh. From Bangladesh, the Bangladesh Standards & Testing instate (BSTI) participated in development of the Regional Prodoc at the invitation of GEF. The GEF Council approved the project in June 2007 and the GEF CEO endorsed the Prodoc on 27 May 2008.

1.1.1Main Objectives

The objective of the project is to achieve the removal of barriers to the development and effective implementation of energy efficiency standards and labeling programs in the region, thereby facilitating the transformation of regional product markets of targeted energy consuming appliances, equipment and lighting products.

1.1.2Key Goals

The project will focus largely on capacity building and assisting government, manufacturing, distributing, retail, consumer and environmental stakeholders throughout the Asian region to implement the most cost-effective energy efficiency measure available. In each participating country, priority activities will be carried out to help foster each country's preferred process for developing or expanding its ES&L program through :

-Increased capacity of Asian countries to develop and implement ES&L programs;

-Enhanced awareness on ES&L programs and in the use of EE products in the countries in the region;

-Facilitation of the development and implementation of ES&L programs, with the participation of the relevant government agencies, manufacturers/suppliers, retailers, and consumers;

-Increased financing and access to financing for ES&L initiatives;

-Establishment of a regional network of standards and labeling activities that will facilitate harmonization of standards; and,

-Successful demonstration of the design, development, financing, institutionalization, implementation of ES&L programs, and the resulting benefits from such programs.

1.1.3Expected Outputs

Regional level: Increased market share of EE equipment/appliances in the different countries and in the region as a result of the ES&L programs.

National level: Energy savings from the utilization of energy efficient appliances/equipment in the end use sectors in each participating country.

1.1.4Key Players on ES&L in the Region and Nationally

The project will identify the key players in the region and in each country and analyze their present roles in the development and implementation of ES&L programs. The key players being in the following categories:

  • Government agencies (Energy, Trade/Commerce and Industry, etc)
  • Appliance and equipment manufacturers (national and multi-national)
  • Local appliance and equipment suppliers/dealers
  • Appliance/Equipment Testing Laboratories
  • International, regional/sub-regional, national institutions
  • Banks and financing institutions
  • Private sector : importers, retailers
  • Others: consumers, consumers protection groups, other oversight bodies.

1.2Bangladesh Context

Bangladesh has a population of more than 140 million, an annual electricity use of approximately 21408 GWH/yr., peak electricity demand of 5000 MW, and an electricity growth rate of approximately 7.5% per year. The estimated appliance saturation is 25% for refrigerators, and 7% for air conditioners. Currently energy standards and labeling programs for residential fans, fluorescent tube lights, refrigerators, and compact fluorescent lamps are being developed in Bangladesh, but there are no Minimum Energy Performance Standards at present (MEPS).

Bangladesh has plans to initiate energy labelling programs for a number of products, but cannot initiate tangible programs on labelling and MEPS without the Global Environment Facility (GEF) technical assistance both regionally and nationally.

The BRESL Project is aimed at rapidly accelerating the adoption and implementation of Energy Standards & Labelling(ES&L) program in Asia. Under a National Energy Policy (NEP) special importance is given to energy efficiency, awareness campaigns & gradual implementation of ES&L programs, The Bangladesh Standards and Testing Institution (BSTI) has been entrusted with the responsibility for implementation of ES&L.

The project will develop energy performance standards and labeling for energy equipments with the aim of improving energy efficiency in the country and also assist in regional harmonization of the standards. Improvement in efficiency will result in energy savings in the overall consumption in the country and thus contribute positively in reducing the acute energy crisis in the power sector of the country.

1.2.1Project components

The project activities will be cantered on the following components:

1. Policy-making support to Government

2. Capacity building of BSTI and related partners

3. Manufacturing and market development support

4. Technical and demonstration support

5. Awareness raising and promotion

6. Regional cooperation

The project activities will focus on 6 products for developing the ESL:

  • Room air conditioners (A/Cs)
  • Refrigerators,
  • Electric fans
  • Electric motors
  • Ballasts for fluorescent tubes,
  • Compact Fluorescent Light (CFLs)

1.2.2Project Financing

GEF has approved over US $ 7 million for the full project for 6 countries. Out of the US $ 1 million allocation for Bangladesh, the country is expected to carry out its national level activities with a budget of US $ 0.65 million while another US $ 0.35 million is for Bangladesh related regional level activities to be operated by the Regional Project Centre (RPC) in Beijing.

The Bangladesh Government contribution to co-financing is US $ 2 Million in terms of already on-going activities of BSTI supported by other donors and GOB, which are going to complement the GEF regional project activities. GOB is also supporting the project in kind: office space in BSTI, designated staff and other logistic support from the organization.

1.3Scope and Objectives of the Assignment

This assignment covers six end use appliances that are the focus of BRESL Bangladesh initiatives. The aim of assignment is to conduct a comprehensive Situation Analysiswith respect to the current policy, institutional and market situation related with the target six appliances.

As such the key objectives of the assignment were identified to;

•Establish overall production capacity/availability of appliances

•Identify trend use pattern of traditional and energy efficient appliances

•Assess buyers and sellers notion towards the use of EE appliances

•Establish awareness among end users about EE appliances in terms of power consumption(electricity bill comparison)

•Recommend formatting the data in a comprehensive manner that reflect the key points, so that these points would be valuable for Project Activities

•Conduct an analyses of policy and institutional situation and

•Provide follow up policy recommendations on appropriate policy provisions in support of energy efficiency work in Bangladesh.

The outcome of the assignment was expected to provide a clear presentation of the;

•Baseline of technology use,

•Existing energy performance standards and benchmarks and their enforcement,

•The institutional and policy realities and capacity development needs, and

•Road map for implementation of energy standards and labelling program based on the current situation, with specific policy recommendations including an M&E framework

This output is expected to provide the necessary direction and plan of action for the way forward.

2Situation Analysis

2.1Comprehensive Desk Review

Not great deal of published reports, specifically on previous energy efficiency initiatives could be found. A range of available material was therefore used in the desk review to ensure that all related with energy efficiency was included. The following documents/ material were used in the desk review;

  1. UNDP Project Document; “Barrier Removal to the Cost-Effective Development and Implementation of Energy Efficiency Standards and Labelling Project (BRESL) (PIMS# 3327)”.
  2. Bangladesh Roadmap for Energy Efficiency Improvements and Demand-side Management, a study jointly sponsored by Power Sector Development Technical Assistance project of the World Bank and Germen Federal Ministry of Economic Development Cooperation (BMZ) through GTZ, 2009.
  3. Bangladesh Energy Conservation Act, 2010; DRAFT Document
  4. The Sustainable Energy Development Authority (SEDA) Act, 2010, DRAFT Document (file dated 31st July 2010)
  5. The Sustainable Energy Development Authority Act (SEDA), 2010, FINAL DRAFT Document
  6. 3-Year Road Map For Power Sector Reform (2008 - 2010), Power Division, Ministry of Power, Energy and Mineral Resources, Government of the People’s Republic of Bangladesh, May 2008. (2nd Update)
  7. “How do You Change a Million Light Bulbs: Experiences from Developing Countries”, a presentation by Ashok Sarkar, Ph.D. Sustainable Energy Department, The World Bank, Washington DC, 2011.
  8. Information available on two World Bank blogs on CFL Distribution program in Bangladesh and
  9. Bangladesh Energy Regulatory Commission Act 2003 and associated Amendment of 2010 to article 22(a)
  10. Energy-policy Framework Conditions for Electricity Markets and Renewable Energies, 23 Country Analyses Chapter Bangladesh, GTZ, 2007
  11. National Sustainable Development Strategy (NSDS) Bangladesh, Department of Environment Ministry of Environment and Forests Government of the People’s Republic of Bangladesh, 2008
  12. Renewable Energy Policy of Bangladesh, Power Division Ministry of Power, Energy and Mineral Resources Government of The People’s Republic of Bangladesh, 2008.

Copies of these documents are attached as Appendix 5. Majority of assessment for current situation, provided in this document, is based on review of the above material and personal interaction with a number of individuals that are either currently engaged or were engaged in major energy efficiency initiatives. A list of individuals and organizations consulted during the conduction of this assignment is provided in Appendix 1.

Subsequently, the following paragraphs provide an assessment of current status related with policy, institutional setup and market situation. Please note that such assessment of current situation is strictly limited to the scope of implementation of appliance standards and labelling program and does not necessarily include the broader scope of energy efficiency or sustainable energy development in general.

2.1.1Overview of Energy Efficiency Activities up to the Date

Energy performance standards and labelling program often is a part of greater energy efficiency initiative. As such it is important to conduct the review of S&L related aspects with reference to greater energy efficiency scene. Compared with other social and development priorities, in Bangladesh, energy efficiency has never been a serious consideration until recently. A few serious energy efficiency initiatives have been implemented in the past, albeit without serious government commitment and policy support. Nonetheless, until recently, the focus primarily has been on supply side in the form of increasing power generation capacity. However, rapidly increasing imbalance between energy supplies and demand, coupled with less predictable energy supply economics, greater level of commitment for energy efficiency has recently been offered by GOB.

Below are some key energy efficiency initiatives that I have become aware of during the mission, however without gaining access to relevant documentation.

Energy Audit Cell at Ministry of Energy: Several years back, the ministry of energy established the Energy Audit Cell to conduct energy audits of large industrial and commercial facilities to identify energy saving potential. It is said that the cell conducted numerous energy audits and provided professional advice to industries and businesses on how to improve end-use efficiency. Apparently the cell still exists, albeit without much activity. The status of energy audit data collected by the cell is unknown.

World Bank CFL Distribution Program: Reasonably recently (2009-2010) The World Bank implemented a mass scale CFL distribution program. Under the program each household was given two CFLs for free in exchange for two working incandescent bulbs. Apparently the key objectives of the program were to; raise awareness about efficient lighting, energy savings and demand reduction. No documented details of the project or follow up monitoring and/or evaluation were identifiable. The World Bank has provided that while 2 phases of distribution have been completed, the evaluation of benefits is currently being completed. An estimated 300MW of peak electricity demand was expected to be shaved as a result of distribution of CFLs.

USAID Sponsored SARI Energy Project: Around 2003 the United States Agency for International Development (USAID) launched the South Asia Regional Initiatives (SARI) project. The project was aimed at encouraging multi-lateral exchange of knowledge and resources among the South Asian countries to facilitate improved regional relationships. The energy component of the project included activities related with energy efficiency. To the best of my knowledge under the project the major work conducted in Bangladesh was to encourage establishment and operation of Energy Services Companies (ESCO). Majority of activities were conducted outside of government domain in partnership with private sector. Unfortunately I could not access any documents related with this project.

2.2Situation Assessment – Policy

Government policy defines its vision, intentions and commitment towards an important aspect of the operation of the government. The government policy determines the specific actions and operation of various government agencies related with the subject matter of the policy.

Energy efficiency is now well recognized as integrated component of planning the security and supply of energy. As such energy efficiency, in many countries, is an integrated component of policy related with energy supply or commitment towards environment impact abatement. Various strands of policy on energy efficiency cover different aspects of energy efficiency; standards and labelling, energy efficiency in industries, transport, public sector, commercial entities etc, and assign responsibilities to various government agencies.

With only 43% population having access to grid electricity Bangladesh has very low electricity coverage. At around 140kWh consumption per capita, Bangladesh also has one of the lowest electricity consumption per capita in the world. As such the major focus of early policies, aimed at power sector, has been on power sector development to enhance available generation capacity and augmentation of national grid.

While the main focus remains on enhancing supply-side resources, it seems that energy efficiency, energy conservation, renewable energy and demand-side management are given consideration in more recent policy and planning agenda. For example the “3-Year Road Map For Power Sector Reform (2008 - 2010)”, mentions of DSM and energy efficiency as principal components of power sector reforms, albeit without identification of specific role. More specifically there are plans to simultaneously establish the Sustainable Development Authority and enact the Energy Conservation Act. The associated legislative tools (SEDA Act and ECA Act) are in draft stage and pending approval by the parliament to become effective.

According to draft contents of SEDA Act, this will be the major institution responsible for all initiatives associated with sustainable energy development, including energy efficiency, renewable energy and Clean Development Mechanism (CDM) in the country. As a nodal organization, SEDA will be primarily responsible for effective implementation of ECAct, in partnership with other established institutions and private and public organizations. It is important to appreciate that SEDA will be the first major institution responsible for sustainable energy development related initiatives.

For such an institution it often takes few years, after establishment, to be effective. However, SEDA is planned to be established backed by supporting ECAct which will provide it with legal powers to become effective rather quickly with implementation of further policies, regulations, and specific activities to promote energy efficient technology, efficient end-use of conventional energy and increased use of renewable energy.