Investment risks and policy solutions for renewable electricity in Bangladesh

Abstract

Renewable energy project developers and financiers in Bangladesh face different risks in investing in renewable electricity projects. These barriers slow the progress towards attaining the renewable energy and climate goals of the country. This study presents the findings of a comprehensive survey of forty six key stakeholders in the renewable energy sector of Bangladesh, including thirty four project developers, six regulators and five financiers. Permits risk and power markets risk are considered the biggest challenges, whereas social acceptance risk, counterparty risk and macroeconomic risks are considered low. Foreign developers have the highest risk perceptions, whereas regulators have the lowest. Risk perceptions vary between debt and equity investors. Power Purchase Agreement guarantees, one stop licensing, financial product development and currency or interest rate hedging are considered top risk mitigation policy solutions, whereas awareness campaigns and community involvement are considered less effective. Public sector investors perceive risks to be lower than their private sector counterparts. The findings reveal that there is a gap between regulators and investors regarding the impact of the risks. A shared understanding of the challenges facing the sector must be attained for regulators to formulate policies that increase and facilitate investments in the sector.