Transforming aid-funded renewable energy systems: A case study of policy-driven financial sustainability in rural Bangladesh

Abstract

Efforts to improve energy access in off-grid areas through donated photovoltaic (PV) systems often encounter sustainability challenges, particularly due to inadequate maintenance resulting from financial constraints. These challenges are compounded when national power grids extend to off-grid regions, leaving existing PV systems underutilized or abandoned. To enhance the sustainability of these systems, this study performs an economic analysis of connecting previously off-grid PV systems to the national power grid with the System Advisory Model (SAM). The analysis examines whether the existing PV systems can generate sufficient revenue to cover operational costs and ensure their long-term viability. Simulations evaluate two schemes -net metering and feed-in tariff- as potential solutions to integrating PV systems into the national power grid while maintaining economic benefits. Results demonstrate that donated PV systems can achieve economic viability under compensation rates lower than those currently supported by government policies. Such reduced compensation rates allow governments to procure electricity at a lower cost while enabling prosumers to meet operational expenses. These findings provide insights into enhancing the sustainability of equipment installed in off-grid areas as electrification expands and offer a framework for diversifying compensation rate policies in government initiatives.