Project developers in Bangladesh are developing power plants at a slower pace, as overall costs have escalated by 15% to 20% since the beginning of the Russian invasion of Ukraine.
Rising US dollar exchange rates are also driving up costs, as shipping costs soar due to the lingering impact of the pandemic, say stakeholders. Imran Chowdhury, country manager for Sungrow Renewables Development, said the last two years of Covid-linked disruptions and rise of the dollar against the Bangladeshi taka are having “serious impacts” on renewables.
Higher panel and inverter prices are driving up total EPC costs. Chowdhury said that prices of Tier-1 solar modules have increased by 15% to 18%, while prices of reputable inverter brands have risen by up to 8%. Due to rising prices, project developers are not reaching their targeted internal rates of return. This is one of the key factors for banks to see a project as bankable.
Masudur Rahim, chief executive officer of Omera Renewable Energy, said developers are a bit hesitant to move forward on projects now, as shipping costs have doubled and panel prices have increased by 10% to 15%.
“After signing a PPA, one has to commission a project within a year,” he said. “Many projects now may need to tenure extension due to procurement delay.”
Ezaz Al Qudrat A Mazid, managing director of Solar EPC Development Ltd., said that prices of modules increased several months ago. He said prices of electric cables and aluminum have also risen.
Bangladesh now has the capacity to generate 787 MW of renewable energy, with 553 MW coming from solar. The country aims to generate 40% of its total electricity from renewable sources by 2041.
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