Attachment J.1 Statement of Objectives.pdf

SECTION C - DESCRIPTION / SPECIFICATIONS / STATEMENT OF OBJECTIVE

Acronym List

ADS Automated Directive System

Asia/EDGE Enhancing Development and Growth through Energy in Asia

BADGE Bangladesh Advancing Development and Growth through Energy

BPDB Bangladesh Power Development Board

BPMI Bangladesh Power Management Institute

CBET Cross-border Energy Trade

DFC Development Finance Corporation

EPRC Energy and Power Research Council

ESCO Energy Service Company

GDP Gross Domestic Product

GoB Government of Bangladesh

IDIQ Indefinite Delivery Indefinite Quantity Contract

IPS Indo-Pacific Strategy

IRRP Integrated Resource and Resilience Planning

ISO Independent System Operator

JICA Japan International Cooperation Agency kWhrs Kilowatt Hours

LNG Liquid Natural Gas

MW Mega Watts

NGO Non-Governmental Organization

PM Power Management

PPA Power Purchase Agreements

SARI-EI South Asia Regional Initiative for Energy Integration

SCADA Supervisory Control and Data Acquisition

SREDA Sustainable and Renewable Energy Development Authority

TO Task Order

TOCO Task Order Contracting Officer

TOCOR Task Order Contracting Officer's Representative

RFTOP Number: 72038820R00006 Bangladesh Advancing Development and Growth through Energy (BADGE)

U.S. United States

USG U.S. Government

USAID United States Agency for International Development

C. Statement of Objectives (SOO)

C.1. Purpose

The purpose of the Bangladesh Advancing Development and Growth through Energy (BADGE) activity is to improve energy security and resilience in Bangladesh through better access to affordable, reliable, and sustainable energy systems and transparent and efficient energy markets. The activity supports the Indo-Pacific Strategy (IPS) and specifically the IPS initiative known as Enhancing Development and Growth through Energy in Asia (Asia/EDGE).

C.2. Background

Bangladesh is a populous country (163 million) and is still considered to be among the least developed nations1. Over the past decade, however, the economy of Bangladesh has enjoyed one of the highest growth rates in Asia, and the Government of Bangladesh (GoB) has set an ambitious target to achieve middle-income nation status by 2021.

Reliable and affordable access to energy is critical to sustain economic growth in Bangladesh.

Meeting this goal will become increasingly challenging as decreasing domestic energy sources, such as natural gas, are projected to decline, while at the same time, a growing economy and population demands more energy resources.

While over the last decade electrical generation capacity has increased from around 5 GW in 2009 to around 21 GW in 2019 and access to energy has expanded to nearly 95 percent, reliability and quality of electricity remain as major issues. According to Multi-Tier Framework For Measuring Household Electricity Access tool2, less than 10 percent of the population has access to Tier 4 or Tier 5 energy service, which entails at least 16 hours a day of electricity per day, with no voltage issues and capacity sufficient to power household appliances (e.g., washing machines). Improving the supply and reliability of electricity, and energy in general, while maintaining affordability, is essential to supporting continued growth of industry and commerce in Bangladesh.

The environmental sustainability of the energy sector will also be key to ensuring it contributes to and does not undermine the resilience of Bangladesh’s population to combat natural shocks and stresses. Bangladesh also topped the list of the world’s most polluted countries in 2019 for PM2.5 exposure, according to the 2019 IQAir AirVisual report. Though the country is vulnerable to extreme weather events and changing climate patterns, the GoB has plans to massively expand coal-fired generation. Opportunities exist, however, to economically improve the sustainability of the energy sector. Energy efficiency measures can reduce pollution from emission-intensive industries such as brickmaking, while significant wind and solar resources could be exploited for low-cost renewable power generation.

Previously, USAID/Bangladesh supported the country’s energy sector development for energy security, economic growth, and climate change mitigation through several activities. Over the past seven years, USAID has been collaborating with a number of stakeholders, both in-country and within the South Asia region, to increase adoption of renewable energy technologies and energy efficiency measures, to strengthen the regulatory climate of the energy sector in https://www.un.org/development/desa/en/news/policy/leaving-the-ldcs-category-booming-bangladesh-prepares-to-graduate.html https://www.usaid.gov/energy/mini-grids/economics/cost-effectiveness/tiers-of-service/ https://www.un.org/development/desa/en/news/policy/leaving-the-ldcs-category-booming-bangladesh-prepares-to-graduate.html https://www.un.org/development/desa/en/news/policy/leaving-the-ldcs-category-booming-bangladesh-prepares-to-graduate.html https://www.usaid.gov/energy/mini-grids/economics/cost-effectiveness/tiers-of-service/

Bangladesh, promote clean energy development through technical assistance, capacity building, and incentive programs and promote regional energy security in South Asia.

Through BADGE, USAID will support Bangladesh in ensuring access to the reliable, affordable, and sustainable energy that is vital to economic growth in Bangladesh. Through the deployment of advanced energy systems, the utilization of transparent and best-value procurement for energy, increased participation in regional energy trade, all overseen by high-performing energy institutions, the energy sector in Bangladesh will contribute to the prosperity and resilience of its citizens now and in the future.

C.3. Results Framework and Theory of Change

ACTIVITY GOAL

Improved energy security and resilience through better access to affordable, reliable, and sustainable energy systems and transparent and efficient energy markets

RESULT 1

Enabling

Environment for Advanced Energy

Technologies

RESULT 2

High Performing

Energy Institutions

RESULT 3

Transparent and

Best-value Energy Procurement

RESULT 4

Increased

Participation in Regional Energy

Trade

IR 1.1 Improved enabling environment for increased deployment of clean energy systems

IR 2.1 Improved energy sector planning

IR 3.1 Increased capacity for competitive and transparent energy procurement

IR 4.1 Improved policy framework for increased CBET

IR 1.2 Increased adoption of energy efficient end-use technologies and demand-side management measures

IR 2.2 Increased adoption of efficient commercial and operational practices by energy utilities

IR 3.2 Increased implementation of effective and market-driven procurement mechanisms

IR 4.2 Improved technical systems and regulatory regimes for a synchronized regional grid

IR 1.3 Enhanced access to high quality, reliable power and modern energy solutions

IR 2.3 Improved human capital of energy sector workforce and institutions

IR 1.4 Increased financing for advanced energy technologies

CROSS-CUTTING OBJECTIVES

Youth, Gender Equity, Private Sector Engagement and Environmental Pollution

The Theory of Change is:

If there are efficient and skilled energy institutions and an enabling environment for deployment of advanced energy systems that reduce cost and increases reliability, transparency, and competition in the domestic and regional energy markets, then Bangladesh’s energy security and resilience will be improved.

C.4. Scope

C.4.1. RESULT 1: Enabling Environment for Advanced Energy Technologies

Advanced energy technologies are poised to play an important role in increasing the reliability, affordability, and sustainability of the energy sector in Bangladesh. Significant opportunity exists to increase clean energy capacity and develop a more cost-effective, less polluting energy sector and expand access to high quality power and modern energy services. However, Bangladesh also plans to expand coal power generation and LNG imports. The development of additional fossil fuel power generation will further decrease Bangladesh’s air quality, which, in 2019 was already ranked highest in the world by percentage of population living in areas with unhealthy levels of PM 2.5.3 4

In support of this result, the Contractor will create an enabling environment that is conducive for increased deployment of advanced energy technologies in Bangladesh and that contributes to the overall sustainability of the sector, while also providing affordable and reliable energy. The focus will be on technologies that have the potential to transform the energy sector and provide a large market opportunity for private sector investments. These include renewable energy, distributed energy resources, digitization technologies, off-grid energy solutions, sustainable building technologies, and air pollution control systems. The Contractor is expected to work together and facilitate institutional linkages and forge partnerships between local government institutions and/or private sector companies and relevant U.S. institutions (e.g., universities, laboratories, and private companies) to build capacities in these local institutions.

This task and all the subtasks under it, will primarily focus on providing technical assistance, advocating for policy reforms and producing strategy/recommendation papers for select sectors.

For the illustrative activities mentioned below, the contractor is expected to work with sector players and relevant government agencies to analyze the respective sectors and put forward recommendations and/or demonstrate opportunities to support uptake of advanced energy technologies. Through the BADGE activity, the contractor will not impact the natural or physical environment.

C.4.1.1. IR 1.1 Improved enabling environment for increased deployment of clean energy systems

Bangladesh presents a complicated mix of obstacles and opportunities when it comes to increasing the sustainability of its energy mix. On one hand, the GoB has embraced an ambitious

PM 2.5 refers to Particulate Matters (PM) with a diameter of 2.5 μm or less. More at https://www.epa.gov/pm-pollution/particulate-matter-pm-basics#PM https://www.stateofglobalair.org/sites/default/files/soga_2019_report.pdf https://www.epa.gov/pm-pollution/particulate-matter-pm-basics#PM https://www.stateofglobalair.org/sites/default/files/soga_2019_report.pdf target of increasing renewable energy generation to 10 percent of total capacity by 2021.5 On the other hand, the revised Power Sector Master Plan, prepared by the Japan International Cooperation Agency (JICA) for the GoB in 2016 envisions up to 40 percent of the country’s power coming from coal in 2030. With at least 29 coal-fired plants (33,200 MW) in construction or pre-construction, the country’s coal power generation capacity will increase 63 times if all projects are completed.6 Serious concerns have been raised about the environmental sustainability of these plans, beyond even the implications for greenhouse gas emissions.7 Independent analyses have also raised questions about the economic assumptions of these predominantly Japanese and Chinese-backed projects that will increase Bangladesh’s reliance on imported fuels.8 9

Under this subtask the Contractor will identify and support creating conducive policy and market conditions to undertake high-impact interventions to support the deployment of clean energy in Bangladesh. Ranked 20th in the world by Climatescope, an index that evaluates the investment conditions for clean energy10, Bangladesh has set targets for generating 2,322 MW from solar and 510 MW from wind by 2035.11 Project development has been slow, however, as independent power producers struggle to acquire land and secure right-of-way and connect to the grid. Given the timeline set by the GoB, there is an opportunity to secure lower tariffs by promoting best-practices such as Competitive Renewable Energy Zones coupled with competitive procurement.

With the right support, distributed technologies may also provide needed generation capacity.

The GoB has plans for rolling out up to 300MW of rooftop solar over the next four years and hopes that large private consumers will follow suit, incentivized by a recently instituted net-metering regime.12 Additional opportunities for increased clean energy generation may stem from supply-side energy efficiency measures13 and technologies not yet commercially demonstrated in Bangladesh such as battery storage, floating solar, and off-shore wind.

Illustrative Activities:

● Work with relevant government agencies (e.g., Sustainable and Renewable Energy

Development Authority (SREDA), the Power Division) and U.S institutions (e.g., NREL) to identify and designate competitive renewable energy zones in Bangladesh

● Work with Bangladesh Economic Zone Authority for improved energy resource planning

● Support improved coordination among government agencies for permitting and commissioning of renewable energy plants https://cpd.org.bd/bangladesh-vision-2021/ https://www.marketforces.org.au/wp-content/uploads/2019/11/Choked-by-Coal_The-Carbon-Catastrophe-in-

Bangladesh-FULL.pdf https://energy.economictimes.indiatimes.com/news/power/bangladeshs-coal-fired-power-plants-put-sunderbans-on-natural-sites-in-danger-report/69808920 https://foreignpolicy.com/2019/06/09/when-coal-came-to-paradise-china-coal-kenya-lamu-pollution-africa-chinese-industry-bri/ https://atlanticcouncil.org/in-depth-research-reports/issue-brief/transforming-the-power-sector-in-developing-countries-geopolitics-poverty-and-climate-change-in-bangladesh/ ahead of regional neighbors such as Nepal (31), Pakistan (43), and Sri Lanka (60). For more, http://global-climatescope.org/results

“Revisiting PSMP 2016” https://powerdivision.portal.gov.bd/sites/default/files/files/powerdivision.portal.gov.bd/page/4f81bf4d_1180_4c53

_b27c_8fa0eb11e2c1/Revisiting%20PSMP2016%20%28full%20report%29_signed.pdf https://www.pv-magazine.com/2019/09/27/bangladesh-government-pledges-rooftop-pv-on-all-its-buildings/ https://www.worldbank.org/en/news/feature/2019/11/21/bangladesh-meets-clean-energy-demands-with-new-power-plant https://cpd.org.bd/bangladesh-vision-2021/ https://www.marketforces.org.au/wp-content/uploads/2019/11/Choked-by-Coal_The-Carbon-Catastrophe-in-Bangladesh-FULL.pdf https://www.marketforces.org.au/wp-content/uploads/2019/11/Choked-by-Coal_The-Carbon-Catastrophe-in-Bangladesh-FULL.pdf https://energy.economictimes.indiatimes.com/news/power/bangladeshs-coal-fired-power-plants-put-sunderbans-on-natural-sites-in-danger-report/69808920 https://energy.economictimes.indiatimes.com/news/power/bangladeshs-coal-fired-power-plants-put-sunderbans-on-natural-sites-in-danger-report/69808920 https://foreignpolicy.com/2019/06/09/when-coal-came-to-paradise-china-coal-kenya-lamu-pollution-africa-chinese-industry-bri/ https://foreignpolicy.com/2019/06/09/when-coal-came-to-paradise-china-coal-kenya-lamu-pollution-africa-chinese-industry-bri/ https://atlanticcouncil.org/in-depth-research-reports/issue-brief/transforming-the-power-sector-in-developing-countries-geopolitics-poverty-and-climate-change-in-bangladesh/ https://atlanticcouncil.org/in-depth-research-reports/issue-brief/transforming-the-power-sector-in-developing-countries-geopolitics-poverty-and-climate-change-in-bangladesh/ http://global-climatescope.org/results http://global-climatescope.org/results https://powerdivision.portal.gov.bd/sites/default/files/files/powerdivision.portal.gov.bd/page/4f81bf4d_1180_4c53_b27c_8fa0eb11e2c1/Revisiting%20PSMP2016%20%28full%20report%29_signed.pdf https://powerdivision.portal.gov.bd/sites/default/files/files/powerdivision.portal.gov.bd/page/4f81bf4d_1180_4c53_b27c_8fa0eb11e2c1/Revisiting%20PSMP2016%20%28full%20report%29_signed.pdf https://www.pv-magazine.com/2019/09/27/bangladesh-government-pledges-rooftop-pv-on-all-its-buildings/ https://www.worldbank.org/en/news/feature/2019/11/21/bangladesh-meets-clean-energy-demands-with-new-power-plant https://www.worldbank.org/en/news/feature/2019/11/21/bangladesh-meets-clean-energy-demands-with-new-power-plant

C.4.1.2. IR 1.2 Increased adoption of energy efficient end-use technologies and demand-side management measures

Despite the massive growth in installed electricity capacity over the past ten years, Bangladesh faces frequent shortfalls and load-shedding. This lack of capacity is a drag on GDP, with small and medium enterprises, industrial and commercial consumers in secondary/tertiary cities, and rural households often forced to curtail operations. Larger industries, on the other hand, invest in costly gas-fired back-up power that exacerbates gas deficits and power shortfalls. Beyond power, primitive and inefficient manufacturing methods and technologies in the industrial sector result in high levels of emissions and other pollution. Bangladesh ranks highest in the world when it comes to percentage of population exposed to unhealthy levels of air pollution,14 with the brick making industry a major contributor to particulate emissions in and around densely populated Dhaka.

The Contractor shall support energy efficiency interventions with high potential to address capacity shortfalls and reduce pollution. In the Energy Efficiency and Conservation Master Plan up to 2030, the GoB has acknowledged opportunities across a wide range of sectors (commercial, industrial, residential, and agricultural).15 However, a general lack of capacity remains in both the private sector (i.e., limited Energy Service Company (ESCO)-based implementation, capacity to implement energy-audit recommendations, and financing for energy efficiency projects) and public sector (i.e., lack of performance standards, labeling programs, and building codes).

Additional opportunities exist with respect to demand-side management, peak load shifting, and the introduction of emerging technologies such as electric vehicles that can reduce emissions while potentially helping to adjust load profiles.

Illustrative Activities:

● Analyze and demonstrate opportunities for energy efficiency in industrial, commercial, residential, and agricultural sectors

● Work with the GoB’s Department of Environment to scale up cleaner and more energy efficient brick-making technologies

● Work with both GoB agencies and U.S. institutions (e.g. the Association of Energy Engineers) to facilitate partnerships to train and certify energy auditors in Bangladesh

C.4.1.3. IR 1.3 Enhanced access to high quality, reliable power and modern energy solutions

Bangladesh has made remarkable progress in energy access which has increased from under 50 percent to a purported 93 percent over the last 10 years. However, wide disparity remains when it comes to quality of service. A majority of Bangladeshis enjoy Tier 3 level service – at least eight hours of electricity per day, capacity to power medium load appliances, and the ability to afford a minimum of 365kWhrs per year. However, less than 10 percent of the population enjoy a higher quality service, while nearly 45 percent have lower quality.16 In rural areas, poor power quality https://www.stateofglobalair.org/sites/default/files/soga_2019_report.pdf https://openjicareport.jica.go.jp/pdf/12231247.pdf https://energydata.info/dataset/9754e175-4eb7-455f-8439-73716553ca9e/resource/70c5550d-0c8e-437a-b5d4-d8708f57def4/download/bangladesh.pdf https://www.stateofglobalair.org/sites/default/files/soga_2019_report.pdf https://openjicareport.jica.go.jp/pdf/12231247.pdf https://energydata.info/dataset/9754e175-4eb7-455f-8439-73716553ca9e/resource/70c5550d-0c8e-437a-b5d4-d8708f57def4/download/bangladesh.pdf https://energydata.info/dataset/9754e175-4eb7-455f-8439-73716553ca9e/resource/70c5550d-0c8e-437a-b5d4-d8708f57def4/download/bangladesh.pdf impacts the ability to run agricultural and productive loads and there is heavy reliance on diesel for tasks such as water pumping. Bangladeshis still heavily rely on traditional stoves for cooking, which further degrades the ecosystem with over extraction of natural resources. Also, women, the primary users of these traditional cookstoves generally do not have the social and financial control to make decisions to switch for cleaner energy solutions..

The Contractor will work to ensure that the benefits of reliable power and modern energy solutions extend to all Bangladeshis, including rural populations, poor households, women energy users and groups prone to natural shocks and stresses. This may include promoting alternative technologies such as mini-grids, solar water pumps, and energy efficient cold storage solutions.

The Contractor may also identify and execute high impact interventions to improve power quality and reliability of the power grid.

Illustrative Activities:

● Work with SREDA and other relevant agencies on establishing a regulatory and tariff regime conducive to scaling up RE mini-grids (including grid-tied systems)

● Support entrepreneurial skill-building in newly electrified communities

● Facilitate the private sector participation in the provision of solar water pumping solutions in

Bangladesh

● Work with private sector, academic institutions, and laboratories from the U.S. for establishing a platform for technology and knowledge transfer in advanced energy fields

C.4.1.4. IR 1.4 Increased financing for advanced energy technologies

A key barrier to the deployment of advanced energy technologies stems from challenges in securing low-cost financing. This issue cuts across the three sub-tasks described above. Utility-scale projects often rely on foreign investment, which can be costly, involve foreign currency risks, and require large project sizes. There is often difficulty in securing local debt for industrial-scale solar and energy efficiency upgrades due to a lack of capacity among local lending institutions to assess the technical and financial viability of the projects. In the case of solar water pumps and other off-grid solutions, end users often lack the ability to buy these technologies with cash and companies struggle to offer in-house financing solutions without a robust source of working capital.

The Contractor must identify and implement activities designed to unlock the capital required for the deployment of advanced energy technologies. These may span intermediate results 1.1-1.3 and should focus on mobilizing private investment for high impact activities. The Contractor should become familiar with the newly formed U.S. International Development Finance Corporation (DFC)17 and explore opportunities for support via this institution. Assuming clean energy projects from Bangladesh will soon become eligible for availing DFC support, the Contractor should identify good projects and support the projects to secure equity financing, debt financing, political risk insurance, and technical development from DFC, as applicable.

Illustrative Activities:

● Provide transactional support to prepare bankable projects

● Demonstrate viable ESCO models in Bangladesh

● Support project bundling and demand aggregation to facilitate project finance www.dfc.gov http://www.dfc.gov/

● Build capacity of local banks to identify and complete due diligence on RE projects

● Identify clean energy projects and develop proposal for DFC support

C.4.2. RESULT 2: High Performing Energy Institutions

Energy institutions form the backbone of a functioning energy sector. In Bangladesh, fragile transmission and distribution utilities impact both the quality of power provided and the ability to expand generation capacity. Poor financial and operational performance distribution companies have led to reliability issues and underinvestment in infrastructure, while the GoB still struggles to mobilize resources for transmission upgrades. BADGE will work with a variety of government institutions, including utilities, system operators, policy makers, and regulators as well as the private sector, to accelerate the modernization of utilities across the entire electricity chain, including generation, transmission, and distribution.

C.4.2.1. IR 2.1 Improved energy sector planning

Despite a myriad of goals, targets, and planning documents, the GoB struggles to form a coherent strategy to deliver on its objectives. Though a Power Sector Master Plan was developed with the assistance of JICA in 2016, others have questioned the underlying premise that coal is, and will be going forward, the most cost-effective source of power.18 There is also a need to build skill and capacity so that Bangladeshi institutions, including utilities, can competently undertake their own planning, develop realistic targets for specific generation technologies, including LNG capacity, and plan transmission and distribution system upgrades accordingly.

The Contractor shall work with energy agencies and utilities to develop the capacity and policies required for sound planning in the energy sector. The Contractor should focus on planning functions with high potential to increase the financial viability of the sector, improve utility performance, and support the deployment of advanced energy technologies. The contractor should also identify the challenges faced by women energy users in the rural areas of Bangladesh and craft capacity building programs to benefit them.

Illustrative Activities:

● Guide GoB energy agencies in adopting and implementing Integrated Resource Planning

(IRP)

● Conduct analyses and provide recommendations that contribute to strategic planning and decision-making

● Support Bangladesh Power Development Board (BPDB) and the Power Division in developing a planning unit with in-house modeling capabilities

C.4.2.2. IR 2.2 Increased adoption of efficient commercial and operational practices by energy utilities

Increasing revenue generation and resilience of the power grid, while maintaining affordability is a critical challenge for Bangladesh. Like many developing countries, Bangladesh struggles with https://www.atlanticcouncil.org/wp-content/uploads/2020/01/Power-Transformation-Bangladesh-final-web-version.pdf https://www.atlanticcouncil.org/wp-content/uploads/2020/01/Power-Transformation-Bangladesh-final-web-version.pdf https://www.atlanticcouncil.org/wp-content/uploads/2020/01/Power-Transformation-Bangladesh-final-web-version.pdf cost-recovery in the power sector. This limits capacity to support upgrades and improve utility performance. A lack of data hinders the ability to conduct system analyses, reliability studies and develop future expansion plans, while private developers lack information on loads and off-taking capabilities of substations. A generally weak distribution grid causes unstable system frequencies and reliability issues, while distribution utilities lack the Supervisory Control and Data Acquisition (SCADA) systems to precisely monitor and control the network. Though system losses have been reportedly reduced to under 8 percent, the outstanding challenges stem from subsidies provided to both end users and generators. Currently the Bangladesh Power Development Board, has a recorded deficit on its books of nearly $7 billion, despite a $1 billion subsidy received from the government in FY 18-19.19

The Contractor will work to identify key energy utilities and help them improve their commercial and operational practices. Recognizing that many of the systems, including the subsidy regimes are politically sensitive and entrenched, the Contractor will strive to identify key areas where change is feasible and the prospects for significantly improving utility performance is high.

Illustrative Activities:

● Support distribution companies in identifying and addressing key system losses

● Introduce automatic generation control systems

● Support the establishment of an Independent System Operator (ISO)

C.4.2.3. IR 2.3 Improved human capital of energy sector workforce and institutions

The Bangladesh energy sector is dependent on strong institutions with well-trained staff and a skilled energy workforce. The relatively recent formation of the Bangladesh Energy and Power Research Council (EPRC) and the Bangladesh Power Management Institute (BPMI) have the potential to foster the development of indigenous talent and human capital that the energy sector needs for long-term performance and sustainability. The U.S., with a preeminent university system, national laboratories and strong track record of supporting energy research (e.g., ARPA- E and the Sunshot Initiative) is well poised to provide the strategic partnerships that will help Bangladesh strengthen its human capital and institutions.

The Contractor will support strategic efforts to support the development of human capital in the energy sector. Though capacity building efforts may focus on a critical institution or entity, the focus should be ways to sustainably cultivate excellence in the Bangladeshi energy sector over the long term. To the extent possible, the Contractor should look for opportunities of U.S.

institutions to forge partnerships with local energy institutions like EPRC, BPMI, and others. The contractor should also encourage programs that ensure women’s capacity building and effective participation and thereby reduce the skewness of the heavily male dominated energy sector of Bangladesh.

Illustrative Activities:

● Propose strategic partnerships between U.S. and Bangladesh institutions

● Develop agreements that define the structure and function of those partnerships

● Create a U.S.-based training program for Bangladeshi energy professionals

● Support institutions to co-develop programs of study https://www.bpdb.gov.bd/bpdb_new/resourcefile/annualreports/annualreport_1574325376_Annual_Report_2018-

19.pdf https://www.bpdb.gov.bd/bpdb_new/resourcefile/annualreports/annualreport_1574325376_Annual_Report_2018-19.pdf https://www.bpdb.gov.bd/bpdb_new/resourcefile/annualreports/annualreport_1574325376_Annual_Report_2018-19.pdf

C.4.3. RESULT 3: Transparent and Best-value Energy Procurement

There is a need to develop a more efficient, transparent, competitive power market in Bangladesh.

Though reforms of the power sector have allowed independent power producers and partially separated generation, transmission and distribution, the Bangladesh Power Development Board still operates 50 percent of the generation in-country and serves as a single buyer for electricity.

Merit order dispatch is not always followed, and unsolicited proposals are still commonly used for new power generation. Increased competition and improved market structures are needed in Bangladesh to improve efficiency, accountability, and financial viability of the sector, while enabling increased private sector investment.

C.4.3.1. IR 3.1 Increased capacity for competitive and transparent energy procurement

Opportunities exist to increase competitive procurement in the energy sector. The government has put in place an unofficial moratorium on unsolicited projects, and project delays may provide an opportunity for the government to cancel Power Purchase Agreements (PPAs) with high tariffs.

Reverse auctions for renewables have proven very effective globally for securing low prices globally, however Bangladeshi authorities have not fully embraced this approach. Bangladeshi policy makers require a better understanding of the benefits and structuring options, before putting in place standards and protocols. To utilize new clean energy generation efficiently, economic dispatch must be followed. This may require new policies mandating priority dispatch for renewables. Additional opportunities may exist to develop new models for public-private partnerships (PPPs).

The Contractor will identify and implement interventions to promote receptivity of the energy agencies to competitive procurement approaches and develop the preconditions (policies, protocols, standards) to implement it consistently and support the efficient utilization of competitively procured energy.

Illustrative activities:

● Development of documentation including schedules, auctions rules, auction manuals, model

PPAs, and other documentation based on best practices and tailored to country needs

● Support the design and adoption of regulatory and legal frameworks such as: public-private partnership laws and independent power producer laws

● Develop guides, checklists, and streamlined protocols to help private developers navigate the procurement and commissioning process

● Model and demonstrate cost-savings from a day-ahead energy market

C.4.3.2. IR 3.2 Increased implementation of effective and market-driven procurement mechanisms

Once commitment is demonstrated, Bangladeshi energy agencies will require implementation support for competitive procurement.

The Contractor will work with technical and procurement divisions of the key public agencies to advise and support on the implementation of competitive procurement of clean energy.

Illustrative Activities:

● Develop and transfer auction bid model/platforms

● Develop and review prequalification documents, bidding frameworks, and guidelines

● Run auction simulations

C.4.4. RESULT 4: Increased Participation in Regional Energy Trade

Within the energy sector context, South Asia is one of the least connected regions in the world.

Greater cross-border integration of energy markets will enhance regional stability, increase sector revenues, generate additional employment, provide access to expanded economic opportunities, advance economic growth, and improve social services. However, experience from other regions demonstrates that regional energy integration is a lengthy process, requires persistent commitment from participating countries, and can be stymied by the weaker national systems participating in the market. Though past interventions under USAID’s South Asia Regional Initiative for Energy Integration (SARI-EI) have focused on the regional frameworks and infrastructure needed to facilitate trade, there is a need for country-specific interventions to enable Bangladesh’s participation.

C.4.4.1. IR 4.1 Improved policy framework for increased CBET

Bangladesh stands to benefit from cross-border energy trade (CBET), which will lead to increased grid stability, improved ability to balance renewables, and overall lower energy prices. Though there is a general recognition of opportunities, for example the potential to import power from India and hydroelectricity from Nepal and Bhutan, foundational issues of national policy remain unresolved with respect to participation in a regional market. Greater clarity is needed around how to balance energy independence with respect to the economic benefits of regional integration, which entities should regulate different aspects of CBET, and what market-making functions are necessary in Bangladesh. As Bangladesh’s participation in regional markets evolves, it could be beneficial to track indicators of market outcomes such as prices and trading activity to promote accountability and the ability to course-correct.20

The Contractor must identify ways to enhance the policy framework for CBET in Bangladesh.

There may be significant capacity needs on the part of Bangladeshi energy agencies to analyze opportunities to engage in CBET, define strategic priorities and negotiate favorable PPAs or trade power on an exchange. The focus should be on Bangladesh needs and priorities over regional capabilities.

Illustrative activities:

● Study the financial implications for Bangladesh from specific CBET arrangements

● Support the GoB in identifying which Bangladesh entities should be authorized to participate in India’s power market as its economic dispatch rules evolve

● Advise on the terms of bilateral PPAs

C.4.4.2. IR 4.2 Improved technical systems and regulatory regimes for a synchronized regional grid

The gold standard of energy integration is a synchronous regional grid coupled with a market exchange/power pool. However, movement in this direction will require additional technical, operational, and regulatory alignment among participating nations. Currently the India and https://www.nrel.gov/docs/fy20osti/75228.pdf https://www.nrel.gov/docs/fy20osti/75228.pdf

Bangladeshi power grids are not synchronized, and power is traded via high voltage DC lines.

This transmission capacity is a costly addition to the price of power. However technical upgrades, such as the implementation of automatic generation controls to stabilize oscillations, will be a prerequisite for AC interconnects. For additional integration, there is also a need in Bangladesh to adopt and implement harmonized technical rules, standards, grid codes, and operating procedures.

The Contractor will support the GoB in identifying and adopting the technical systems and developing the regulatory frameworks necessary to support CBET. Emphasis should be placed on frameworks, procedures, and system upgrades necessary specifically for Bangladesh.

Illustrative Activities:

● Undertake a network analysis and identify technical upgrades required to support an AC interconnection with India

● Analyze necessary regulatory functions and make recommendations around which

Bangladesh entities should regulate which aspects of CBET

● Support transmission planning in Bangladesh to facilitate CBET

C.4.5. Cross-cutting Objectives

Four cross-cutting objectives have significant relevance to the energy sector: youth, gender equity, private sector engagement, and environmental pollution. Consideration of these objectives should factor into the identification and implementation of activities in support of the results described above.

C.4.5.1. Youth

Bangladesh has approximately 128 million youth under the age of 40. Investments today in youth development will pay future dividends in economic growth and positive social change. The “youth bulge” also presents serious political, social, and economic pressures, placing a significant burden on employment opportunities for the uneducated. Political unrest and economic stagnation could destabilize the country if the nation’s institutions, civil society, and private sector cannot maintain adequate job creation and opportunities for youth. The Contractor will recommend ways to integrate youth into appropriate activities with a focus on C.4.2.3 - Improved human capital of the energy sector workforce and institutions.

C.4.5.2. Gender Equity

Bangladeshi women face barriers and disadvantages in nearly every aspect of their lives, including access to health services, economic opportunity, political participation, and control of finances. As a sector heavily dominated by male counterparts in policy formulation and decision making, the energy sector poses unique challenges and opportunities to promote gender equality and increase social inclusion. Over the course of implementation, the Contractor must identify ways to engage women, increase participation in the energy sector, and reflect female voices in decision-making processes.

The contractor will be required to conduct a gender analysis in the context of the activity, at an early stage of the activity implementation and incorporate the findings into the activity work plan.

The contractor will also be required to integrate activities to ensure that they reduce the gaps between males and females that will be identified in the gender analysis and address the unique needs and interests of males and females. The contractor will include the identified gaps and activities in a “Gender Action Plan,” which will be a section of the activity work plan and will be updated as necessary throughout the life of the activity. The contractor will track the differential impacts on male and female participants in all activities and report those in the quarterly performance reports.

C.4.5.3. Private Sector Engagement

The private sector is essential to mobilizing the resources needed to support the efficient and sustainable expansion of the energy sector in Bangladesh. The Contractor shall explore opportunities within all four Technical Components to spur private sector investment and financing, promote policy/regulatory enabling environments that are favorable for private investors, support entrepreneurs that are developing and distributing energy technologies, and/or convene platforms for sharing knowledge on best practices in energy sector management and operations.

C.4.5.4. Environmental Pollution

Globally, the fossil fuel-based energy industry is one of the largest contributors to greenhouse gases and global warming. Bangladesh suffers from significant pollution of its water, land, and air. The energy sector contributes to pollution in a variety of ways: emissions from power plants (mercury, sulfur dioxide, nitrogen oxide, etc.), e-waste from batteries and other solar products that can contribute to lead and other heavy metal contamination of soil and water, and thermal pollution of rivers and streams that impacts local ecology, and negatively affects livelihoods and quality of life . In light of this, the Contractor must integrate consideration of environmental pollution into execution of activities. This includes both identifying targeted activities that can help reduce pollution associated with the energy sector as well as avoiding and/or mitigating activities that might exacerbate environmental pollution from the energy sector.

During pandemics like the COVID19, the Contractor will ensure that all work is done while maintaining social distancing requirements, when there is no direct contact with potentially affected people and done online when possible.

C.4.6. Innovation Fund

The Innovation Fund will be used as a tool to augment the results detailed above. The purpose of the Innovation Fund is to encourage participation of diverse organizations that might not otherwise be a part of USAID contracting, including public, private, and nonprofit entities. The Contractor is strongly encouraged to seek out local organizations and work with them to achieve the results described herein. The value of the fund is not to exceed the amount provided by USAID in the project budget.

The Contractor will identify a range of approaches to deploying resources under the Innovation Fund including subcontracts, grants, and co-creation processes. The Contractor may award grants in combination with technical assistance, training, and other activities that contribute to specific objectives in response to expressed local needs. The Contractor is strongly encouraged to leverage funding from other non-USG resources who receive Fund support, either as matching grants or parallel funding of similar activities that support the achievement of common results.

The Contractor must follow the requirements that apply to USAID-executed grants (including the agency policies regarding construction activities in ADS 303 for grants to NGOs) when issuing grants to NGOs. Similarly, the Contractor must incorporate all required terms and conditions of the IDIQ under which the TO is issued specifically relating to grants under contract, audit, monitoring, and oversight into each grant issued to partner government entities. USAID may unilaterally terminate grant activities.

C.4.7. Other energy programs

Throughout implementation, the Contractor shall remain cognizant of key USG energy programs and initiatives such as Asia EDGE21 and the Indo-Pacific Vision.22 The Contractor is also expected to be fully aware of other donor-funded energy programs in Bangladesh. The Contractor will work to compliment these programs and initiatives and avoid duplication of efforts. As needed, the Contractor may be asked to provide coordinating support for USG energy programs in the country.

C.4.8. Crisis Modifier and/or Emergency Response Funds

Bangladesh is vulnerable to natural hazards like floods, tropical cyclones, drought, epidemics from bacterial, viral, and parasitic infections, and pandemics like the 2020 COVID-19 outbreak.

These disasters, and other unexpected needs or events, whether natural or human made, may arise during implementation of the BADGE activity and can significantly impact development gains. Hence, USAID encourages the Contractor to have the flexibility needed to effectively respond to such crisis situations within the limits of appropriation law, statutory requirements, and USAID’s program and budget processes.

USAID encourages the Contractor to possess the agility to dispatch resources, re-align budgets, support rapid delivery of assistance, and respond to direction from USAID, to address any changing circumstances and unanticipated events that may impact the achievement of the objectives of the BADGE activity, or to support new activities that could enhance the results of the BADGE activity. This may include, but not limited to, disaster preparedness, response, and recovery. Furthermore, the response may include assistance to government and other key stakeholders, taking advantage of new or changing market opportunities for interventions of varied scale that can enhance results associated with the activities necessary to achieving the objectives of the program, and protecting the development gains in a changing environment.

The scope and deliverables expected from any realignment, pivoting or redirection of funds will be mutually agreed upon by USAID and the Contractor, if necessary. Prior to using any Crisis Modifier and/or Emergency Response Funds, the Contractor shall identify the activity to be funded, including the required amount for funding such activity, and obtain written concurrence from the TOCOR, and approval from the Task Order Contracting Officer. Funds from the Crisis Modifier and/or Emergency Response budget line item must not be expended without prior written approval from the Task Order Contracting Officer.

[END OF SECTION C]

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