‘Taking inspiration from RMG, other industries should move toward renewable energy’: Mahmud Hasan Khan

In a recent interview, Mahmud Hasan Khan, President of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA) and Managing Director of Rising Group, discussed the prospects of renewable energy in industrial power supply, particularly in the readymade garments and textile industries. 

He spoke about the opportunities, challenges, and future pathways for energy transition in Bangladesh's industrial sector. Ms Helen Mashiyat Preoty, Senior Research Associate at the Centre for Policy Dialogue (CPD), joined him in this conversation.

Helen Mashiyat Preoty: As the newly elected president of the BGMEA, how do you envision the energy transition in the garments sector? 

Mahmud Hasan Khan: As the president of the BGMEA, I aspire to encourage all member factories to adopt renewable or sustainable energy for their power needs. Specifically for EU suppliers, we aim to ensure that 30% of electricity consumption comes from renewable sources by 2030.

Does BGMEA have medium- to long-term plans for expanding renewable energy, particularly during your tenure? 

Currently, the target for factories supplying EU-based brands and buyers is to source 30% of their electricity from renewable sources. In fact, some buyers have shortened the timeline from 2030 to 2026. Following further discussions, we will set a target from the BGMEA. 

How does BGMEA plan to promote the expansion of renewable energy among its member factories? Are there any incentives, technical support, or facilities provided by BGMEA?

Under Bangladesh Bank's Green Transformation Fund, we can secure loans at a 5% interest rate. In addition, if companies follow the proper due diligence, they can access low-cost financing from the Infrastructure Development Company Limited (IDCOL). 

We are also negotiating with Bangladesh Bank to see if they can relax the conditions for loans, financing, or refinancing schemes. Another area we are advocating for is the utilisation of the newly announced Merchant Power Plant Policy. 

What challenges have member factories faced in setting up solar PV infrastructure in their buildings? 

There are three main challenges faced by readymade garment (RMG) factories. First, RMG factories typically have a vertical structure, which limits roof space, and for safety reasons, some areas must remain vacant, preventing the installation of large-capacity solar PV systems. 

Second, the high interest rates on loans, financing, and refinancing schemes pose a financial challenge. Third, there are high duties and tariffs on solar PV equipment, except for solar panels and inverters. For example, the tariff on mounting structures and other related equipment can be as high as 60%. 

What motivated you to adopt solar PV systems in the Rising Group's spinning factories, and how has your experience been so far?

At Rising Group, we have installed 9.6 MW of rooftop solar PV systems across two factories in different locations. We started with just 2 MW of solar capacity eight years ago, and we now aim to expand solar installations across all our factories, which would generate a total of 14 MW of electricity from solar energy. 

Whenever I visited factories abroad, especially in China, I noticed that they had fully functional rooftop solar PV systems. That made me realise, if China can do it, why can't we? Also, the cost of using the conventional grid is rising daily, while solar electricity is becoming more affordable due to decreasing generation costs. 

Lastly, gas supply shortages have disrupted the operation of our captive power plants, ultimately hampering production. From a business perspective, it is clearly rational to shift toward solar electricity.

Mahmud Hasan Khan. Sketch: TBS

From the perspective of industrial electricity demand, what percentage of it can be met through renewable energy? Not just from solar PVs, but also considering the grid—cost-wise, is it feasible to run factory operations entirely on renewable energy?

Renewable energy can never supply 100% of an industry's total electricity demand, as it is a variable source and cannot provide continuous power. Alongside renewable energy, factories must maintain a grid connection or captive power. However, this does not mean factories should avoid installing solar PVs; they absolutely should, as it helps reduce operational costs and overall expenditure. 

Through Net Energy Metering, factories can even offset their electricity bills. I believe it is possible, I am doing it myself. Renewable energy is a strong business case for the industrial sector. Depending on location and peak/off-peak hours, the cost of grid electricity ranges from Tk10–12 per unit, whereas electricity from rooftop solar costs around Tk5–6 per unit at a 5% interest rate.

Has the installation of solar PV systems created additional employment at the Rising Group factories?

Yes. For regular maintenance — whether done manually or using semi-robotic technology — manpower is needed to clean the panels. Given the dusty conditions in industrial areas, the solar panels must be cleaned every other day. 

For the installation of rooftop solar at your factories, you took loans from both IDCOL and commercial banks. How was your experience with financing solar PV systems?

We took a loan from IDCOL for 3 MW of solar PV, while the remaining capacity was financed through commercial banks under Bangladesh Bank's GTF refinance scheme. 

IDCOL offers an 8-year repayment period, whereas commercial banks provide a 6-year tenure. However, IDCOL's conditionality, due diligence, and approval process are stricter and more time-consuming compared to the GTF scheme.

The approval process through IDCOL's board meetings is also lengthy and time-consuming. In the case of commercial banks, we did not face any issues while receiving financing; however, when it went to Bangladesh Bank for refinancing, we encountered similar delays and challenges.

Do you think other major businesses will consider renewable energy as a viable option and pursue similar energy transition goals?

Other industries are in a more favorable position than RMG factories, as they do not face the same infrastructural limitations. The roofs of these factories should be utilised for renewable energy generation, as it would provide significant business benefits. In particular, the Bangladesh Textile Mills Association (BTMA) could capitalise on the horizontal structure of their factory buildings to install rooftop solar panels. 

Taking inspiration from the RMG sector, other industries and associations should move toward renewable energy, motivated primarily by the strong business case it presents.