By Mohammed Masudur Rahman
Bangladesh Power Sector: Market Overview
From a mere 21 MW in 1947, Bangladesh currently boasts a total installed capacity of 13,095 MW as of December 2016. 54% of the installed capacity is publicly owned, while private sector and foreign imports accounts for the rest. The energy mix of the country is significantly skewed towards fossil fuels, with a 63% capacity relying on gas, coupled with a strong dependence on diesel and furnace oil. Despite being the global leader in distributed solar home systems penetration, Bangladesh is not a renewable-ready market. Access to electricity and grid efficiency are still the priority problem statements compared to a shift to renewable energy sources and green power developments.
Access to electricity in Bangladesh currently stands at 76%, which accounts for a scanty 293 kW-hour electric power consumption per capita. To put this in context, neighboring country India consumes 765 kWh, and developed nations like the United States consumes around 12,988 kWh per capita (World Bank, 2013). According to the Power Sector Master Plan (2010) of the government, the government plans to generate 24,000 MW by 2021, and 39,000 MW by 2030. Much higher than the projected demand of 33,708 MW by the same year. The Government also plans for 100% electrification in the country by 2021.
Challenges for the Growing Market
While rampant load shedding was commonplace few years back, the situation is rapidly improving. Solar home systems are providing basic and minimum access to electricity where grid connection has not reached yet. Due to power purchase agreements with the government, the private sector now has an aggressive participation in power generation.
It should be noted that the biggest challenge in the Bangladesh market is the single-fuel dependency. The excessive reliance on fossil fuels weakens the energy mix portfolio. Burning hydrocarbons increased the carbon footprint of Bangladesh, but that is a debate for another day. The more pressing concern is that the use of natural gas depletes the main domestic fuel source of the country. This is leading to a shift in consumption to the LPG market, a segment still to flourish properly in Bangladesh. Pressure is mounting to increase import, bottle, and distribute LPG to all corners of the country, swiftly, and reliably, before the natural sources run out. At the same time, the shift has to be accompanied with socioeconomic development in the country as the rise in purchasing power needs to accompany the rising price of household fuel sources.
For industrial and commercial users, unreliable and inconsistent supply of power is a concern. This leads to delayed and inconsistent output schedule for the increasingly competitive markets, especially for the export-oriented industries. Large organizations are bypassing this trouble by installing captive power generation utilities. This ensures consistent and reliable power connection to high-power consumption manufacturing units, and some can also choose to sell additional generation back to the national grid.
When it comes to overall generation capacity, recent times have seen significant strides. New plants are created not only through private-public partnerships, but generation is also increasing due to cross-border power sharing arrangements. However, the generation performance could have translated much better into actual consumption if not for high system loss in transmission and distribution setups. Project completion delays due to various governance issues also contributes to the situation.
Cross-Border Power Sharing Opportunities
Quick rental power generation contracts are not the only short-term capacity development options anymore. The South Asian region in general is a seasonally surplus region in terms of electricity production. Both Nepal and Bhutan produce more hydropower than they require in the monsoon seasons, and export a significant surplus to India. In the winter, however, they end up trading back power from India.
Bangladesh is bordered by India and Myanmar; both countries have a strong cross-border trading potential that Bangladesh can benefit from. Bangladesh currently imports 600 MW of Power from India but the government plans to increase this to 2,000 MW. The North Eastern states of India are a viable option for Bangladesh. At the same time, Myanmar is a country of strong hydropower potential, estimated to be up to 100 GW by International Hydropower Association. SAARC as a regional bloc is yet to come up with its avenues of connectivity. If a regional exchange can be established through India via the BBIN channel, Bangladesh can benefit from the connectivity opportunities, and import hydropower from Nepal and Bhutan.
Way Forward
In a bid to reach the ambitious stage of 39,000 MW supply of electricity in the Bangladesh market by 2030, the government has to focus in a multitude of areas. While generation capacity development and electrification coverage are seemingly the most straightforward objectives, considerations have to be made in building up a balanced energy mix, as the current portfolio not only depletes the already scarce gas reserves, it makes insufficient use of viable alternatives like coal. Focus on renewable energy certainly takes a priority seat as the current solution of distributed home systems do not add to the grid capacity. While infrastructural capacity gains momentum, significant focus must be assumed to developing and retaining competent energy professionals in the country.
The author is a Development Professional with concentration in Sustainable Trade and Clean Energy.
