17th November 2020
EP Report

Present reality does not favor continuation of captive power. Captive Power generation must be stopped for effective utilization of surplus grid power. Energy experts at a recent webinar stressed the need for ensuring uninterrupted supply of quality power before closing captive generation. They thought the present reality does not support continuation of captive power with having surplus grid power.


The experts pointed out that the government had allowed the captive power generation plants due to its limitation to supply electricity. The situation had compelled the government to encourage the industries with policy support to invest in the captive power. The gas price has gradually been increased to Tk 13.85 per cubic meter, but the generation cost of captive power still remains Tk 2-3 lower. So, it would not be possible to close the captive generation only through ensuring the quality supply of grid power. The price should also be rationalized.


The experts put forward the recommendations at a virtual talks titled “Prospects and Possibilities of Replacing Captive Power with Quality Grid Power Supply”, organized by Energy & Power magazine on 7 November 2020.


Recognizing the suggestions, Power Secretary Dr. Sultan Ahmed said it would not be possible to close down the captive power overnight. We will have to achieve the consumers’ confidence first and the power division is working on priority basis to this end. As part of it, the power division is taking preparation to ensure uninterrupted supply of quality power to the dedicated industrial zones. A project has also been taken to ensure dual sources of power supply gradually to the old industrial zones. In addition, the prices of grid and captive power should be made competitive.                      


Speaking as the chief guest, Dr Ahmed said that various allegations of environment pollutions are raised against the captive power generation. It was a necessity at a time due to the circumstances prevailing at that period. Now the reality is different. We must improve average efficiency from 25%. We can generate more power with same quantity of gas if fuel-efficient plants can be installed.


He said: “We can discuss about sharing power through setting up power plants near the industrial hubs. We are working through analyzing big data. We will definitely arrive at some conclusions.”


The secretary pointed out that municipal waste of Dhaka is polluting the rivers and environment. A decision is at the final stage to generate about 42.5MW of electricity using about 3,000 tonnes solid waste of Dhaka North City Corporation (DNCC). It would come into commercial operation within 20-22 months. It will also solve waste dumping problem to a great extent. Similar initiative is also taken for power generation from 600 tonnes waste of Narayanganj City Corporation. Dhaka City South and Gazipur are also evaluating the possibilities. These will go a long way in protecting the rivers around Dhaka city from pollutions.


Engr. Mohammad Hossain, Director General of Power Cell, delivered the keynote speech, emphasizing on doing away with the captive power generation. He said it was promoted when the power system experienced 8-10 hours of average disruptions daily due to supply deficit. Now we have reasonable surplus in generation. Many grid-connected power plants are forced to remain idle for lack of demand.


On the other hand, 802 captive power generation plants of about 3,000MW capacity are serving the industries. About 600 MW relies on liquid fuel and about 400 MMCFD gas is used for generating 2,400MW gas-based power. Generation of even 7,000MW power is possible using the same amount of gas in combined cycle power plants. Considering the economics, if this gas is diverted to grid power generation, it will be possible to supply each unit of power at Tk 2.00 only.


Humayun Rashid, President of International Business Forum Bangladesh and CEO of Energypac, mentioned that Bangladesh has achieved commendable success in the power sector in the last decade. But he strongly protested the statement of inefficiency of captive power generation. He mentioned that 90% of the units use cogeneration now. He said the IPPs are penalized if they fail to supply power as per the contract. The distribution utilities do not compensate industries if their failure to supply quality power affect industry production. No one is showing any mercy to industries through supplying power. Quality power supply needs to be ensured. This must be guaranteed before doing away with captive power. The supply must be sustainable. Still now, the grid power experience 3-4 hours of daily interruptions. Time for switching 100% to grid power has not come yet.


Shahedul Islam Helal, former President of Bangladesh Chamber of Industries, referring to the keynote speech questioned as to why the additional peak time charge needed to be paid if there is surplus grid power to cater for that. It takes 30 minutes at least to restart a heat-based production unit even if power supply interrupts for 5 minutes. Plastic industries suffer Tk 5,000-10,000 for each cycle of loadshedding. He mentioned that in 2008, there was 1,572 times of loadshedding. However, in 2009, it reduced to 317. He requested the utilities to inform ahead of scheduled loadshedding. If necessary, industries would share the cost for such system of prior information. Please inform us in advance so that we can be ready for it. Please work on it and it will be beneficial for us.


Engr. Rajeeb Haidar, former Director of Bangladesh Textile Mills Association, pointed out that products in process in printing and dyeing industries are either wasted or get deteriorated if power supply is interrupted. Power loadshedding is a great headache for us. Our industry generates 7MW of  electricity on our own and take 1 MW from REB. Even now, we experience 1 to 1:30 hour loadshedding on the average daily. We have cogeneration and tri generation facilities. Waste heat recovery makes us up to 85% efficient. Captive power generation must continue till grid power system becomes truly reliable.


The members of the association generate 1,300MW of captive power. We had to invest here to get uninterrupted supply of quality power due to lack of alternative. Though criticized, our energy efficiency is actually much more than 25%. It would be 80-85% due to co-generation and tri-generation.   |


Professor Dr. Shamsul Alam, Energy Advisor to the Consumers Association of Bangladesh (CAB), reminded that in 2015, the industries were generously offered facility for captive power generation. Within four years, talks are goping on to stop that provision. I would have been overwhelmed with joy if reality prevailed for that situation. Such notion is technically flawed and not acceptable. Engineers had no role in introducing captive generation. Hence engineers should not recommend for stopping it either in the present context. Why does the outage happen? Why this cannot be planned with prior information? Utilities have no freedom for initiating planned outage. They cannot even talk about it. How can they talk about something which they even do not know about? There is no effort for rationalizing power tariff. He suggested for letting engineers work with freedom. He also suggested not to imposing decisions on them.


Engineer Bikash Dewan, Managing Director of DPDC, admitted the limitations in power transmission and distribution segments for supplying quality power. He said that we are endeavoring for updating and modernizing the system for ensuring quality power supply to industries. There exist some issues with longer transmission lines. We are trying to alert consumers early about supply disruptions.


Md. Kausar Ameer Ali, Managing Director of DESCO, mentioned that not only the reliable power supply, much lower cost captive power is also an issue. Users will always go for cheaper option. Consideration must be given for price of gas to captive power generation. He said that by June 2021, quality power supply to the industrial hub of Tongi in Dhaka would be ensured.



Anjan Kanti Das, Member (Planning & Development) of BREB, informed that they are working on ensuring quality power supply to 28 power hubs through creating dual sources supply. We are not claiming that we are able to ensure unterrupted supply now. There are occasional loadsheddings. It happens even when a tree fall on the power line. We are working on GIS and automation. We are expecting that the system would become much more reliable in 3-4 years.


Engr. Khondkar Saleque Sufi, Consulting Editor of Energy & Power, connecting from Melbourne, Australia pointed out that it is a reality that the grid has huge surplus capacity, but at the same time, it is true that the power system cannot supply quality power to industries at this moment. There are various categories of industries. Some process industries need quality power supply on uninterruptible basis 24/7. Such industries definitely require captive generation or stand bye generation till grid supply becomes reliable. Moreover, many industries have introduced co-generation and tri-generation now.  He suggested for carrying out a joint survey about nature of fuel use in industries before taking any firm decision. He also suggested for reviewing tariff structure.


Mollah Amzad Hossain, Editor of Energy & Power, moderated the seminar. He pointed out that on 6 November 2020, the generation of grid power was 7,975MW – less than half of the installed capacity. This is not acceptable.  He also mentioned that the per unit cost of gas-based captive power generation is only Tk 5.00. He also questioned the rationale for letting new captive power generation for under construction special economic zone when huge capacity of grid power remains idle. He pointed out that the government’s policy for discouraging captive power generation is not yet visible.


He said that we believe that in 3-4 years power system would improve to a reliable level for ensuring quality power supply to all on uninterruptible basis. Cost of generation in 2019 has reduced as compared to that in 2018. This is for lesser use of liquid fuel-based power plant.


Summary of recommendations

·      There is no option but doing away with captive power generation for effective utilization of surplus grid power capacity. However, before that the grid power supply must be made reliable.

·      Power tariff for industries should be reviewed objectively.

·      Peak, off peak slab of tariff must be withdrawn.

·      Scheduled outage must be done with due prior intimation.

·      Captive and grid power tariff must be competitive.

·      New captive power generation initiatives must not be encouraged.



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