Bangladesh has achieved remarkable economic growth for over a decade, from 2010 to 2021, leading to its qualification for graduation from a Least Developed Economy to a Developing Economy. The transition is set to happen in 2026. The country has set its sights on further growth, aiming to become a higher developing economy by 2030 and a developed country by 2041. However, sustainable energy security is crucial for maintaining consistent economic growth.
A review of the present situation of power and energy supply in Bangladesh reveals significant challenges to achieving sustainable energy security. While the COVID-19 pandemic and the Ukraine war have complicated matters, the improper mindset of policymakers has contributed to a heavy reliance on imported fuels. This approach neglects the exploration and exploitation of Bangladesh's own primary fuel sources and the potential for renewable energy. Despite various plans such as the Power System Master Plan (PSMP) 2010 and PSMP 2016, the country has struggled to address these issues effectively. Coal resources remain untapped, and gas exploration efforts have been minimal. Additionally, the export of liquefied natural gas (LNG), liquid fuel, and coal is hampered by a dollar crisis.
The existing installed power generation capacity of over 25,000 MW is insufficient to ensure a sustainable power supply for the smooth operation of industries. It is not feasible to significantly improve gas supply from domestic sources or through LNG imports in less than 3-5 years. Moreover, the government cannot commit the necessary funds for importing fuel from the global market. Given these constraints, the most logical short-term solution is to expedite the expansion of renewable energy generation. Solar energy holds great potential, and wind energy also shows promise. Bangladesh has made national commitments to clean and green energy, yet the current contribution of renewable energy to the national grid is less than 3%. Experts believe that the lack of an appropriate mindset among policymakers, the absence of an integrated and coordinated policy, and a clear implementation strategy are impeding the development of renewable energy. Furthermore, the multitude of studies and recommendations has only served to confuse policymakers.
Bangladesh already has various policies and plans in place, such as the Renewable Energy (RE) Policy, Mujib Prosperity Plan, the draft Integrated Energy and Power Master Plan (IEPMP), and the Nationally Determined Contributions (NDC). However, in some cases, these provisions contradict one another. Development partners like the Asian Development Bank (ADB) and the World Bank have also conducted studies, adding to the complexity. What is urgently needed is a comprehensive policy, a clear road map, and a champion organization to spearhead the development of renewable energy. Without these crucial steps, it is unlikely that Bangladesh will achieve its national vision of a 40% contribution from renewable energy by 2041.
Bangladesh's Prime Minister has consistently emphasized her vision and commitment to achieving a 40% contribution from renewable energy by 2041 as part of the country's transition to a developing economy. As the President of the Climate Vulnerable Forum, she set an example by canceling the implementation of 10 large imported coal power plants before attending the global climate conference (COP26). The Mujib Prosperity Plan also aligns with her vision and commitment by prescribing a fuel mix that supports renewable energy development.
Currently, the contribution of renewable energy to the installed power generation capacity in Bangladesh is around 3% in 2023. However, the various ongoing studies, plans, and a conservative mindset are hindering the smooth and unhindered development of renewable energy in the country. The absence of a comprehensive policy and an implementable approved strategy further compounds the challenges. The mindset of policymakers is not fully aligned with the national vision of achieving significant renewable energy development.
There is a consensus that all options for renewable energy generation and utilization must be explored and exploited to ensure sustainable energy security for Bangladesh's smooth transition to a developing nation by 2026 and the attainment of a developed economy by 2041. Development partners such as the Asian Development Bank (ADB) and the World Bank have produced study reports, the Ministry of Energy, Mineral Resources Division (EMRD) has prepared a solar roadmap, the Japan International Cooperation Agency (JICA) has produced a draft final report of the Integrated Energy and Power Master Plan (IEPMP), and the Mujib Climate Prosperity Plan is in place. However, these efforts are not fully aligned with the national vision, and there is a lack of a comprehensive policy document and an integrated strategy for developing renewable energy.
In the current situation, it is highly unlikely that the ambitious renewable energy targets, including the clean energy contribution by 2041 as pledged by the Prime Minister, can be achieved without prompt action. Urgent steps need to be taken, and champions must emerge to take responsibility for driving renewable energy development in Bangladesh. The country needs a smooth and reliable transition from fossil fuel dependency to renewable energy sources in a sustainable manner. A comprehensive policy and an integrated strategy must be developed and implemented to ensure the realization of Bangladesh's renewable energy vision.
Present Scenario
Bangladesh has signed the historic Paris Climate Agreement, which is a global response to the threat of climate change by restricting the global temperature rise this century below 1.5 degrees Celsius. The present electricity generation installed capacity is 26,700MW (inclusive of captive generation and off-grid solar). The highest demand served was 15,648MW on 19th April 2023. Per capita generation is 609MW. According to BPDB entire country achieved coverage of power supply in 2022. There is a national pledge of achieving a 40% contribution to green energy by 2041.
A significant capacity of gas-based generation remains idle for the chronic gas supply crisis. Coal power generation and liquid fuel-based generation also suffers from the dollar crisis restricting import. Domestic gas production is depleting and there is no possibility of increasing LNG import increasing in less than 3-5 years. There is a credible opportunity for increasing RE contribution in the next 3-5 years through rooftop solar, grid-connected solar, and solar irrigation connected with the grid.
It is sad that despite of having so many policies and guidelines, the real achievement of RE is well below the expected level. Now final draft of IEPMP has realistically consolidated everything into a single document. It is under the approval process. The government engaging local resources developed a Solar Energy Roadmap but has not been approved yet. Development partners ADB and World Bank have made some studies. Net metering has been introduced. Policymakers are still not convinced whether a feed-in tariff will be the right incentive for Bangladesh or not. Experts observed that some provisions of the above documents are not aligned with the national vision of achieving a 40% contribution of RE to the fuel mix by 2041. Even policymakers think that by 2041 the contribution of green energy including nuclear power and energy import may be 40%. Hence from the policy perspective, it cannot be assured that the policymakers have a clear mindset for RE development as yet. No clear strategy for RE exists and no particular organization is made responsible for it.
Other Challenges
Availability of land for utility-scale solar, absence of fiscal incentives, proper tariff structure. import taxes and duties on solar panels, inverters, and accessories put solar in uneven competition with fossil fuel-based power plants. The worldwide cost of solar generation has gone down, and the inclusion of modern battery storage has even increased the availability of solar power for a longer duration. But a Bangladeshi think tank is still too much leaning towards fossil fuel use. However, the recent volatility of fuel prices in the global market and disruption of the fuel supply chain must have given a rude awakening to policymakers. The introduction of net metering is a good initiative in the right direction. It encouraged industries to go for rooftop solar. But the decision on CNG supply to industries through a risky venture of converting Bhola gas to CNG and transporting from Bhola to Gazipur and Ashulia may act as a temporary deterrent to the growing interest of industries going for rooftop solar. A lot of time and energy has been spent on feed-in tariffs. Countries like Vietnam benefitted from it. Why not Bangladesh introduces this for 3-5 years and then when the solar business gets matured it can be withdrawn? Bangladesh must also review high import duties and taxes on the import of solar panels, inverters, and other accessories. Fiscal incentives and proper tariff structure will encourage major private sector investors to invest in solar and RE in Bangladesh. Solar with flow battery inclusion has become competitive in many countries. Even with higher initial costs solar over life span becomes cheaper for zero cost on fuel.
Availability of land for large utility-scale solar was a genuine issue for solar power generation growing big. Some of the private sector investors failed to proceed with projects of land issues. Moreover, the government’s strategy for not letting 3 crops-growing lands for industrial use also restricted land availability. Still, the government acquired land for mega projects and special economic zones. In the recent past, the government’s scrapping of 10 major coal-fired projects has created an opportunity for setting up utility-scale solar in the areas earlier acquired and, in some cases, developed for these plants. A recent World Bank study has also recommended this. According to that report, about 3,800MW of utility-scale solar power can be generated from there in 3 years. Apart from that, the government can provide incentives for utility-scale solar power plants at about 88 Special Economic Zones that are planned or at various stages of development. If these are pursued in right earnest, there is no reason why Bangladesh cannot generate 10,000-15,000MW grid-connected solar power by 2030. Moreover, the Delta Plan envisages reclaiming a huge area by 2035. Why not 5-10% of that allocated to solar?
Large utility-scale solar plants near large base load plants at Matarbari and Payra will be useful in the context of evacuation to the power grid as offtake from base load plants can be adjusted as and when required.
The study which is only preliminary requires a further detailed feasibility study at each location. The study also mentions: "The total capacity of the sites assessed in the component 2 report is estimated to be more than a 17-fold increase on current utility-scale solar PV in Bangladesh. The total capacity of circa 3.8GW is also approximately 24% of the maximized Mujib Climate Prosperity Plan RE target for 2030 of 16,000MW of installed RE, for an investment of circa US$2.46 billion. With an approved funding source, upgraded transmission and possible storage, some of this capacity could be brought online even before 2026. A key proviso, however, is that much of this capacity is at one site (Moheshkhali) which is approximately 40 times the size of Bangladesh’s largest current solar PV installation. Given the enormity of this specific project, the expectation is that this site will be developed in stages, with the potential for several hundred MW to be online by 2026. Relevantly, 3.8GW also surpasses the unconditional commitment in Bangladesh’s Nationally Determined Contribution under the Paris Agreement to implement 911.8MW of renewable energy projects by 2030 and goes a significant way toward reaching the circa 4.1GW renewable energy installed capacity target under the conditional contribution scenario."
Another Finding of the WB Study Report About tariffs is: “There are many benefits from progressing the proposed designs for utility-scale solar PV. The benefits include reduced power prices for consumers – with the BPDB setting a tariff ceiling of $US0.10/kWh for solar PV, the projections for these sites fall within that ceiling, ranging from US$0.07–0.10/kWh. Other benefits include zero pollution and zero carbon emissions during operation. Rapid construction means power generation can also be brought on stream quickly.”
Growing big in rooftop solar, however, does not have land issues. With the introduction of net metering, major industries are keen on taking advantage of offsetting gas supply-related issues for their captive power generation and high-cost generation from liquid fuel. However, the government should encourage them by providing soft loans and reducing duties and taxes on the import of solar equipment whether they opt for Capex or Opex model. The government must also let distribution utilities engage developers for setting up solar rooftops on public buildings, government offices, educational institutions, hospitals, and community clinics. The government should also review whether rooftops of airports, railway stations, and metro stations can also set up rooftop power generation facilities.
Another area of potential generation is solar irrigation. IDCOL is supporting this, but the success is a bare minimum. A business model for solar irrigation pumps may be developed as soon as possible for FDI in this area as the solar irrigation facility will also require grid integration. There will be significant investment there.
While going big in solar, one must bear in mind that without battery plant factors will be restricted to 15-20% only. Hence the inclusion of battery storage must also be actively considered.
Conclusion
Bangladesh has developed reasonable expertise in solar facility installations. Some private companies have skills and proven track records. But solar program suffers from the absence of single-point contact, and proper regulatory mechanism. The government introduced the mandatory provision of a certain percentage of rooftop solar proved counterproductive for the supply and installation of substandard materials and poor installations. These gave the wrong message to end users about solar power. We suggest SREDA may be developed as a single point contact for RE-related matters and BUET-like institutions may be included for quality control and quality assessment of solar equipment.
For the present and emerging global scenario, Bangladesh has to grow big in RE, solar and wind power in particular. For that, all policies and guidelines must be consolidated into one comprehensive policy document. Taxes and duties on imports must be rationalized, the route to the market of RE must be smooth, and the tariff structure must be redesigned for attracting private sector investment. If these are done there is no reason why Bangladesh cannot achieve a 40% contribution of RE by 2041.
