In a special webinar titled “Power sector reforms: Roadmap for sustainability” organized by the Energy & Power Magazine 22 December 2024, experts urged to increase renewable energy capacity and adopt cost reduction strategies to streamline the distressed power sector. Energy & Power organized the event based on the Institute for Energy Economics and Financial Analysis’s (IEEFA) recent report “Fixing Bangladesh’s power sector”. Editor of the Energy & Power Magazine, Mollah Amzad Hossain moderated the webinar.
Delivering the keynote presentation, IEEFA’s lead energy analyst for Bangladesh, Shafiqul Alam highlighted that the power sector’s installed capacity increased by more than 100% between June 2016 and October 2024. As the demand for power did not keep pace with soaring generation capacity, Bangladesh’s power sector has the issue of overcapacity which results in capacity payments. Alam added that amid a tepid power demand growth, the power sector’s cost increased by 2.6 times against the revenue growth of 1.8 times, compelling the government to pay taka 1,267 billion (USD 10.64 billion) subsidy during the fiscal year 2019-20 to 2023-24. BPDB still recorded a combined loss of taka 236.42 billion (USD 2 billion) during the same period. Despite power tariff hikes thrice in 2023 and once in 2024, the subsidy recorded in the fiscal year 2023-24 was still a whopping taka 382.89 billion (USD 3.22 billion).
Alam suggested Bangladesh should assess future power demand more accurately to reduce overcapacity, phase out power plants of 4,500 MW capacity (including oil-based capacity of 3,500 MW) during 2025-30, increase grid-connected renewable energy capacity to at least 4,500MW in 2030, reduce load shedding and limit the T&D losses to 8%. Further, Bangladesh should modernize the grid to encourage industries to gradually rely more on grid power. The reform measures will help BPDB save Taka 138 billion (USD 1.2 billion) per annum. Bangladesh should also limit any new fossil fuel-based plants at lease till 2030. However, Bangladesh should work on gradually transitioning to all-electric systems (for example, gas boiler to electric boiler or heat pump) to further bring down the subsidy burden.
Attending as a discussant, A S M Marjan Nur, Climate & Environment Advisor, British High Commission, Dhaka, said that Bangladesh must a have a proper energy transition plan and a conducive environment will be important for the country to expedite renewable energy. He added that securing finance for fossil fuels will be difficult in the future.
Engr Mizanur Rahman, General Secretary, Bangladesh Energy Society, agreed that Bangladesh needs to reduce the reliance on captive generators. However, grid modernization is important for that. Additionally, Bangladesh must expand renewable energy which is far more competitive today than a few years ago.
Dr. M Rezwan Khan, professor, Department of EEE, United International University, opined that Bangladesh should take the advantage of rooftop solar. Rooftop solar under the net metering is lucrative. The government may consider different tariffs for rooftop solar instead of only flat rate. He also suggested taking lessons from the solar home systems.
Dr. Ijaz Hossain, an energy expert and former Dean of BUET, felt that Bangladesh’s power sector must undertake measures that will reduce their costs. He added that adding increasing renewable energy and using battery for evening applications could be an option. Given that power cost from the oil-fired plants is more than taka 23 per kWh, Bangladesh may consider battery storage as an option for evening application.
The chief guest of the event Mr. Jalal Ahemd, Chairman of Bangladesh Energy Regulatory Commission (BERC), agreed that the power sector can only be made sustainable through undertaking reform measures. He opined that due to the expansion of the power sector’s installed capacity without paying attention to the demand growth, many plants remain idle now and the government pay capacity charges. Now is the time to revisit the sector and undertake reform measures, such as proper demand assessment, integration of more renewable energy and reduction of load shedding and T&D losses. He assured that he would undertake measures that fall under the purview of BERC. He also felt that the capacity of the Sustainable and Renewable Energy development Authority (SREDA) should be enhanced so that it could play more important role.
