[🇧🇩] Energy Security of Bangladesh

[Saif]

I am against any deal with India concerning energy import because this will give them an opportunity to torpedo our energy security. After seeing the fate of water sharing of common rivers I am dead against making Bangladesh depended on India for energy import.

India looks to export RLNG to BD via pipeline

Two Indian energy companies are eyeing export of re-gasified liquefied natural gas (RLNG) to Bangladesh within next few years after laying two separate pipelines totalling 265 kilometres. After importing the gas from international suppliers, Indian state-run GAIL and private company H-Energy wil

thefinancialexpress.com.bd

India looks to export RLNG to BD via pipeline
M AZIZUR RAHMAN
Published :
Jun 12, 2024 00:57
Updated :
Jun 12, 2024 00:57

Two Indian energy companies are eyeing export of re-gasified liquefied natural gas (RLNG) to Bangladesh within next few years after laying two separate pipelines totalling 265 kilometres.

After importing the gas from international suppliers, Indian state-run GAIL and private company H-Energy will supply RLNG to separate Bangladeshi entities.

India's H-Energy is set to sign a deal with Bangladesh's state-owned oil, gas and mineral corporation Petrobangla, while GAIL is finalising a re-gasified LNG sales agreement with private Bangladeshi firm Dipon Gas Company.

Market analysts attribute this move by the Indian companies to sluggish domestic LNG consumption in India over the past several years.


Neighbouring India imported around 23.3 million tonnes (mt) of LNG during the fiscal year of 2023-2024 (April-March), which is a 7.17 per cent decrease compared to the country's peak LNG import volume of 25.1 mt in FY 2020-21, according to India's Petroleum Planning and Analysis Cell (PPAC).

India's GAIL and H-Energy will primarily export a combined total of around 1.6-2.0 million tonnes per annum (MTPA) of re-gasified LNG, which could be expanded through mutual negotiations.

H-Energy, a subsidiary of the Hiranandani Group, intends to supply half of the total, or 0.8-1.0 MTPA, while GAIL will handle the remaining half of 0.8-1.0 MTPA.

The pipelines, prices

H-Energy plans to supply the gas from Digha in West Bengal to Khulna in Bangladesh. This will require constructing a 155 km cross-border pipeline stretching from Kanai Chatta in East Medinipur district to Shrirampur in Khulna.

The pipeline will be divided, with 90 km laid within India and 65 km within Bangladesh.

H-Energy will cover the construction costs, while Petrobangla will be responsible for the wheeling charges.

H-Energy's selling price will be linked to Brent Crude, ensuring flexibility to fluctuate with international market movements.

GAIL will supply the gas to Jashore district in southwestern Bangladesh. The gas will be delivered through a 110 km cross-border pipeline constructed from the Benapole border.

The pipeline will be divided, with 65 km laid within India and 45 km within Bangladesh.

GAIL will build the Indian segment of the pipeline, while Bangladesh's Dipon Gas will be responsible for constructing the Bangladeshi stretch.

Dipon Gas and GAIL have not yet finalised the benchmark for setting RLNG prices.

"We are now at the final stage of inking RLNG import deals with India's H-Energy," Petrobangla Chairman Zanendra Nath Sarker told The Financial Express recently.

"All relevant issues, including payment methods, pipeline management and pricing, have already been discussed," he added.

According to the Petrobangla chairman, H-Energy will be able to deliver re-gasified LNG to Bangladesh within two years of finalising the deals. This timeframe encompasses pipeline construction and the signing of purchase and sales agreements.

"We expect to receive RLNG from H-Energy by 2027," said a senior Petrobangla official involved in the negotiations.

To read the rest of the news, please click on the link above.​

 

[Saif]

Acute gas crisis takes the lid off LNG vulnerabilities

It’s another wake-up call for the energy sector

www.thedailystar.net

Acute gas crisis takes the lid off LNG vulnerabilities
It's another wake-up call for the energy sector

VISUAL: STAR

We are worried about the acute gas crisis that has followed the shutdown of an LNG regasification terminal in Cox's Bazar's Moheshkhali after being damaged by Cyclone Remal. According to a report by this daily, the crisis has plagued many households, factories, and vehicles running on compressed natural gas (CNG). For many residents in Dhaka and elsewhere, cooking has become a daily struggle. The situation is no better for the industrial sector, where factory closures and operational disruptions have resulted in significant economic losses and job insecurity for thousands of workers. Meanwhile, CNG filling stations have been overwhelmed with long queues of cars and auto-rickshaws. The power supply in rural areas has worsened as well.

Reportedly, the two-week-long crisis will continue for some more time as the damaged LNG unit—which reduced our LNG supply by almost half, and was taken to a dry dock abroad for repairs—is not expected to be back for another two weeks. That means more outages, more disruptions, and more sufferings. The Moheshkhali unit is one of the two floating storage and regasification units (FSRUs) in Bangladesh that convert LNG, or liquefied natural gas, back to gas before supplying it to the national grid. While the present crisis has again brought into focus the country's poor LNG import/supply infrastructure—it was only recently that we commented on the risk of surplus LNG regasification capacity as well as gas compressor stations lying idle amid insufficient supply—it also exposed deeper systemic issues surrounding our energy policy.

At the heart of it is the over-reliance on imported LNG amid dwindling local gas reserves. As experts have repeatedly said, a short-term, small-scale dependence on LNG import is reasonable, but tying it with our long-term energy future is not sustainable. Yet this is what the government has been doing, and doing rather poorly as it cannot pay for the costly import thanks to the dollar crisis. What we need to focus and indeed invest more on is diversifying our energy sources so as not to be so vulnerable to economic and natural shocks like Cyclone Remal. That, right now, should start with exploring local gas, including the 48 gas wells that the government flagged for exploration in three years. We should also invest more on renewable energy sources which haven't yet got the traction they deserve.

So, while we call on the government to do everything necessary to address the present gas crisis, we should also keep an eye on the future. Exploring and extracting local gas must be a priority going forward, and the national budget must reflect that priority before it is passed. The government should also work on our vulnerable energy supply/distribution infrastructure, which is seldom discussed despite the sufferings it has caused in recent years.​

 

[Saif]

Using solar panels on 10pc of waterbodies, rooftops can meet country’s power demand: study

If the unallocated khas lands in Dhaka division can be used to produce solar power, 26 percent of the capital's electricity demand can be met, according to a new study revealed today

www.thedailystar.net

Using solar panels on 10pc of waterbodies, rooftops can meet country's power demand: study

File photo

If the unallocated khas lands in Dhaka division can be used to produce solar power, 26 percent of the capital's electricity demand can be met, according to a new study revealed today.

Besides, using only 10 percent of waterbodies for floating solar plants and 10 percent of rooftops for solar panels can meet the entire country's demand, the study said, jointly conducted by Bangladesh Environmental Lawyers Association (BELA) and Coastal Livelihood and Environmental Action Network (CLEAN).
The study was jointly conducted by Bangladesh Environmental Lawyers Association (Bela) and Coastal Livelihood and Environmental Action Network (CLEAN).

The organisations presented the study findings in a seminar at the capital's YWCA auditorium today, titled "Solar Energy Potential of Bangladesh and Reality of Land Availability".

Speakers at the seminar said Bangladesh is committed to achieving the target of 100 percent renewable energy by 2050, but the current number is only three percent.

The study said Dhaka division's unallocated khas lands are around 3,388 acres and the electricity demand is 5,276 MW.

"It is possible to generate 1,367 megawatts of solar electricity by using those lands. Besides, floating solar plants across 10 percent of Dhaka's 1,48,235-acre waterbody can produce 5,985MW of electricity," the report said.

Then, if 10 percent of rooftops in Dhaka are used for solar panels, it can produce 10,779MW of electricity, it added.

Hasan Mehedi, CEO of CLEAN, said there should be a change at the policymaking level. There are also opportunity for setting up wind power plants in the country, he added.​

 

[Saif]

https://thefinancialexpress.com.bd/trade/china-bangladesh-launch-joint-venture-for-100mw-solar-power-plant

China, Bangladesh launch joint venture for 100MW solar power plant
Published :
Jun 13, 2024 20:17
Updated :
Jun 13, 2024 20:17

A new 100 megawatt (MW) solar power plant will be built at Madarganj of Jamalpur district by December 2025 with an investment of US$170 million.

A joint venture (JV) agreement between China's CREC International Renewable Energy Company and Bangladesh's state-owned B-R Powergen Limited (BRPL) was inked at Biduyt Bhaban in the city Thursday to build the power plant.

Chinese company will have 70 per cent stake in the JV, while the state-owned BRPL, jointly owned by Bangladesh Power Development Board and the Bangladesh Rural Electrification Board (REB), will have 30 per cent stake in the JV.

Power Division senior secretary under the Ministry of Power, Energy and Mineral Resources (MPEMR) Md Habibur Rahman was the chief guest at the event.

Speaking on the occasion Mr Rahman hoped that the country will be able to generate around 1,200 MW of electricity from renewable energy by 2030.

The government has been working to generate 40 per cent of the country's overall electricity generation from clean energy by 2040, he added.

He urged the sponsor company to build the power plant in time.

Some 241 families will be rehabilitated under the project where a primary school, health centre, mosque, market, pond and graveyard will also be built.

Separately, Bangladesh University of Engineering and Technology (BUET) officially launched the Infrastructure Development Company Limited (IDCOL) financed Rooftop Solar Project (BRSP) in its campus Thursday.

The official ceremony declaring the project's commercial operation date (COD) was held at BUET's auditorium.

The 3.27 megawatt-peak (MWp) BRSP is a collaborative effort of BUET and GPPS Consortium Ltd.

Funded by IDCOL, the project is expected to generate substantial cost savings for BUET, reducing their electricity bills by an estimated Tk 600 million over the next 30 years.

Chaired by vice chancellor of BUET professor Dr Satya Prashad Majumder, executive director & CEO of IDCOL, Alamgir Morshed, deputy CEO & CFO of IDCOL S. M. Monirul Islam, managing director of the PEGEL a major shareholder of GPPS Consortium Ltd Asma Jahan Hoque and pro-VC of BUET Dr Abdul Zabbar Khan were the special guests at the funcdtion.

Addressing on the occasion, the IDCOL top brass lauded the BRSP as a crucial step forward for renewable energy in Bangladesh's education sector.

He emphasized the project's alignment with the government's commitment to clean energy and reducing dependence on fossil fuels.

Professor Majumder expressed his gratitude to IDCOL for their financial support, which played a key role in bringing this ambitious project to life. He also commended GPPS Consortium for their successful implementation despite challenges.​

 

[Saif]

Cyclone damage disrupts four June spot LNG deliveries

Bangladesh has cancelled and deferred four spot liquefied natural gas (LNG) cargoes scheduled for delivery in June as one of its LNG terminals remains out of operation following damage caused by Cyclone Remal in late May. State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has cancelled one ca

thefinancialexpress.com.bd

Cyclone damage disrupts four June spot LNG deliveries
M AZIZUR RAHMAN
Published :
Jun 16, 2024 09:36
Updated :
Jun 16, 2024 09:36

Bangladesh has cancelled and deferred four spot liquefied natural gas (LNG) cargoes scheduled for delivery in June as one of its LNG terminals remains out of operation following damage caused by Cyclone Remal in late May.

State-run Rupantarita Prakritik Gas Company Ltd (RPGCL) has cancelled one cargo and deferred two from Gunvor Singapore Pte Ltd; and has also cancelled one cargo from QatarEnergy Trading LLC, according to market sources.

The operation suspension at the Summit terminal has led to a 500 million cubic feet per day (mmcfd) shortfall in gas supply to the national grid. The supply crunch affects power generation amid high power demand due to hot weather requiring increased use of air conditioning and irrigation for paddy fields.

However, a senior Petrobangla official has downplayed the impact.

He said that gas-guzzling industries, power plants and households are unlikely to be affected too much, as the Eid-ul-Azha holiday begins on Sunday and the capital would take time to shake off the festive mood -- letting the gas demand remain lower.

The official added that regular maintenance work is also scheduled for Chevron's Bibiyana and Jalalabad gas fields during the Eid vacation, coinciding with the period of lower demand.

However, due to the unavailability of the Summit terminal, there could be an uptick in load-shedding after the Eid holiday when people return to work.

The Petrobangla official, citing a letter from Summit, said the terminal's floating storage and regasification unit (FSRU) will not be in operation until July 13.

"But we hope that Summit will be back earlier as it in the letter intended to resume operation as soon as possible," the official added.

The official said the FSRU has already left its mooring facility at Moheshkhali Island in the Bay of Bengal for repairs, which will be carried out either in Singapore or the Middle East.

Before departing, the FSRU regasified around 40,000-50,000 cubic metres of LNG that were on board at the time of the cyclone damage, he added.

More delivery rescheduling likely

The senior Petrobangla official shared the details of cancelled and deferred LNG cargoes.

He said Gunvor Singapore Pte Ltd was awarded three tenders by Bangladesh's highest public procurement body the Cabinet Committee on Government Purchase to deliver spot LNG cargoes for June 7-9, June 9-11 and June 28-29.

Bangladesh was supposed to purchase the June 7-9 and June 9-11 cargoes from Gunvor at $10.4622 per million British thermal units (MMBtu), while the June 28-29 cargo was priced at $12.9697 per MMBtu, the official added.

Separately, Bangladesh also cancelled a spot LNG cargo from QatarEnergy Trading LLC, which was scheduled for delivery between June 19-21. The price of this cargo was set at $10.30 per MMBtu.

Each of the four cancelled or deferred LNG cargoes contained a volume of around 3.36 million MMBtu, the official said.

The RPGCL, a wholly owned subsidiary of Petrobangla, looks after LNG trading in Bangladesh.

The official said Petrobangla has also approached its long-term LNG suppliers, Qatargas and OQ Trading International, requesting them to reschedule several LNG delivery cargoes in order to manage the situation caused by the terminal outage.

He also feared that additional LNG cargo cancellations might be required due to the ongoing situation.

Five LNG cargoes rescheduled in previous cyclone

During the previous Cyclone Mocha in 2023, Petrobangla was forced to reschedule at least five LNG cargoes when the country's floating LNG terminals were shut down, according to market insiders.

At that time, Bangladesh deferred deliveries from both long-term suppliers and spot supplier TotalEnergies.

To read the rest of the news, please click on the link above.​

 

[Saif]

Flames seen over Sylhet skies no cause for alarm, says Chevron

Chevron Bangladesh has announced the start of gas well maintenance at the Jalalabad gas field in Sylhet’s Lakkatura. Flames will be visible in the sky for the next 60 hours from early Tuesday. The US oil and gas company has assured local people that there is no cause for alarm. Chevron Pub

thefinancialexpress.com.bd

Flames seen over Sylhet skies no cause for alarm, says Chevron
BDNEWS24.COM
Published :
Jun 17, 2024 19:16
Updated :
Jun 17, 2024 20:25

Chevron Bangladesh has announced the start of gas well maintenance at the Jalalabad gas field in Sylhet's Lakkatura.
Flames will be visible in the sky for the next 60 hours from early Tuesday.

The US oil and gas company has assured local people that there is no cause for alarm.

Chevron Public Relations Officer Sheikh Zahidur Rahman said in a press release on Sunday that the flaring was part of routine maintenance and that all necessary measures had been taken to ensure the safety of the local community and the environment.

Residents are advised to avoid the vicinity of the gas well during this period.​

 

[Saif]

Petrobangla cancels LNG spot cargo deliveries

Bangladesh's Petrobangla has cancelled some spot liquefied natural gas imports after one of the country's two import terminals was damaged during a cyclone, leaving it unable to receive shipments, two industry sources said on Tuesday

www.thedailystar.net

Petrobangla cancels LNG spot cargo deliveries

Bangladesh's Petrobangla has cancelled some spot liquefied natural gas imports after one of the country's two import terminals was damaged during a cyclone, leaving it unable to receive shipments, two industry sources said on Tuesday.

The state-owned group is tasked with importing LNG for Bangladesh, which relies on the fuel to meet power demand for its population of more than 170 million people.

Summit LNG, the operator of the damaged terminal, told Petrobangla that it had declared force majeure on LNG deliveries after its terminal was damaged, one of the sources added.

In late May, Summit LNG paused operations at its floating storage and regasification unit (FSRU) in Moheshkhali after it was significantly damaged during a cyclone.

The company later said the FSRU, which acts as a floating terminal, would proceed to Singapore or the Middle East for repairs, and that it hoped it could return to Bangladesh within three weeks of those being completed.

Due to Summit's terminal outage, Petrobangla cancelled four spot cargoes scheduled for delivery from late May to around mid-June, a senior Petrobangla official said on Tuesday.

Three of the spot cargoes were set to be delivered by Gunvor in late May and between June 7-11, and the fourth by QatarEnergy between June 19-21, added the official.

Summit LNG and QatarEnergy did not immediately respond to a request for comment on a public holiday in Bangladesh and Qatar. Gunvor declined to comment.

Summit's FSRU is one of Bangladesh's two floating LNG import terminals, with a regasification capacity of 500 million cubic feet per day, that supplies gas to the national grid. It began commercial operations in April 2019.

Bangladesh has seen annual LNG imports increase and last year shipped in 5.2 million metric tons of the fuel, according to data from analytics firm Kpler.

It has imported 2.6 million metric tons of LNG so far this year, with May shipment volumes reaching an all-time monthly record of 600,000 metric tons.​

 

[Bilal9]

New solar park going live at Saidabad in Sirajganj, behind the new station being built, immediately before the new Jamuna Rail bridge.

The park boasts capacity of 68 MW and is situated in an area of 214 acres.

 

[Saif]

New solar park going live at Saidabad in Sirajganj, behind the new station being built, immediately before the new Jamuna Rail bridge.

The park boasts capacity of 68 MW and is situated in an area of 214 acres.

As far as I know, BEXIMCO is making another solar power plant with a capacity of 200 MW.

 

[Saif]

Structure energy budget, keeping sustainability in mind: CPD

The think-tank said in a paper presented at an event on power and energy sector in the national budget for FY25

www.thedailystar.net

Structure energy budget, keeping sustainability in mind: CPD
The think-tank said in a paper presented at an event on power and energy sector in the national budget for FY25

The budget for the next fiscal year is trying to promote some anti-transition and anti-sustainability measures by backing coal-based electricity generation and setting unnecessarily ambitious power demand targets, the Centre for Policy Dialogue (CPD) alleged today.

It said the proposed budget for the power and energy sector for 2024-25 has failed to comply with required allocation for energy sustainability and energy transition.

"The budget for the power and energy sector needs to be structured from energy sustainability and energy transition point of view. Without proper planning, allocation, implementation and monitoring both energy sustainability and energy transition will not be achieved."

The observations were made in a paper presented at an event styled "Power and Energy Sector in the National Budget FY2025: Can the Proposed Measures Address the Challenges?" at the BRAC Centre Inn in the capital. Khondaker Golam Moazzem, research director of the CPD, presented the paper

The paper said some of the electoral commitments are reflected in the budget, but a number of the commitments are not reflected there. These include the retirement of rental and inefficient power plants, import of hydropower and smart grid.

Some important issues that required very distinctive fiscal measures are not being addressed. These include fossil fuel phase-out, the retirement of rental quick rental power plants, ending capacity payments, and incentivising renewable energy through fiscal measures.

The CPD said there is a tendency to not provide enough attention towards the expansion of renewable energy-based power generation.

"More budgetary allocation needs to be ensured for speedy expansion of the renewable energy. Renewable energy-friendly fiscal and budgetary incentives should be proposed and recommended."

According to the paper, the integration of renewable energy into the grid has a lot to do with the upgradation of transmission and distribution system.

A special allocation of Tk 100 crore has been proposed by the finance minister to encourage the development and use of renewable energy. Though the amount is small, the initiative is appreciated since it will accelerate the breaking of carbon lock-in in the country, the CPD said.

"Prioritising the distribution and transmission network of the drilled gas is appreciated."

It, however, warned that relying heavily on imported LNG could make Bangladesh more vulnerable to changes in global prices and political issues between countries.

A subsidy allocation of Tk 7,000 crore in LNG import has been proposed in FY25. In FY24, it was Tk 6,000 crore.

"Rather than enhancing LNG import, the fund should be allocated in the domestic gas exploration," the paper said.

In Bangladesh, the power and energy sector is passing a challenging period which needs proper fiscal, budgetary and policy planning with regard to generation, transmission and distribution of electricity and generation, transmission of domestic gas.

The CPD called for stopping funding for any new fossil fuel-based power generation. "The budget should reiterate the government's commitment to phase out old, dated, and expensive fuel-based and plants by ending contractual periods."

It recommended reducing load-shedding and enhancing allocation for drilling more gas wells.​

 

[Saif]

Endeavours for transition to green electric energy

Bangladesh has been working to increase the use of renewable energy in its energy mix. State Minister for the Ministry of Power, Energy and Mineral Resources Nasrul Hamid, MP considers that Bangladesh needs coordinated initiatives and major investment to make green energy transition. He confirms th

thefinancialexpress.com.bd

Endeavours for transition to green electric energy
MUSHFIQUR RAHMAN
Published :
Jun 24, 2024 21:34
Updated :
Jun 24, 2024 21:34

This photo taken on February 17, 2024 shows a 50 MW Chinese-built photovoltaic power plant in Mymensingh District, Bangladesh Photo : Xinhua

Bangladesh has been working to increase the use of renewable energy in its energy mix. State Minister for the Ministry of Power, Energy and Mineral Resources Nasrul Hamid, MP considers that Bangladesh needs coordinated initiatives and major investment to make green energy transition. He confirms that 'efforts to provide clean electricity to businesses are continuing through net metering systems, rooftop solar, import of hydropower and increased use of energy efficient appliances'. The minister informed further that solar power projects constituting 12,000 MW is currently at different stages of government approval.

Sustainable and Renewable Energy Development Authority (SREDA) of Bangladesh has finalised a 'National solar energy roadmap 2021-2041' in 2020. In the roadmap different scenarios of implementation were recommended. Emphasis was given to high deployment scenario to achieve 40 per cent share of renewable energy in the country's commercial energy mix within 2041. Under the roadmap, within 2030 the country should achieve its target of 9,000 MW and 30,000 MW electricity by 2041. In the said roadmap low cost, renewable energy import was recommended from neighbouring countries for securing more renewable energy in the country's commercial energy mix.

The Cabinet Committee on Bangladesh Government Purchase recently (June 11, 2024) approved the proposal to buy 40 MW of electricity (under a 5-year Agreement including transmission cost) from Nepal at Taka 8.17 ($ 0.697) per unit. As per the Agreement, Bangladesh will spend Tk 6.5 billion over 5 years for bringing in the electricity from Nepal using Bangladesh-India existing grid lines. Therefore, the electricity authorities of Nepal, India and Bangladesh will sign a tripartite Agreement for wheeling the electricity into Bangladesh national grid. Bangladesh government officials consider that the approval of the hydropower purchase agreement with Nepal demonstrated the country's commitment to increase the share of green and renewable energy in its energy mix. Prime Minister Sheikh Hasina reiterated her country's eagerness to import hydroelectricity from Bhutan while meeting the Bhutanese Prime Minister Dasho Tshering in New Delhi ( June 9, 2024).

Experts believe that Bangladesh realistically can generate solar energy at a cost below US cents 7.0 (present generation cost for solar electricity from commercial plants in the country is close to US 15 cents) if it adopts appropriate strategies. Bangladesh' neighbours have been advancing fast in green energy transition using their natural advantages for generating hydroelectric power, solar and wind power. In addition, appropriate policy supports from the respective governments have helped them attracting investment in the sectors. Land scarcity remains one of the major challenges for Bangladesh for generating electric energy from the commercial size solar power plants. The private sector investment initiatives for developing large-scale solar energy firms could not meet their project implementation schedules, as they need to acquire and develop lands and infrastructure on their own prior to installing the solar PV cells with other accessories. If the government authorities provide land for developing solar power plants, project implementation lead-time and costs will be reduced significantly.

The government agencies have been actively considering investments in developing hydropower generation projects in Nepal and Bhutan to enable green electricity import from the region. Necessary infrastructure including regional high voltage electricity grid development remains in active consideration of the government. Such initiatives are positive. However, for securing a balanced and stable commercially sustainable energy system, domestic energy development options should receive priority. For securing green energy transition of the country and for consistent development towards net zero targets, solar energy potentials of the country should be developed at a faster pace.

International Energy Agency (IEA) predicts that the global investment will reach nearly two trillion US dollars in 2024 for increasing the share of clean energy-based electricity (renewable and nuclear energy) generation, power grids, energy storage facilities, energy efficiency improvements and for development of low emission fuels. The Guardian ( June 6, 2024) reports that the IEA's executive Director Fatih Birol informed that that investment in the clean energy sector had been doubled compared to investment in fossil fuel (oil, gas and coal) sector development in 2024. Investment in oil and gas and coal sector still remains high. Climate analysts have been raising alarm that continued investments in fossil fuel development worldwide will result in missing the world's climate friendly development targets. The world community had agreed in the 28th UN Climate Conference in Dubai to triple the share of power generated from renewable energy sources by 2023. Experts believe that the renewable energy generation capacity enhancement will be nearly doubled in a few countries only within the timeline. Other countries have a lot more to do for converting their promises into action plans for reducing their fossil fuel dominated economy. As per the Paris Climate Conference (2015) commitments, governments of the participating countries should develop their nationally determined contributions (NDCs) with specific targets and policies on renewable energy development. Under these policies, governments will focus mainly on developing solar and wind energy-based electricity generation facilities in their countries within their NDC targets.

With advancements of technology, solar and wind provide three quarters of global renewable energy growth. Both solar and wind energy producing companies have been making good businesses as well. 'Seven Sisters' (Exxon Mobil Corporation, Chevron Corporation, Shell Plc, British Petroleum Plc, Total Energies Se, Conoco Phillips and ENI SpA) have been dominating petroleum products production and marketing in the world. There share in the world energy (liquid and gaseous hydrocarbon) market dominated during the last century. Electricity generation had been largely dependent on the hydrocarbon supply and its use as primary fuel. Now the seven Chinese companies (Tongwei Co., GCL Technology Holdings Ltd., Xinte Energy Co., Longi Green Energy Technology Co., Trina Solar Co., JA Solar Technology Co., and Jinko Solar Co.) have emerged as dominating energy companies primarily because of their production and supply of PV (photovoltaic) cells (the device that converts light energy into electric energy) in the world market. Bloomberg (June 14, 2024) report suggests that 'Right now, seven Chinese companies have a bigger stake in the power source of the 21st century than the Seven Sisters of oil that dominated the 20th century'.

Mushfiqur Rahman is a mining engineer. He writes on energy and environment issues.​

 

[Saif]

Finance is key to Bangladesh’s energy transition

Bangladesh must invest more in renewable energy and energy efficiency to reduce fossil fuel imports to reverse the increasing trajectory of the subsidy burden.

www.thedailystar.net

Finance is key to Bangladesh's energy transition

Visual: Star

Bangladesh is facing a double whammy. On one hand, climate-change induced events continue to ravage the country, compelling it to spend 6-7 percent of its annual budget on adaptation each year. On the other hand, transitioning to capital-intensive clean energy is also a necessity for the country given its reliance on fossil fuels, which increases costs and drives up inflation. These competing priorities mean that Bangladesh will need to consistently invest in critical climate-resilient infrastructure and clean energy technologies in the next several decades.

To achieve these goals, it is important that Bangladesh streamline its funding schemes and identify viable sources of financing.

Drivers of a clean energy transition

Cyclone Remal, which hit Bangladesh in May 2024, affected as many as 3.8 million people, damaging 150,000 houses. This was not a one-off event. Although Bangladesh is prone to cyclones of similar magnitude or more, such extreme events are likely to become frequent in future. As a result, the country will need more funding to adapt to climate change.

There are several reasons why Bangladesh should invest in clean energy. Dependence on imported fossil fuel has proven costly for Bangladesh. Apart from the high price volatility of fossil fuels in the international market during 2022-23, the recent devaluation of the Bangladeshi taka by Tk 7 per US dollar in May 2024 has made fossil fuel imports more costly. As a result, the Bangladesh Petroleum Corporation (BPC) incurred an additional cost of roughly Tk 5 billion ($42.3 million) to import fuel oil in May 2024. BPC's annual cost may increase by Tk 60 billion ($511 million), which is enough to install a combined rooftop solar capacity of more than half a gigawatt (GW).

Since importing fossil fuels such as liquefied natural gas and coal is also expensive now, the government will feel the pressure of increasing tariffs for electricity and gas.

However, raising tariffs cannot eliminate the subsidy burden. The subsidy for the power sector soared to Tk 395.35 billion ($3.34 billion) in fiscal year (FY) 2022-23 from Tk 296.58 billion ($2.51 billion) in FY2021-22 despite the 15 percent tariff hike on electricity between January and March 2023.

Bangladesh must invest more in renewable energy and energy efficiency to reduce fossil fuel imports to reverse the increasing trajectory of the subsidy burden.

Energy transition will necessitate billions in financing

According to the Integrated Energy and Power Master Plan (IEPMP 2023), Bangladesh plans to install a total of 37.8GW new renewable energy (primarily solar and wind) capacity until 2050 under the advanced technology scenario (ATS) (taking the in-between growth scenario which considered the average of the growth rates projected in the country's perspective plan and the International Monetary Fund's estimates). The IEPMP estimates that the combined capacity of 37.8GW renewable energy without energy storage systems will cost Bangladesh $37.4 billion.

However, renewable energy capacity may reach 26.2GW in 2050 under the in-between growth case, excluding ATS. The changed IEPMP scenario indicates that the country may have 17 percent renewable energy by 2050, implying that the installed renewable energy capacity will be less than 20GW.

According to IEEFA's estimate, even the installation of 20GW renewable energy capacity with battery storage for 30 percent of the capacity for four-hour back-up may require around $1 billion investment a year through 2050.

Financing the energy transition

Bangladesh should set a mission that is fit-for-purpose to lead an effective energy transition, with finance at its core. This is not only due to insufficient financing schemes, but also the challenges posed by the current banking and finance framework in the country.

For instance, Bangladesh Bank's refinancing scheme of Tk 4 billion ($33.84 million) for environment-friendly projects has recently been increased to Tk 10 billion ($84.6 million) but the cap for a loan to a solar park is only Tk 0.3 billion ($2.54 million). The loan amount is inadequate in relation to the required finance volume even for a 10 megawatt (MW) solar project.

To accelerate its energy transition, Bangladesh should explore available financing avenues, such as multilateral development banks (MDBs), green bonds, private equity funds, investment promotion and financing facilities.

The Infrastructure Development Company Limited, a non-banking financial institution (NBFI), finances utility-scale clean energy projects in Bangladesh with funding from multilateral and bilateral agencies. Likewise, another NBFI, the Bangladesh Infrastructure Finance Fund Limited, can extend debt finance to clean energy projects. However, other local financial institutions should also develop the capacity to access the low-cost finance offered by MDBs. As the country mostly imports clean energy technologies, funding in US dollars is of utmost importance to ensure a smooth opening of letters of credit (LCs) for projects.

Bangladesh Bank published a policy for the issuance of green bonds by banks and financial institutions in 2022. Green bonds can help expedite the clean energy transition in Bangladesh by raising funds for capital-intensive clean energy projects. Institutional investors have a major role to play as a large-scale renewable energy project may require funding worth several hundred million US dollars. It is imperative to incentivise individual investors with green bonds when the government's saving instruments provide lucrative returns.

A lack of equity among sponsors often delays renewable energy projects. Private equity firms with a focus on environmental, social and governance (ESG) may invest in renewable energy projects. These firms are still at a nascent stage in Bangladesh.

Bangladesh Bank's Investment Promotion and Financing Facility, supported by the World Bank, helped develop infrastructure projects in the country. While the funding phase has ended, a new phase, if launched, may speed up the energy transition. The scheme will be fit for purpose as the fund is disbursed in dollars with a tenor of 20 years.

Early preparation to identify and access finance while developing the capacity of local financial institutions is key to driving an effective and sustainable energy transition. The situation demands a bold response—defining a path that will not compromise the needs of the country, both on the climate adaptation and energy transition fronts.

Shafiqul Alam is lead energy analyst for Bangladesh at the Institute for Energy Economics and Financial Analysis (IEEFA).​