[🇧🇩] Energy Security of Bangladesh

[Saif]

How can Bangladesh enhance its energy security?

Continuous gas exploration and exploitation of renewable energy should be the two pillars of energy security in the country.

www.thedailystar.net

How can Bangladesh enhance its energy security?​

A developing country cannot import fuels to sustain a growing economy beyond a certain limit. Bangladesh is no exception. VISUAL: STAR

Bangladesh hasn't recovered from the economic shocks caused by the Covid pandemic and the Russia-Ukraine war, as it is still experiencing a slow but continuous draining of its foreign exchange reserves and is unable to stop the devaluation of taka. The power and energy sectors have been badly impacted in this situation because of their overdependence on imported fuels. Policymakers understood that the foreign currency requirement for this increasing dependency on fuel imports would soon become unsustainable. Experts then pointed out that this situation was mainly the result of neglecting two areas: gas exploration and renewable energy. The stark realisation that the country may not be able to pay for its fuel imports led the authorities and policymakers to declare enhanced gas exploration and incentivise rooftop solar panels and solar parks.

Over the last 20 years, natural gas production in Bangladesh tripled without the addition of any substantial reserves. Exploration was grossly neglected with the belief that no major discoveries were possible, and the shortfall in supply can be easily met through the import of liquefied natural gas (LNG). The unusually low LNG prices during the last decade emboldened those who propagated the idea that it was cheaper to import LNG than to invest in gas exploration. The strong proponents of LNG import cited Japan and Korea as examples.

Domestic natural gas production reached its highest level of 2,663 mmcfd in 2017. But it started to fall the following year, reaching around 2,250 mmcfd. Thus, there has been a production decline of approximately 400 mmcfd in the last six years. At this rate, by 2030 the production will reach a dangerously low level, and to meet the daily national demand, the LNG import burden will severely stress both the dollar reserves and exchange rate.
More than two years have gone by since the alarm was raised, and all the previously promised activities are yet to bear fruit. Very recently, however, some commitments with respect to gas exploration have been made. Petrobangla has announced an ambitious plan of drilling 46 wells by 2026 and a total of 100 wells by 2028. The plan is backed up by a promise of adequate funding and removal of bottlenecks. Moreover, focus has been renewed on the long neglected Bhola gas field, while offshore blocks are also being tendered. Now we wait and see how seriously and sincerely the drilling plan is executed.

The other long neglected area is renewable energy, especially grid-tied solar power plants and rooftop solar panels. The statuses of the four solar technologies that are directly or indirectly contributing to the total grid electricity are shown in the table below. Solar parks are continuously providing electricity to the grid when there is sunlight. The other on-grid technologies are directly contributing when they are sending electricity to the grid. At other times, like the off-grid technologies, they are indirectly contributing by lowering the load on the consumer. The net effect is the same.

The achievement on this front over the last 15 years—since the passing of Renewable Energy Policy, 2008—is dismal. Only 677 MW power generated by solar energy is being contributed to the grid. The implication of this failure can be understood by analysing the daily energy curve.

Source: BPDB website

The contribution of solar PV electricity can be seen from the Daily Energy Curve figure, which shows how the demand for electricity was met on February 18; the turquoise band from early morning to early evening is the contribution to the grid. To meet demand during these hours, the grid operator dispatched oil-fired (mainly HFO but also some diesel) power plants. What is amazing here is that the full demand could not be met due to a lack of fuel despite having more than enough power plants, and we had to resort to load-shedding. It is inconceivable that when the sun is shining, there is load-shedding. The electricity supplied by HFO and diesel power plants, including load-shedding, could have been supplied by solar PV. If the grid had enough solar PV capacity, they could have saved the fuel used by oil-fired power plants as well as prevented the load-shedding. In the last 15 years, we managed to build fossil-fuelled power plants with the collective generation capacity of more than 20,000 MW, but solar PV power plants with the capacity of less than 500 MW.


If Bangladesh had grid-connected solar power plants with the collective generation capacity of 2,000 MW more, which could have been accommodated in the grid without instability issues, a lot of foreign currency could have been saved and the country would have had greater energy security. However, to accommodate another 2,000 MW of daytime solar, there must be sufficient power plants to manage intermittency (to cover for cloudy days). In the table below, it can be seen that there are gas-fired power plants (gas turbines) with less than 1,500 MW capacity that can perform this task. Of course, there are plenty of oil-fired power plants, but the unit cost of electricity from these power plants is very high. It is ironic that we need more gas-fired power plants despite the fact that nearly 50 percent of the existing plants (with more than 5,000 MW generation capacity) are sitting idle. To keep tariffs low and add more solar PV electricity to the grid, the gas-fired power plants should be simple (single) cycle, not combined cycle, of which we have plenty and which is the principal cause of overcapacity.

Source: BPDB Annual Report 2021-22

The realisation that energy security cannot be ensured by importing fuels and that domestic resources are the only means of strengthening energy security have hopefully dawned upon policymakers in Bangladesh. Continuous gas exploration and exploitation of renewable energy should be the two pillars of energy security in the country. The neglected reserves of high quality coal should also be considered. A developing country cannot import fuels to sustain a growing economy beyond a certain limit.
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Dr Ijaz Hossain is former dean of the Faculty of Engineering at Bangladesh University of Engineering and Technology (Buet).​

 

[Saif]

BD seeks over $300m loan from WB to fund three energy projects

Bangladesh has sought over US$300 million funds from the World Bank (WB) to improve the power and gas distribution and transmission networks of the country, officials said on Saturday. The Economic Relations Division (ERD) requested the WB months ago to finance two investment projects and one tech

thefinancialexpress.com.bd

BD seeks over $300m loan from WB to fund three energy projects​

FHM HUMAYAN KABIR

Published :​

Mar 03, 2024 00:35

Updated :​

Mar 03, 2024 00:35

Bangladesh has sought over US$300 million funds from the World Bank (WB) to improve the power and gas distribution and transmission networks of the country, officials said on Saturday.


The Economic Relations Division (ERD) requested the WB months ago to finance two investment projects and one technical assistance (TA) projects.

Officials said the ERD sought some US$337 million in loans for financing a gas transmission line, a power distribution line and a TA project for energy sector development.
However, the Washington-based lender is yet to reply in this regard, they added.

The state-run Gas Transmission Company Limited (GTCL) needs funds to install the Langalbandh-Mawa-Gopalganj-Khulna gas transmission pipeline through the Padma Bridge aimed at supplying natural gas to the western zone of the country.

The GTCL needs $130.76 million funds from the WB for its transmission line development works, said a company source.

Meanwhile, the West Zone Power Distribution Company Limited (WZPDCL) is going to take up the Distribution System Improvement under WZPDCL Area project that requires fund support.

The WZPDCL needs some $204 million funds for improving the power distribution lines in the country's western zone areas, including Khulna and part of Dhaka divisions, said another official at the Ministry of Power, Energy and Mineral Resources.

Besides, the ministry has sent another TA project funding request to the WB for getting $2.3 million in foreign aid.

"All the three funding requests have been sent to the WB during October-November period of 2023. However, we are yet to get any response. We will give them another reminder shortly," said a senior ERD official. "We hope the World Bank will bankroll the important projects."

Bangladesh's gas transmission lines have already been expanded to the country's southern, eastern, and north-eastern regions, but the westerns and north-western regions are still deprived of adequate supply of gas.

The proposed Langalbandh-Mawa-Gopalganj-Khulna gas transmission pipeline of the GTCL is expected to ensure the gas supply to the western Bangladesh and facilitate industrialisation.
The power distribution line improvement and expansion at the west zones will ensure uninterrupted electricity supply to the consumers.​

 

[Saif]

'High dependence on imported fossil fuels bringing trouble'

"The high dependence on imported fossil fuels has significantly impacted our energy system."

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'High dependence on imported fossil fuels bringing trouble'​

Shafiqul Alam, lead energy analyst at the Institute For Energy Economics and Financial Analysis, discusses the state of our energy sector and implications of a possible price hike in an interview with Eresh Omar of The Daily Star.

Reportedly, the authorities forecast that they will need to increase power supply by 75 percent in April, while the government is already struggling to ensure the current supply. Realistically, can the government boost generation by that much, or will load-shedding be the norm come this summer?

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It has been estimated that during summer nights in April, when the demand peaks, 17,500MW will need to be generated. If we look at recent power demands, only a few days ago, it was 11,600MW. Maximum generation, according to Bangladesh Power Development Board (BPDB) data, was 11,426MW. So, there was some load-shedding. Given our current power system capacity of around 26,500MW—without considering captive and off-grid systems—meeting that target should not be a problem. But due to the dollar crisis and because private power producers still owe payments, load-shedding will take place again.

Coal and LNG prices have significantly come down in the international market compared to last year. So, ideally, this year's load-shedding should not be as catastrophic as last year's. But a lot of it depends on how the government manages the total system. While the government took temporary measures, the economic pressure will likely remain. For example, the bonds that were issued to make payments to our private power producers have a cost—that is, the interest payments. These payments only helped oil-fired plants meet their obligation against bank loans. These power-generating units will need additional money to import fuel to produce electricity during this summer. The local gas supply situation has not improved and hence, sufficient fuel supply to gas-fired plants will be a huge challenge. This portrays a scenario where meeting summer peak demands will be difficult.

Although the government will receive international funds to import oil and LNG, this loan will have to be paid back. Given these challenges, the government has to exercise caution and be prudent in its management.

While focusing on increasing generation capacity, why did the government ignore primary energy supply over the years? And how costly is that proving?

When this government came to power in 2009, there were no other alternatives to ramping up generation capacity, because there was such a huge power supply deficit compared to demand. The initial focus on increasing generation capacity had some positive impacts, as industries grew and people's living standards improved. But in recent years, the increase in power demand could not match the trend of power system capacity expansion. Despite having enough generation capacity, we have not been able to cater to the needs of our industries; they still rely significantly on captive systems. If we could have supplied them with consistent and quality electricity, then perhaps this gap between demand and supply would not exist.

Perhaps the concern that we might not be able to find sufficient local natural gas reserves eventually tempted the government to resort to imported LNG to partially meet the demand for gas. Efforts in local gas exploration were not enough to meet the growing demand. Meanwhile, our success in exploiting renewable energy has been very limited. Once renewable energy was very expensive. But even when costs came down, we could not increase its capacity substantially. All these have increased our exposure to imported fossil fuels and their volatility in the international market. Our primary energy costs have gone up mainly due to import dependence.

The high dependence on imported fossil fuels has significantly impacted our energy system, leading to the need for upward price adjustments of energy and power in quick succession, especially in recent years. In fact, a significant amount of dollars is spent on energy imports, which also negatively affects the foreign currency reserves of the country. Besides, the government couldn't supply enough gas to industries which in turn operated at lower capacities last year. Although the industrial contribution to our GDP is on an increasing trajectory as per the Bangladesh Bureau of Statistics data, this contribution would have been even more with sufficient energy supply.
Read more

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Why are industries using captive systems? Is it because our distribution systems aren't up to the mark?

Yes, there is still a lot to be done there. And the government is working on that, but it needs to be expedited. Also, we need to supply electricity to industries consistently.

Energy security is an integral part of any country's national security. From that perspective, how secure are we, and how can the government address the ongoing crisis in the energy sector?

As our dependency on imported energy increased drastically, our energy security concerns have increased too. To become more economically efficient, we cannot rely so much on external sources for our energy; we have to look into our internal resources. Right now, there are no immediate solutions. We have to focus on long-term solutions and mainly on improving planning, coordination, proper management and good governance.

As our dependency on imported energy increased drastically, our energy security concerns have increased too. To become more economically efficient, we cannot rely so much on external sources for our energy; we have to look into our internal resources.

Still, we can take some measures for short-term relief. For example, since we struggle a lot to meet the evening peak demand for electricity, and since we are now going through a crisis moment, we could perhaps take the initiative to close shopping malls a little earlier on weekdays. The government took a similar measure when the Russia-Ukraine war started. The government can also implement a time-of-use tariff to flatten the evening peak demand slightly.

In the long term, we have to seriously explore local gas both onshore and offshore. Different studies and reports have revealed that Bangladesh has the potential for gas reserves. The Schlumberger 2011 report, for example, talked about 49 wells that should be reworked on. Aside from that, we have to expand our renewable energy capacity. Here, also, we should avoid any sudden expansion. Instead, we should increase capacity gradually. Last April, we released a study which said that Bangladesh could incorporate around 3,000MW of solar energy, and thus reduce the operation of expensive plants during the day's peak hours (when sun is available) and cut down on associated fossil-fuel imports.

While solar can help us with day peak-time energy consumption, wind can help with nighttime consumption. Wind can also help during the daytime. Ultimately, we have to focus more on renewables and improve our energy efficiency, which is something all developed countries around the world are pursuing. Our industries have already improved energy efficiency to a certain level. Many households are using efficient appliances like LED lights and air conditioners with inverter technology. Still, there is a lot of room for energy efficiency improvement on the demand side for which we must spearhead consistent measures.

Cross-border energy trade with Bhutan, India and Nepal is also something we should explore. Reportedly, we have finalised an agreement for hydropower import from Nepal. But we should also explore the potential of energy export. This region has a significant variation in energy demand patterns. For instance, Nepal and Bhutan have low energy production and energy shortages in winter—since they are hydro-dependent. But we have a significant surplus electricity capacity during the winter. This provides an excellent case to export electricity to Nepal and Bhutan during the winter. We should continue our efforts for a regional energy trade that will help both the import and export of energy.

Reportedly, the government will soon raise energy prices. How fair is it to raise prices for consumers while paying capacity charges to idle power plant owners?

Last year's data substantiates that the power sector experienced quite a hefty revenue shortfall. The difference between selling and buying prices is very high. From that angle, the government has no alternative but to raise the power tariff. But increasing tariffs alone will not solve our problems. We need to reduce the cost. Identifying the costly and inefficient power plants and phasing them gradually out will help reduce costs. We also need to forecast future power demand more accurately to minimise overcapacity, reduce capacity payments and thus contain our fiscal burden.

There are a number of plants that are currently in the pipeline—aside from those that are already under construction. We should decelerate the projects that are at the contracting and planning phases, so that our overcapacity problem does not increase further and increase the burden on the economy.

Renewable energy, particularly solar, already has an economic case here. While the cost of solar energy is much higher in Bangladesh than in many other countries, the price will further come down in the foreseeable future, making it even more economically compelling. We need to enter the competitive renewable energy procurement process, which has the potential to reduce costs.

Sustainability is another important dimension that we must not forget. We need to use our resources prudently. For example, Solar Home Systems (SHS) contributed to transformational changes in the lives of rural and far-flung people. But reportedly, many of the SHS are no longer operational after 100 percent electricity coverage was achieved. So, ultimately, it is an inefficient utilisation of resources.

Moreover, as per the requirement to obtain new grid connections, different building owners have installed rooftop solar panels. But due to lack of monitoring, many of these installations do not work and deliver little or no energy. We have to cut down on such wastes.

As the power tariff adjustment is on the card, it should be done gradually. The distributional impacts of a price hike on lower income groups, who are often disproportionately affected, should also be kept in mind. Additionally, higher energy prices will affect industrial production.​

 

[Saif]

State Minister hints at cutting fuel oil prices in days

State Minister for Power, Energy, and Mineral Resources Nasrul Hamid has indicated reductions in fuel oil prices this week. “Regular monthly adjustments to fuel oil prices may start in a few days. The energy division is now awaiting the prime minister’s approval about this,” he s

thefinancialexpress.com.bd

State Minister hints at cutting fuel oil prices in days​

Published :​

Mar 03, 2024 19:58

Updated :​

Mar 03, 2024 19:58

State Minister for Power, Energy, and Mineral Resources Nasrul Hamid has indicated reductions in fuel oil prices this week.


“Regular monthly adjustments to fuel oil prices may start in a few days. The energy division is now awaiting the prime minister’s approval about this,” he said while speaking to reporters at the Secretariat on Sunday afternoon, according to local media.

“As there is somewhat affordable availability of fuel oil in the global market, there could be reductions in fuel oil prices this month,” the state minister added.

Earlier on February 29, the government issued “Fuel Pricing Guidelines” through a gazette notification to set an automated price for petroleum fuels across the country.​

 

[Saif]

Bangladesh wants to import 9,000MW electricity from neighbours: Nasrul

State Minister for Power, Energy, and Mineral Resources Nasrul Hamid today said Bangladesh and India have a huge opportunity to work together for the development of the power and energy sector

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Bangladesh wants to import 9,000MW electricity from neighbours: Nasrul​

Photo: Collected

State Minister for Power, Energy, and Mineral Resources Nasrul Hamid today said Bangladesh and India have a huge opportunity to work together for the development of the power and energy sector.

"We want to import 9,000MW of electricity from neighbouring countries. The process to import hydro-electricity from Nepal and Bhutan has advanced," Hamid said when the Indian High Commissioner to Bangladesh Pranay Verma called on him at his office in the ministry.

He also informed the Indian envoy a deal is likely to be signed next month to import 40MW of hydropower from Nepal.

He said that the import of 500 MW of electricity from Nepal through Indian company GMR is almost final while the import of renewable energy is also in progress. The import and export from Meghalaya, Tripura, or Assam can be discussed.

He said the process of importing LNG and gas through H-Energy is almost final.

"We want to increase the connectivity with neighbouring countries including India. We need Indian cooperation in this regard," the minister said.

Nasrul Hamid said power trade will get momentum if there is a dedicated line from Nepal to Bangladesh. This will also benefit India.

He also said it is essential to have a stakeholders' meeting of both sides every month to increase the area of cooperation. "We can also work together on bio-fuel," he added

He observed that the demand for LPG is increasing. It should be considered actively as to how Bangladeshi private investors can work in India in these sectors.

The high commissioner said India's cooperation with Bangladesh in the power and energy sector is growing.

Import of hydropower from Nepal to Bangladesh is ongoing, he said, adding India is also importing about 600 MW of electricity from Nepal.

The issues on high voltage transmission lines, renewable energy, import-export of electricity, R-LNG, fuel capacity enhancement, energy efficiency, and future regional connectivity was discussed at the meeting.​