Bangladesh's power plants are highly dependent on natural gas and instead of relying on gas and LNG-based power production, the country should focus more on renewable energy, said the South Asian Network on Economic Modeling (Sanem).
The cost of power generation using only liquified natural gas (LNG) was Tk49.49 per kilowatt hour in 2022, which had created an extra burden on the country's economy, the think tank said while unveiling a research paper on energy at Hotel Amari in the capital on Monday.
Presenting the paper titled "Exploring Sustainable Energy Pathways: Focusing on Cost-Effectiveness and Green Budget", Sanem Research Associate Israt Hossain said that in 2022, almost 98% of all energy production originated from natural gas, oil, diesel, and coal whereas less than 2% of the energy mix was from renewable energy, according to Bangladesh Economic Review, 2023.
Currently, electricity generation using natural gas costs Tk2 per kilowatt hour.
According to government estimates, the country's natural gas reserves will be almost exhausted by 2030. That is why the government has planned to increase LNG imports by 9 million tonnes (Mt) in 2030, 21 Mt in 2040, and 46 Mt in 2050. To meet these targets, the government is building LNG terminals.
Israt Hossain said currently the government is supplying both LNG and natural gas to power plants, the total accounting cost of which is 1.43% of GDP. If opportunity cost is considered during cost estimation, the overall economic cost stands at 11.66% of total GDP in the year 2022.
To ease pressure on the economy, Sanem recommended increasing power production through renewable sources.
Bangladesh has the lowest proportion of renewable energy (excluding hydropower) in the total installed capacity of power generation (1.01%) among South Asian nations such as Pakistan (6.8%), Sri Lanka (22.22%), and India (30.2%), the Sanem research found analysing government documents of the respective countries.
Bangladesh has made precise climate commitments within its Nationally Determined Contributions (NDC) under the Paris Agreement.
In November 2022, the country introduced the "Mujib Climate Prosperity Plan", which initially set ambitious renewable energy (RE) targets at 30% by 2030 and 40% in power generation by 2041.
Sanem also arranged a dialogue at the event where several economists and government officials participated. State Minister of Planning Ministry Dr Shamsul Alam was present as chief guest.
Mohammad Hossain, director general of Power Cell — a government regulatory agency under the Ministry of Power responsible for regulating the power industry, said, "Currently, 5% of our total power generation comes from renewable energy. We are working to increase this percentage rate."
"We are making cross-border agreements to increase hydropower usage to reduce dependency on fossil fuels. We also have to take into account the impact of the cost of no energy," he added.
"The consumption of electricity by the industrial sectors in the country is increasing and we need LNG to meet this current demand. A few months ago, LNG supplies were shut down due to storms. At that time, there was severe load shedding in the country, said Dr Rafiqul Islam, joint secretary of the Energy and Mineral Resources Division.
Dr Sayema Haque Bidisha, the research director at Sanem, said, "There is incoherence in the government's plans. There should be incentives for electricity and fuel. Ensuring the availability of affordable electricity is the biggest achievement we have to consider."
Professor Shamsul Alam, an energy advisor of the Consumers Association of Bangladesh, said the development of the power sector is not possible without fixing the policy first.
Regarding the quality of electricity, Khalilur Rahman Khan, secretary at the Bangladesh Energy Regulatory Commission (BERC) said, "We do not have any standards to determine the quality of electricity. We have applied to the ministry to introduce electricity grid codes. Once it is done, we will be able to measure the power quality. Separate coding is being done for gas as well."
About the alleged plunder in the power sector, Dr Shamsul Alam, state minister of the Ministry of Planning, said, "Many people alleged incidents of looting in the power sector. The government is subsidising the power sector, how can there be looting? No such thing is happening here."
He further said that the LNG supply system has been developed to reduce pressure on the country's gas reserves.