The spot market LNG imports could cost Bangladesh about $11 billion between 2022 and 2024, whereas solar could reduce these imports by 25% and save the country $2.7 billion, according to the global energy think tank Ember.
Talking about the feasibility of solar, Ember said that India is currently building solar power plants at an average cost of $560 million/GW.
"Even if such projects cost 50% more in Bangladesh and if we assume flexibility and grid augmentation to cost double the overall project cost, solar projects/plants that can produce about 6.5 GW electricity could still be installed with the same $11 billion, which Bangladesh might have to spend on spot market LNG purchases in just 3 years," reads the report.
Ember's Data Explorer shows that Bangladesh's electricity demand grew 8% on average annually in the last decade; about 62% of which was met with gas power.
To keep up with the demand, the country started importing LNG from 2018-2019 and eventually started purchasing LNG from the spot market in 2020.
By contrast, renewable energy generation saw only marginal growth and accounted for just 1% of Bangladesh's total power generation in 2021.
Ember's analysis finds that under current plans, Bangladesh could spend $11 billion between 2022 and 2024 just on spot market LNG imports to keep up with its growing electricity demand, weakening the country's energy security. This number could be even higher if Bangladesh's spot LNG imports continue to increase as per the trend in the recent year.
However, following the global energy price volatility, Bangladesh has postponed importing LNG from spot market since mid-July of this year in order to reduce the forex expenditure.
At present the country is importing LNG under long term contract which has dragged down the gas supply by 200mmcf from the total national supply of 3000mmcf per day.
Meanwhile, referring to the The Mujib Climate Prosperity Plan, Ember said that had this plan been fully implemented, additional solar generation could have reduced these imports by 25% between 2022 and 2024, saving about $2.7 billion.
Ember's Senior Electricity Policy Analyst Aditya Lolla said, "Bangladesh can turn the current power crisis caused by the spiralling gas prices into an opportunity. Redirecting its efforts to ramp up renewable energy capacity and grid augmentation investments now can solve so many problems. It will reduce the country's reliance on expensive LNG imports, offer protection from global fossil energy price fluctuations, reduce the fiscal burden on the government, improve overall energy security and place Bangladesh in a stronger position in climate negotiations."
What is clear from the current crisis is that Bangladesh needs to diversify its energy mix in a more sustainable way. Pivoting to renewable energy will decrease energy costs and boost energy security, reads the Ember report.
Ember's Electricity Analyst Dr Achmed Edianto said, "Renewable energy, especially solar, represents a low-risk diversification option when compared to other fossil energy sources. Once installed, domestic renewables offer Bangladesh control over its energy and protection from global market volatility."
The report reads that a practical breakthrough is required to allow the renewable market to grow. For this, the government needs to address various supply-side issues such as insufficient grid infrastructure, lack of flexible capacity to accommodate rising outputs from variable renewable energy, and oversupply in the domestic electricity market.