Bangladesh, with its 160 million

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1 Energetica India Bangladesh Energy Overview The article shows the picture of the power sector in Bangladesh. It looks at the sector challenges, the government policies and expected power trends in the country. Bangladesh, with its 160 million people in a land mass of 147,570sq km is an emerging economy of South Asia. Sustained economic growth over the last decade has resulted in a considerable high electricity demand. However, the demand has not been met due to inadequate generation addition in the past. Load shedding had been increased. Moreover, outstripping electricity demandsupply gap has been constraining further economic progress as required to move ahead middle class economy. The Bangladesh government has already declared its vision for power sector with an objective to generate electricity for all. Power System Master Plan 2010 (PSMP 2010) In order to develop the Bangladesh power sector, the government had put in place a Power Sector Master Plan (PSMP) in The PSMP 2005 was mainly based on gas with the perception that Bangladesh has abundance of gas reserve. But the reality was not that, as such even the existing gas based power plants could not be operated due to the shortage of adequate gas pressure and gas reserve is alarmingly depleting. This made the government come up with a new PSMP 2010 with a vision to provide electricity for all by The new PSMP 2010 considered coal as dominant primary fuel for the attainment of stable power supply up to the year 2030 in consideration of the diversification of fuel resources. The PSMP 2010 included an optimum power development plan and identification of the potential power plant sites based on the fuel diversification study. It was developed with fundamental conditions of the development e.g. demand forecast, procurement of primary energy resources, optimum power development plan, future optimum power supply structure including the positioning of gas-fired power plants, and so on. The fundamental objective was also to attain stable power supply by achieving the 3Es i.e, Economic Growth, Energy Security and Environmental Protection simultaneously. According to the Master Plan the forecasted demand would be 19,000 MW in 2021 and 34,000 MW in To meet this demand the generation capacity should be 39,000 MW in Considering the fuel diversification issue, the PSMP 2010 aimed to acquire the fuel composition ratio to be coal 50% (30% domestic coal and 20% imported coal), natural gas 25% (including LNG), 5% liquid fuel and 20% nuclear including renewable and cross-border trade. However, domestic energy supplies are not enough to fulfill the rapid demand growth for electricity and natural gas, and so it became necessary to tap into other power sources from abroad. In order to achieve the said target the PSMP 2010 addressed the following issues: 1. Construction of imported coal power station 2. Introduction of LNG facilities 3. Construction of the oil fired power station 4. Import the electricity generated by hydro power from the neighbouring countries or joint development 5. Introducing a high efficient power supply and low CO 2 emission technology 6. Improving 10 points thermal efficiency on average The PSMP 2010 recommended the revision of tariff structure to recover main- 4

2 tenance costs and future investment for plant and equipment due to the fact that the prevailing tariff did not envisage funding for neither appropriate maintenance nor future system expansion. While the prevailing tariff policy adheres to the cost reflection, it was also recommended that the power development surcharge into the power tariff be introduced for the purpose of funding the development of the power system and/or energy saving projects. PSMP 2010 recommended to promote private investment and develop an environment that allows private funding. The aggregated investments for the development of the generation, transmission and related facilities are found to be at Taka 4.8 trillion (US$ 69.5 billion). The annual average of the investment amounts to Taka 241 billion (US$ 3.5 billion). The government fully recognizes the fact that public sector investment alone is not sufficient to achieve its target and has aimed at mobilizing resources from the private sector investments. The government has been promoting the development of infrastructure through the promotion of Public-Private Partnership (PPP) as the policy to develop public services via private sector investment. The Master Plan as a whole, requires an annual allocation of Taka 241 billion and the amount calculated for future availability covers only 51% of the total requirement, while the remaining 49% has yet to be identified in its funding source. It is imperative that the funding source needs to be expanded and efforts should be made to increase the funding volume from each of the funding sources to fill the gap. In addition to what has been described of the conventional Sources of funds, funding can be sought to the mechanisms such as Global Environment Facility (GEF) and Clean Development Mechanism (CDM) established for protection of the global climate. Generation Plan of Bangladesh s Power Sector Though the power sector in Bangladesh has witnessed a few success stories, there exists gap between what s been planned versus what the power sector has been able to deliver. The demand for electricity is increasing rapidly with the improvement Installed Capacity of BPDB Power Plants as on February 2014 Unit Type Capacity(Unit) Total(%) Coal 250 MW 2,44% Gas 6615 MW 64,59% Heavy Fuel Oil High Speed Diesel 1963 MW 19,17% 683 MW 6,67% Hydro 230 MW 2,25% Imported 500 MW 4,88% Total MW 100% Tabl2 1. BPDB - Bangladesh Power Development Board. of living standard, increase of agricultural production, progress of industries as well as overall development of the country. Power Generation Scenario In Bangladesh Bangladesh as a country has faced severe power crisis which has compelled the State to enter into contractual agreements for high-cost temporary solution, such as oil based rental and public sector peaking power plants on an emergency basis.; thereby resulting in fiscal pressure. With a power sector which is almost dependent on natural-gas fired generation (89.22%), the country is confronting a simultaneous shortage of natural gas and electricity. Nearly 800 MW of power could not be availed from the power plants due to shortage of gas supply. Other fuels for generating low-cost, base-load electricity, such as coal, or large hydropower, are not readily available and Government has no option but to go for fuel diversity option for power generation. Table 2. Table 3. Steps have been taken by government to generate 7,000 MW by 2013 and 13,000 MW by MW of power (as of September, 2013) has been added to the grid. The plan suggested to go for fuel-mixed option, which should be domestic coal 30%, imported coal 20 %, natural gas (including LNG) 25%, liquid fuel 5%, nuclear, renewable energy and power import 20%. In line with the Power system Master Plan 2010, an interim generation addition plan up to 2018 has been prepared, which is as seen in tables 2, 3. Short, Medium and Long Term Plans The Government has undertaken some short term, medium and long term plans to make electricity available to the country. Under the short term plan, rental power plants will be installed using liquid fuels/ gas and capable to produce electricity within months. Total 1653 MW was installed by this time from rental power plants. Under the medium term plan, initiatives have been taken to set up power plants with a total generation capacity of 11,497 MW. The plants are mainly coal based; some are gas and oil based. In the long term plan, some big coal fired plants will be set up, one will be in Khulna and other will be in Chittagong, each of having the capacity of 1300 MW. Some MW gas based power plants will be set up in Bibiana, Meghnaghat, Ashugonj, Sirangonj and in Ghorashal. Calendar Year Wise Generation Addition program (From 2013 to 2018) In MW YEAR 2013 (MW) 2014 (MW) 2015 (MW) 2016 (MW) 2017 (MW) 2018 (MW) TOTAL (MW) Public Private Power Import Total Plants Commissioned During 2009 September 2013 YEAR 2009 (MW) 2010 (MW) 2011 (MW) 2012 (MW) 2013 (MW) TOTAL (MW) Public Private Q. Rental Total

3 A total of 38,229 Million-kilowatt hour (MkWh) net energy was generated during Public sector power plant generated 47% while private sector generated 53% of total net generation. The share of gas, hydro, coal and oil based energy generation was 78.12%, 2.34%, 3.02% and 16.51% respectively. Power Distribution Plan Bangladesh saw a number of distribution entities taking shape as a result of reforms, restructuring and corporatization process of Bangladesh power sector. The distribution entities were formed with the objective of bringing commercial environment including increase of efficiency, accountability and dynamism with the aim of reaching electricity to all citizens by Presently the following five organizations are responsible for the distribution of power in the country: Bangladesh Power Development Board (BPDB) 7. Rural Electrification Board (REB) 8. Dhaka Power Distribution Company (DPDC) 9. Dhaka Electric Supply Company (DESCO) 10. West Zone Power Distribution Company (WZPDC) Some Recent initiatives to improve power distribution in Bangladesh include: Power System Interface Meter At present the government has taken massive measures to reduce system loss and increase customer satisfaction. Under this project 409 interface meters have been installed at all generating stations throughout the country and Dhaka distribution zone and transmission network at 230KV, 132KV and 33KV level. The interface meters have been used as billing meters. This will be extremely beneficial for the energy auditing system. Operator s performance will also be enhanced significantly and accountability and transparency will be established in the energy auditing system. Remote Area Power Supply System (RAPSS) A part of the population lives in remote areas which are far away from existing grid line and sometimes isolated from the main land. Considering this the government has identified private sector participation as an important requirement. Under the RAPSS concept, private investor will be given an area (the RAPSS Area) for the development, operation and maintenance of the electricity distribution and retail supply system, including generation as a utility for a period of 20 years. The government has taken initiatives to establish solar minigrid for remote off-grid area under RAPSS where grid expansion is not planned for the next 15 to 20 years. Pre Paid Meter With an aim to improve operational efficiencies, reduce financial risks and enhance customer services, Bangladesh Power Development Board [BPDB] had installed nearly 46,000 pre paid meter in Chittagong, Bogra, Sylhet and Sirajgonj area. Due to the success of the pre paid meter, the government has planned to install this system all around the country. Renewable Energy in Bangladesh In the roadmap set by the State for country s power sector, renewable energy has been given due importance. Power generation in Bangladesh was mono-fuel dependent, i.e. indigenous natural gas since 2009 considering its apparent huge availability. About 89% of generated power comes from natural gas and the rest is from liquid fuel, coal and hydropower. The present share of renewable energy is only 0.5%. However, in recent years, it was evident that actual scenario is other way round and adequate supply of natural gas has been at stake due to depleting existing gas reserves and non-exploration of new gas reserves. Development of renewable energy is one of the important strategies adopted as part of Fuel Diversification Program. Under the existing generation scenario renewable energy has a very small share to the total generation. However, under the changed perspective renewable energy would have a significant contribution given the global climate change scenario and carbon trading prospect. The government has taken a systematic approach towards renewable energy development with initiatives including development of relevant policy and institutional development. Renewable Energy Policy Renewable Energy Policy, brought about in 2008, to facilitate both public and private sector investment in renewable energy projects to substitute indigenous nonrenewable energy supplies and scale up contributions of existing renewable energy based electricity productions. The Policy envisions 5% of total generation from renewable sources by 2015 and 10% of the same by Institutional Development Establishment of a nodal agency, i.e. Sustainable Energy Development Authority (SEDA) as envisioned in the Renewable Energy Policy is underway. For the interim period and to carry ahead initial formation activities of SEDA, a wing under leadership of an Additional Secretary of the Government has been set up. With governmental institutional support, the expectations are that the Renewable Energy Development Program will gain momentum. Government Power Utilities like Bangladesh Power Development Board (BPDB), Rural Electrification Board (REB), Local Government Agency like Local Government Engineering Directorate (LGED) and a significant number of Private Sector agencies including NGOs are involved in renewable energy development. Noted Public Universities and their affiliated Institutes are involved in research and development of Renewable Energy Applications. 6

4 Renewable Energy Potential in Bangladesh Bangladesh is hoped to have enormous potentiality in renewable energy development. Some of the areas like solar PV, the potential of development is already proven. Bangladesh has fitting geographical condition for solar power. Bangladesh receives an average daily solar radiation of kwh/m 2. Solar photovoltaic (PV) are gaining acceptance for providing electricity to households and small businesses in rural areas. Development of off-grid solar home solutions has achieved international benchmark. According to a survey, there is an existing market size of 1 million households for Solar Home Systems (SHS) on a feefor-service basis in the off-grid areas of Bangladesh. At present the national grid is serving only 50% of the nearly 10,000 rural markets and commercial centres in the country which are excellent market for centralized solar photovoltaic plants. Throughout the country, different government administrative offices, NGO offices, Health Centres, Schools, banks, police stations etc are functioning. In the off-grid locations, these offices are either using traditional means (lantern, candles, kerosene wick lamps etc.) or operating their own diesel gensets. However, potential of other renewable resources is still at the exploration stage. Potential of Wind Energy is mainly in coastal areas and offshore islands and to determine extent of potential wind resource mapping project is in process. Some of the development partners and companies come forward for wind mapping in different parts of the country. Bangladesh has strong potential for biomass gasification based electricity. More common biomass resources available in the country are rice husk, crop residue, wood, jute stick, animal waste, municipal waste, sugarcane bagasse etc. Exploration of these resources for electricity generation is still at preliminary stage. Potentials for utilizing biogas technologies derived mainly from animal, kitchen and municipal wastes may be one of the promising renewable energy resources for Bangladesh. Micro hydro and mini hydro have limited potential in Bangladesh with exception of Chittagong Hill Tracts. Hydropower assessments have identified some possible sites Table 4. Resources Solar Wind Hydro Domestic Biogas System Rice Husk based Biomass gasification Power Plant SHS Table 5. Cattle waste based Biogas power plants Category Other Solar PV Applications including Solar Irrigation Wind Energy Biomass based electricity Biogas based electricity Total from 10 kw to 5 MW implementation of which is still at large. Other renewable energy sources include bio-fuels, gasohol, geothermal, river current, wave and tidal energy. Potentialities of these resources are yet to be explored. Installed Capacity of Renewable Energy Government utilities are involved in large scale grid connected renewable energy based power project development. On the other hand, private sector is involved with off-grid home-based renewable energy solutions. The first significant PV-based rural electrification programme was the Norshingdi project initiated with financial support from France. Since the introduction of SHS in 1996 it has become now the biggest renewable energy program in Bangladesh so far installed 900,000 units and ever increasing due to an integrated program undertaken by the government through its financial institution, IDCOL. IDCOL s program is considered as a successful model for installation of SHSs in the world. Till now, national capacity of renewable energy based power is approx. 50 MW as shown in table 5. In a developing country like Bangladesh where meeting generation shortage is the primary priority, least cost generation technologies always rule the generation planning. Unfortunately, renewable energy cannot compete to achieve grid parity at the moment. Government incentives like FiT can enhance the development process, but it is always difficult to source fund for such incentives especially under present tariff rationalization structure. Only a comprehensive large scale program with support to buy-down the cost of intervention can pave the way for Renewable Energy development. Renewable Energy Development Program In line with the Renewable Energy Policy, the government has plans to develop at least 500 MW power from renewable energy by Expected Public Sector Participation in program is: Solar Wind Total Potential Enormous Resource mapping required Limited potential for micro or mini hydro (max. 5 MW). Est. hydro potential: approx. 500 MW 8.6 Million Cubic Meter of Biogas 300 MW considering 2 kg of husk consumption per kwh 350 MW considering m 3 of biogas consumption per kwh. Achievement 45 MW 1 MW 2 MW <1 MW 1 MW 50 MW Total Capacity 25 MW 235 MW 260 MW Recent Initiatives in Renewable Energy: 1. Govt. has exempted income tax for next 5 years from commercial production from renewable energy MW of wind power will be generated in the off-shore area of Anwara, Chittagong in IPP model; tendering is under process 3. Power Development Board [PDB] has undertaken a project in a remote area Sullah to provide 600kW solar 7

5 power under Climate mitigation programme. 4. Rural Electrification Board [REB] has taken project for Solar Irrigation System. 40 irrigation pumps will be brought under solar power under this project. 5. PDB and REB are distributing Solar Home System (SHS) to the people living in the off-grid areas. 6. PDB has already installed nearly 11 KW solar power to the CHT area, nearly Capacity addition in MW Commercial Solar Projects 340 Social Sector Solar Projects 160 Total MW 500 Table 6. Capacity addition in MW Solar Irrigation 150 Solar Mini Grid 25 Solar Park 135 Solar Roof-top Residential & Commercial Bldgs 10 Industrial Bldgs 20 Total MW 340 Table 7. Capacity addition in MW Solar electrification in Health Centres 50 Solar electrification in Remote Educational Insitutions 40 Solar electrification at Union e-centres 7 Solar electrification at Religious Establishment 12 Solar electrification at Remote Railway Stations 10 Solar PV System in Government & Semi-Government Offices 41 Total MW 160 Table W solar power in Angorpot and Dahagram Chitmahal Area and installed 115W at their office building. 7. Solar PV with capacity of 21.2 KW has been installed at the Hon ble Prime Minister s office as a demonstration programme. 8. Nearly 10MW solar plant will be installed by PDB in Sarihabari (2-4 MW), Rigional Training Office, Rajshahi (1 MW), Rajabarihat, Godagari (2-4 MW) in IPP model. Preparation of tender documents is underway. The Bangladesh Government has also recently initiated 500MW Solar power programme with the inspiration and support of Asian Development Bank. The strategy of the mission is to install 500MW solar power by The government will encourage private sector involvement in the sector; with approximately 340MW for private sector. Solar power is the most potential source among the renewable energy resources in Bangladesh. This initiative of Bangladesh Government could become a landmark success story on how government s commitment in combination with strong support from Development Partner could achieve the targeted renewable energy development in a developing country. Under Commercial Solar Projects; the categories are (see table 7). Under Social Sector; the categories are (see table 8) 7 8