The rising value of electrical energy offered by impartial energy producers (IPPs) and funds for maintaining overcapacity within the system may end up in elevated energy tariffs in Bangladesh, says a brand new report by the Institute for Vitality Economics and Monetary Evaluation (IEEFA).
The electrical energy bought from IPPs accounts for greater than 50% of the Bangladesh Energy Improvement Board’s complete working bills.
The IEEFA, in its report, advisable Bangladesh to deal with grid funding and renewable sources slightly than switching from imported coal to imported liquified pure fuel (LNG).
A hike in tariffs, nevertheless, has been on the playing cards for some time.
Earlier in January, the Bangladesh Energy Improvement Board (BPDB), in a proposal to the Bangladesh Vitality Regulatory Fee (BERC) requested for a bulk energy tariff improve of as much as 64% to satisfy the growing value of energy era and purchases of imported coal, LNG and oil.
In accordance with BPDB knowledge, within the 2020-21 fiscal yr, the company spent a complete of Tk50,435crore to generate and buy electrical energy from IPPs, rental and public crops, and in imports from India.
Of this, Tk27,737crore was spent on electrical energy from IPPs, a rise from Tk17,519crore in 2019-2020.
The numerous rise in the price of electrical energy purchases from IPPs has grow to be an enormous motive for the federal government subsidies to bail out the BPDB after its losses reached a report Tk11,780crore within the 2020-21 fiscal yr, up from Tk7,440 crore within the prior yr.
On the similar time, overcapacity is eroding the BPDB’s monetary standing. Capability funds reportedly elevated to Tk13,200crore within the 2020-21 fiscal yr.
This correspondent known as the BPDB chairman various instances, however he couldn’t be reached for feedback.
Capability utilisation could drop to simply 38%
With bigger coal IPPs below building and enormous capacities of LNG-fired tasks deliberate, the BPDB’s IPP value is prone to improve considerably, mentioned the IEEFA.
In accordance with the BPDB’s newest annual report, 12,967 megawatts (MW) will likely be added to the grid after building of a brand new plant and one other 19,651MW is anticipated by the tip of 2024-2025 fiscal yr.
Over the identical interval, solely 3,990MW of previous capability is deliberate to be retired, in line with the BPDB.
Because of the big capability additions, the general energy plant utilisation will drop to simply 38% by 2024-2025 even when the ability era grows at a really excessive 12%.
The BPDB’s losses may improve spending on subsidies.
New energy grasp plan can convey reduction
The brand new Built-in Vitality and Energy Grasp Plan (IEPMP), funded by the Japan Worldwide Cooperation Company represents a chance for Bangladesh to halt the development of deliberate LNG and coal energy crops and reset the planning to offer a financially sustainable energy system for the long run.
The grasp plan focuses extra on renewable sources of energy.
“Constructing home low value clear power capability would assist enhance the eroding monetary standing of the Bangladesh Energy Improvement Board (BPDB) which is burdened by the nation’s capability over-expansion based mostly on imported fossil fuels,” mentioned Vitality analyst and writer of the IEEFA report Simon Nicholas.
“Any additional deal with imported risky fossil fuels is a warning to power shoppers in Bangladesh. Additional important and economically damaging energy tariff development is greater than probably.
“The brand new energy system grasp plan led by JICA mustn’t name for elevated imports of fossil fuels, which is able to additional injury tariffs.
“Bangladesh power shoppers are susceptible to being requested to pay large tariff will increase to cowl shortfalls being skilled by the BPDB. This isn’t sustainable, and doesn’t tackle the foundation of the issue within the energy sector.”
Bangladesh has already suffered from publicity to the price-volatile international LNG market. The price of liquified pure fuel (LNG) soared to report highs in 2021, forcing Bangladesh to pay report costs. Analysts don’t anticipate stability out there any time quickly.
Nicholas wrote that the upper renewable power ambition of SREDA and the Mujib Local weather Prosperity Plan should be mirrored within the new power and energy grasp plan.
“If Bangladesh needs to start out having fun with the advantages of low-cost renewable power as a lot of the remainder of the world is, the federal government’s bold wind and photo voltaic targets must be locked into the brand new IEPMP.”