August 21, 2020 Read More →

Excess power capacity continues to plague Bangladesh

Energy & Power Magazine:

The power sector continued to face criticism. Electricity is indispensable for development, but the excess generation capacity appears to have become a liability, especially in the eyes of the consumers’ rights activists. Notwithstanding, the necessity of introducing the private sector in power generation and the growth of generation capacity has been unplanned. Consequently, the cost of generation is increasing due to payments of rents and capacity charges for keeping the generation capacity unutilized. The consumers are bearing the burnt of this. On the other hand, the energy sector researchers and academics observed that the present situation has been created due to planning the generation growth based on projected economic growth. The demand grew in domestic and commercial sectors, but remained virtually static in the industrial sector over the last four years. The unutilized capacity progressively increased. There is another school of thought that the already operational industries could not be brought under the grid power coverage for not very reliable supply and comparatively higher tariff than that of the cost of captive power. However, Bangladesh Power Development Board (BPDB) analysis evidenced that the generation capacity increased by 444% over the past 19 years, but the demand growth in industrial sector is 245% only. The demand growth in commercial and domestic sector is 853% and 620% respectively. USA-based research organization, Institute For Energy Economics Financial Analysis (IEEFA) claimed that if the PSMP 2016 is pursued, 58% of the generation capacity would remain unutilized in 2030. BPDB, however, contested these observations as unrealistic and claimed that these were not based on objective information.

During the COVID-19 pandemic, half of the generation capacity remains idle. The Power Division thought that the demand during this summer could grow to 14,000-15,000 MW had there been no pandemic. In that case, it could be extremely difficult to manage that demand with the present effective generation capacity. The pandemic, that caused an economic stagnation of Bangladesh alongside global recession, has forced the authorities to review the power generation plan. Some academics and civil society representatives have advised the government for slowing down the implementation of the under-construction mega power generation projects. Advice is also there to suspend other projects in the pipeline. Sources close to BPDB told the EP that there is no scope for paying heed to such advises before reviewing the PSMP 2016. Moreover, slowing down execution of the ongoing projects would push up the cost.

[Mollah Amzad Hossain]

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