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Power overcapacity worsening in Bangladesh

January 20, 2021
Simon Nicholas
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Key Findings

Worsening overcapacity has significant implications for the Bangladesh Power Development Board’s finances.

Planned future reliance on expensive imported coal and LNG will raise the per unit fuel cost for thermal power.

There is significant potential for rooftop solar in Bangladesh with The Infrastructure Development Company Ltd (IDCOL) calculating that 5,000MW could be installed on the rooftops of ready-made garments, textiles and other industrial buildings.

Executive Summary

  • Bangladesh’s overall power system utilisation has fallen again in FY2019-20 to just 40%, down from 43% in the prior year (Figure 1).
  • With a further 21,000 megawatts (MW) due online before the end of 2025, under-utilisation, and hence overcapacity, is set to worsen even further.
  • Capacity payments to plants lying idle, in addition to increased reliance on imported fossil fuels, will increase the per unit cost of power generation.
  • Increased government subsidies and/or power tariffs would be the likely result. Power tariffs can now be increased multiple times per year after new legislation.
  • A key part of the solution should be a refocus on ever-cheaper renewables and improved transmission and distribution infrastructure to make better use of existing capacity.
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Bangladesh Power Capacity (MW) and Overall Capacity Utilisation (%)

Please view full report PDF for references and sources.

Simon Nicholas

Simon Nicholas is IEEFA’s Lead Energy Finance Analyst for Bangladesh, Pakistan and the global steel sector as well as Asian seaborne thermal and coking coal markets.

Simon’s focus is on the energy transition, the long-term outlooks for coal and steel as well as the need for emerging nations to establish financially sustainable power systems to support their development.

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