- The government aims to increase energy capacity to 40,000 MW by 2030 and 60,000 MW by 2041
- Bangladesh wants to import 9,000 MW of electricity from neighboring countries
- The energy sector is the largest contributor to Bangladesh’s greenhouse gas emissions, representing 55%
- Bangladesh needs US $30 billion in investments over the next 5 years
Bangladesh has made significant progress in achieving its development goals including in the power sector, outlined in Vision 2021 and Vision 2041. The country’s power generation capacity has increased dramatically from 5,272 MW in 2009 to 22,482 MW in 2022, representing a growth of over 300%. Moreover, Bangladesh has achieved universal grid electricity coverage, a substantial improvement from only 50% coverage in 2009.
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These accomplishments are the result of various government policies, such as integrating privately operated quick rental power plants in 2010, enacting the Mineral Resource Development Act in 2012, implementing Power System Master Plans in 2010 and 2016, establishing a central agency for renewable energy, and introducing the Gas Sector Master Plan in 2017, the Rooftop Solar Policy in 2018, and the Mujib Climate Prosperity Plan.
With increased accessibility and affordability, the government is now focusing on ensuring the effectiveness and acceptance of these policies. To support this effort, Bangladesh is seeking a $30 billion investment from China in the energy sector and aims to import 9,000 MW of electricity from neighboring countries.
Chinese Investment is Key
The Asian Development Bank (ADB) reports that China is the primary financier of nearly 90% of ongoing energy projects. As of September 2021, Chinese investments in Bangladeshi coal power plants reached USD 450 million. Currently, two power plants with a total output of 1,845 MW, supported by Chinese firms, are operational.
However, China has shifted its stance and decided not to finance on climate-damaging investments. In February 2021, the Chinese embassy in Dhaka informed the Bangladesh finance ministry of their decision to withdraw from high-pollution and high-energy consumption projects, including coal mining and coal-fired power stations.
In response, Bangladesh sought to redirect USD 3.6 billion in Chinese loans initially intended for five projects, including three coal-fired power plants, for which agreements had been previously signed.
Despite China’s new policy, five coal power plants financed by Chinese state-owned enterprises are proceeding. These plants, located in Banshkhali, Barishal, Payra, Patuakhali, and Saidpur, are being constructed by SEPCOIII, Power China, CMC, Norinco International Power, and Dongsang Electric International Corporation (DEC), respectively, with a collective generation capacity of 4,460 MW.
China’s Belt and Road Initiative now presents a chance to pivot from coal to renewable energy sources. In 2020, a joint venture was formed between Bangladesh’s North-West Power Generation Company Limited and CMC for renewable energy projects, aiming to establish 450 MW of solar power and a 50 MW wind farm.
This shift aligns with Bangladesh’s commitment to generate 40% of its electricity from renewable sources by 2041. The country is moving its investments from coal, oil, and gas to cleaner energy, with Chinese investment playing a crucial role in this energy transition.
Bangladesh’s Energy Sector
The energy sector is the largest contributor to Bangladesh’s greenhouse gas emissions, representing 55%, with projections indicating an increase to over 76% by 2030.
Nasrul Hamid, the Minister for Power, Energy, and Mineral Resources, emphasized the need for substantial funding—between USD 80 to 100 billion from 2030 to 2050—to achieve the goal of sourcing 40% of electricity from renewables. Discussions are underway with international entities like China, Japan, the ADB, and the World Bank to secure this investment.
Bangladesh is in the process of adopting a new Integrated Energy-Power Sector Master Plan (IEPSMP) to transition to a low-carbon economy while maintaining energy security. This plan is set to replace the existing Power Sector Master Plan (PSMP) and is expected to be completed by the end of the year.
The nation’s current power generation capacity stands at 22,482 MW, predominantly fueled by gas (51%), followed by heavy fuel oil (28%), coal (8%), and high-speed diesel (6%). Renewable sources like hydropower and solar currently contribute a mere 1% each.
To fulfill its renewable energy ambitions, Bangladesh has outlined a phased approach spanning three decades: from 2023 to 2030, 2030 to 2040, and finally 2040 to 2050, aiming to generate 40% of its electricity from renewable sources by the mid-21st century.
Bangladesh Seeks more $30 Billion:
State Minister Nasrul Hamid suggested the creation of a dedicated team to expand investment opportunities in Bangladesh’s power and energy sector. He projected a need for US $30 billion in investments over the next five years and expressed hope for China’s increased involvement.
During a meeting with Chinese Ambassador Yao Wen, they explored various aspects of mutual interest. The ambassador acknowledged the growing cooperation between China and Bangladesh and expressed optimism for Bangladesh’s development over the next five years.
The discussions also covered China-supported initiatives, including the establishment of a lithium battery plant, semiconductor factory, electric vehicle production, battery storage systems, smart meters, solar and wind power projects, waste-to-energy conversion, and gas exploration.
Bangladesh Wants to Import 9,000 MW of Electricity from Neighbors
Bangladesh is looking to enhance its power and energy sector by importing 9,000 MW of electricity from neighboring nations, according to State Minister Nasrul Hamid. He emphasized the potential for collaboration between Bangladesh and India in this sector during a meeting with Indian High Commissioner Pranay Verma.
An impending agreement to procure 40 MW of hydropower from Nepal is expected to be finalized soon. The initiatives to import 500 MW of hydropower from Nepal and Bhutan are nearing completion, and discussions on renewable energy imports are advancing.
The state minister mentioned the possibility of negotiating electricity trade with regions like Meghalaya, Tripura, or Assam. The final stages of importing LNG or gas through H-Energy are also underway. Nasrul emphasized the importance of a dedicated transmission line from Nepal to Bangladesh to expedite power trade, which would also benefit India.
Nasrul proposed exploring joint ventures in air-fuel and addressing the rising demand for LPG, including opportunities for Bangladeshi private investors in India.
High Commissioner Verma acknowledged the strengthening partnership between India and Bangladesh in the power and energy sector, noting the ongoing import of hydropower from Nepal to Bangladesh and India’s import of approximately 600 MW of electricity from Nepal.
In conclusion, Bangladesh’s energy sector has made commendable strides towards ensuring energy security, diversifying its energy sources, and achieving significant milestones like 100% electricity coverage. The focus on sustainable energy goals and the reduction of system losses are indicative of a commitment to a more resilient and sustainable energy future. As the country continues to expand its electricity generation capacity and integrate renewable energy into its mix, it is well-positioned to meet the demands of its growing economy and population while contributing to global environmental goals.
