The short, medium, and long-term solution to the power crisis

As load shedding increases in the country, the more captive power plants run, the more the problem of energy wastage will become evident. Photo: Reuters

The ongoing acute power and energy crisis has created enormous havoc in public life, industrial production, employment, and the overall economy. The government has reduced primary fuel imports to protect the forex reserve. 

On 9 October, 2022, 38 power plants were completely shut down. Only 36 plants were fully utilised, and the remaining of the 62 plants were in partial production. Peak load shedding during the night was around 2,500MW.

In this crisis, the government's sole focus is on saving foreign currency reserves by importing less primary fuel, shutting down power plants, and calling on citizens to be frugal in electricity consumption. 

But, can holding back the main sectors from 'dollar drain'  be a sustainable way forward? 

At the end of FY2019-20, the per capita electricity consumption in Bangladesh was 512 kilowatt hours. India crossed this landmark of per capita electricity consumption 20 years ago. India's current per capita electricity consumption is around 1,250 kilowatt hours. 

Bangladesh's per capita electricity consumption is 40% of India's and only 17% of the global average. In countries with low per capita electricity consumption, the opportunity for individual-level energy savings for ordinary people is actually limited. So what is the long-term solution to this crisis?

Creating integrated ecosystems for energy saving

In the short term, public transport should be increased instead of private cars, especially among administration officials and the upper class. Public buses should be made a bit more comfortable and cheaper. Intercity trains should be increased instead of long-distance buses. Dhaka metro routes should be made operational post haste. 

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The use of energy-efficient appliances in industries, businesses, and households will require incentives and tariff facilities. The use of energy-saving AC, washing machine, oven, fridge, elevator, etc, should be given tax incentives. A lower per unit bill should be offered for less electricity consumption, and higher bill ranges for different thresholds. That is, an end-to-end ecosystem has to be created to save electricity. It is impossible to save power by means of verbal calls without policy implications.

'Dollar draining' capacity charge is not sustainable  

In 14 years, Tk90,000 crore has been paid in 'dollars' as capacity charges. A clear plan is needed to get out of this unsustainable level of public subsidy. Instead of capacity charge, private generators should be asked to sell electricity at a 25-50% per unit markup, with the government guaranteeing the uninterrupted purchase of at least one-fourth or half of their electricity production capacity. These two conditions should be sufficient for the private generators to sustain, along with easy bank loans. 

Independent Power Producer contracts paid in a foreign currency, such as the dollar, are the main problem area in the power sector. As a contract with the government serves as collateral for a bank loan, the private power plant should receive payment in taka and not dollars. Private power plants are local, and giving them foreign currency payments is unreasonable. 

According to the Power Development Board (PDB) data, in the last 12 years, the PDB calculated a loss of around 1.05 lakh crores. On the other hand, the PDB will incur a loss of around 1.13 lakh cores in the current financial year and the next financial year combined.

In other words, the total loss that the government has incurred in the power sector in the last 12 years is less than what it will incur in just the next 2 years alone. The current model of capacity charge is not sustainable at all, as both capacity charge and fuel import price are basically dollar payments.

Impunity Act is a safeguard against malpractice and corruption 

In 2010, the government made a special law called the "Quick Enhancement of Electricity and Energy Supply (Special Provisions) Act, 2010." The law has been extended several times, and it currently runs until 2026. Section 9 of the Act says, "No question regarding the validity of any act done or purported to be done, any action taken or any order issued or direction given under this Act shall be raised in any court."

Defended by the Immunity Act, the power sector's per-unit purchase price and the Independent Power Producer cost model have remained beyond accountability. Including the capacity charge for idle power plants, the average annual cost per unit of some of the Independent Power Producer power plants has exceeded Tk100. The PDB's losses cannot be stopped if the Immunity Act is not scrapped.  

Shut power plants with low energy efficiency and low plant factor

Dozens of power plants run with an energy efficiency of less than 30%, meaning they burn too much fuel and produce too little electricity, putting pressure on import-dependent fuel supplies. Many power plants cannot operate continuously due to low plant factors. The other big problem is the captive power plant sector. 

Expired and extremely fuel-inefficient plants brought from abroad are a burden to the power sector. As load shedding increases in the country, the more captive power plants run, the more the problem of energy wastage will become evident.

Out of the 38 closed and 98 partially operational power plants that have good thermal efficiency, whether public or private, a plan is necessary to keep them operational. Prioritising plants with energy efficiency above 40% and plant factor above 60% will reduce fuel wastage in power generation.

Energy-unfriendly captives must be stopped 

Though Bangladesh has more than 12,000MW of electricity generation capacity sitting idle and getting paid as capacity charge, industrial electricity is expensive here, so medium-scale industrialists install their own plants. Through such means, energy usage becomes even more inefficient.

Besides high cost, there is no guarantee of an uninterrupted power supply to industries, and sudden load-shedding is disastrous for industries. Factory owners claim that the production cost of their own gas generators is only one-third of the government price. Of course, there is also the issue of gas metre tampering and bribery involved. 

The high price of grid electricity is increasing the cost of producing industrial goods. Less electricity is produced by burning more fuel in the captive sector's low-efficiency generators. A clear "industrial power" transmission, distribution, and cost-effective billing policies are much needed to stop captive fuel inefficiency.

System losses in electricity, gas and oil should be stopped

At the end of FY2019-20, the electricity system loss stood at 8.73%. Being a technical sector, system losses other than long transmission line losses, are completely unacceptable. As a small country, the loss in Bangladesh should be a maximum of 3%. 

Any system loss greater than 3% is theft. There is unreasonable system loss in the gas distribution and oil transportation sector as well. There should be a transparent work plan to save energy by stopping the theft and corruption responsible for structural system losses.

Implementation of Green Power Roadmap

According to the National Solar Energy Roadmap 2021-41 prepared under the supervision of the Sustainable And Renewable Energy Development Authority Bangladesh and United Nations Development Programme, it is possible to produce 20,000MW of green electricity in Bangladesh by 2041 in spite of the scarcity of land. On the other hand, this capacity can reach 30,000MW in a high-level solar installation model, with 5% of river basin development land, 15% of industrial rooftop land, etc.

In order to get out of dependence on energy imports, the government must undertake transparent and corruption-free implementation of the National Solar Energy Roadmap 2021-41 as a. According to the Power System Master Plan, 2016, renewable power was supposed to be at least 10% of the total capacity by 2021. 

Legalise electricity sale

Desa, Desco, Palli Bidyut, etc, which distributes electricity, should give permission and infrastructure support to companies and individuals to sell solar, wind, and biogas-based power. Individuals should be allowed to store the solar power generated through their own investment and sell the excess power to the national grid. For this, the electricity distribution network has to be made smart.

In remote areas and island areas, renewable solar and wind power generation needs to be prioritised and encouraged, instead of laying out expensive electricity transmission projects. A community grid is needed that is suitable for selling electricity generated by private investment. All tariffs on green electricity, solar panels, converters, DC power appliances, and quality batteries need to be removed. 

A bank loan model is necessary for massive home solar investments. Local battery recycling systems need to be made environment-friendly. Increasing green electricity will save foreign reserve dollars. 

Mapping industrial development plan with electricity production

There are many planned economic zones which are non-functional, but have investments in electricity transmission and distribution systems. Payra deep seaport is not feasible. New power stations at Rampal and Payra are far from the load centre. As the Matarbari deep seaport will take a long time to come into use, the power plant there will be underutilised. 

As Rooppur is also far away from the load centre, huge investment will go into the transmission line. That is, the return on huge investment is insignificant, because there is no coordination of production and circulation planning with industrial planning; these things need to be fixed.

In order to avoid the crisis of power and energy in the long term, onshore gas wells should be reformed. To increase production, offshore gas should be explored in the Bay of Bengal as a national priority. Spot market fuel purchases must be discouraged. To do so, strong diplomacy is required with regards to OPEC/OPEC+ countries for uninterrupted import of oil, gas, and coal on a large scale. National Coal policy should be finalised for use of domestic coal.

Corruption-friendly procurement process should be reformed

With the help of a wrong and short-sighted legal framework, in the name of giving work to the lowest bidder in open tender, inferior equipment, spare parts, and unwarranted machines have occupied our power sector. Hundreds of millions of dollars are spent on the sector in the name of spare parts and support systems, another major source of power sector budget wastage.

Another major problem in Bangladesh's power sector is the wrong policy of transferring skilled manpower and experienced engineers. A major problem is the lack of an automated system. Many power plants do not implement automatic generation control or free governor mode operation for automatic control. Political lobbying, government indecision, and the purchase of machinery from unqualified vendors have created major management and operations problems. 

Due to the lack of implementation of Under Frequency Relay in the power distribution network, it is also not possible to control the system automatically in most cases. There are also questions about incompetent automation consultants, poor-quality power grid modernization, and modernization projects. Slow implementation of transmission and distribution network projects is also hampering the electricity distribution success. 

Overall, the power sector is facing multiple challenges. The solution requires the implementation of intelligent, visionary, transparent, and accountable plans.

TBS Sketch of Faiz Ahmad Taiyeb

Faiz Ahmad Taiyeb B.Sc. EEE BUET, Senior Solution Architect, Vodafone Netherlands. Writer on sustainable development. Faiz has authored 'Fourth industrial revolution and Bangladesh' and '50 years of Bangladesh economy.' He can be reached at [email protected]