Private sector now a major player in power generation

Electricity generation in the country has increased from 3,268 MW in January 2009 to 11,623 MW in September 2018. One of the main reasons for this groundbreaking success is inclusion of private sector investment in power generation.

From a small number of power companies in 2009, the private sector power generation community has become large now, investing around Tk 75,000 crore till date.

It brought in new technology and installed different power plants on a fast-track basis to meet a major crisis. Tariffs offered by the private power companies for different energy segments are among the lowest in the world. For instance, captive generation by the private sector is now about 55 per cent of the electricity, while the public sector accounts for about 45 per cent (8,986 MW).

Private power generation companies not only gave the country access to cost-effective power, but also created about 10,000 direct and more than 3,00,000 indirect jobs.

The private sector is now implementing 55 projects having a capacity to generate 11,829 MW by 2021. Additionally, an additional amount of USD 50 billion is in the pipeline, among which the private sector will invest about 50 per cent by 2040.

Change in fuel mix

Installation of adequate power generation capacity without cost-effective fuel/energy will not yield fruit. In electricity generation, the cost of energy plays a very dominant role (50 per cent to 80 per cent).

The Power System Master Plan 2010 was upgraded to PSMP 2016 to facilitate an optimum energy mix. For example, in 2009, the total power generation was from gas (88 per cent), liquid fuel (6 per cent), coal (4 per cent) water (2 per cent). Currently, the mix is gas (66 per cent), liquid fuel (22 per cent), coal (2 per cent), import (8 per cent) and water (2 per cent).

The country can feel the benefits of having this varied fuel mix: now power is available almost everywhere on demand and the wheels of the economy have gained significant momentum. In gas and liquid fuel-based power plants, the private sector currently has a significant capacity. Apparently, inclusion of liquid fuel-based power generation may have seemed expensive, but the opportunity cost of undelivered power was around Tk. 29/kwh around 2009. So, reaching power to the consumers was more important. Also, the average cost of such power (HFO and diesel) was not more than Tk. 9–10.

Even though coal-based power plants are yet to be added in numbers to the national capacity, Bangladesh is getting cheap coal-based power by importing electricity from India. It is well known that coal-based power is very cheap and power imported from India bears a tariff reflective of that. In that context, coal-based power may be considered currently at 10 per cent.

Power from coal and liquid fuel may have some detrimental effect on the environment. But solutions are being developed and investments made to ensure minimal harm to the environment.

Furthermore, renewable energy is also being promoted and planned to be added to the grid in a large capacity. Bangladesh has already become the largest user of the solar home system (SHS) in the world.

A Gas Development Fund was created in 2009 to ensure exploration of oil/gas through BAPEX. The Energy Security Fund was created in 2015 to ensure the availability of sustainable energy in the long term. As a result of these initiatives, gas production capacity in the country has increased from 1,744 million cft in 2009 to 2,750 cft in 2018.

The Bhola gas field has been found recently and is likely to become the largest gas field in the country. LNG imports have started with the participation of private sector investment.

High-quality distribution & transmission

Installation of power transmission and distribution lines have been significantly increased, giving access to electricity to about 90 per cent of the population in 2018, against 47 per cent in 2009. Within 2021, everyone in the country is expected to have access to electricity. Currently, there are about 3.11 crore customers enjoying power; the number was 1.08 crore in 2009.

A total of approximately 174,000 km of new distribution lines have been built in the last nine years, taking the total current length to 450,000 km. Moreover, system loss in power distribution has been reduced to less than 10 per cent, compared to almost 14.5 per cent in 2009. In 2008-09, aging of receivables from consumers was 2.44 months, while now it has improved to 1.89 months.

One of the primary successes of the power transmission sector in the last 10 years has been creation of a stable 230 KV power backbone network. Earlier, this was dependent on 132 KV, resulting in high power loss and low voltage in the transmission of power over long distances. Through this initiative, among others, the transmission loss has been reduced by almost 14 per cent.

From minimal higher voltage lines/grid substations, the country now has 3,325 km of 230 KV and 560 km 400 KV transmission lines with 11,485 MVA of 230/132 KV grid substations, 1,560 MVA of 400/230 KV grid substations and 650 MVA 400/132 KV substations. The country also has 6,551 km of 132 KV transmission lines along with 17,298 MVA of 132KV/33KV substations. Overall, the power grid can now handle more than 15,000 MW of power.

Another 38,577 MVA of substations and 5,984 km of transmission lines are in various stages of implementation with a view to catering to the 2021 vision of transmitting 24,000 MW of power.

In both power transmission and distribution sectors, a large part of the products are locally manufactured, thus improving the local capacity to support such a behemoth rollout and also saving valuable foreign currency. This has been possible due to a strong patronage of the power and energy ministry and relevant distribution authorities/companies. Additionally, 50,000 new jobs have been generated by the engineering products manufacturing units.

It may not be possible to meet the requirements of Vision 2021, 2030, and 2040 in power transmission and distribution only through goverment/public initiatives. Hence, policies are being currently formulated to draw private investment in these segments to replicate the massive success attained through this initiative in power generation. In addition, policy is being formed so that power producers can sell electricity directly to consumers.

 

Private sector now a major player in power generation

Electricity generation in the country has increased from 3,268 MW in January 2009 to 11,623 MW in September 2018. One of the main reasons for this groundbreaking success is inclusion of private sector investment in power generation. From a small number of power companies in 2009, the private sector power generation community has become large now, investing around Tk 75,000 crore till date. It brought in new technology and installed different power plants on a fast-track basis to meet a major crisis. Tariffs offered by the private power companies for different energy segments are among the lowest in the world. For instance, captive generation by the private sector is now about 55 per cent of the electricity, while the public sector accounts for about 45 per cent (8,986 MW). Private power generation companies not only gave the country access to cost-effective power, but also created about 10,000 direct and more than 3,00,000 indirect jobs. The private sector is now implementing 55 projects having a capacity to generate 11,829 MW by 2021. Additionally, an additional amount of USD 50 billion is in the pipeline, among which the private sector will invest about 50 per cent by 2040. Change in fuel mix Installation of adequate power generation capacity without cost-effective fuel/energy will not yield fruit. In electricity generation, the cost of energy plays a very dominant role (50 per cent to 80 per cent). The Power System Master Plan 2010 was upgraded to PSMP 2016 to facilitate an optimum energy mix. For example, in 2009, the total power generation was from gas (88 per cent), liquid fuel (6 per cent), coal (4 per cent) water (2 per cent). Currently, the mix is gas (66 per cent), liquid fuel (22 per cent), coal (2 per cent), import (8 per cent) and water (2 per cent). The country can feel the benefits of having this varied fuel mix: now power is available almost everywhere on demand and the wheels of the economy have gained significant momentum. In gas and liquid fuel-based power plants, the private sector currently has a significant capacity. Apparently, inclusion of liquid fuel-based power generation may have seemed expensive, but the opportunity cost of undelivered power was around Tk. 29/kwh around 2009. So, reaching power to the consumers was more important. Also, the average cost of such power (HFO and diesel) was not more than Tk. 910. Even though coal-based power plants are yet to be added in numbers to the national capacity, Bangladesh is getting cheap coal-based power by importing electricity from India. It is well known that coal-based power is very cheap and power imported from India bears a tariff reflective of that. In that context, coal-based power may be considered currently at 10 per cent. Power from coal and liquid fuel may have some detrimental effect on the environment. But solutions are being developed and investments made to ensure minimal harm to the environment. Furthermore, renewable energy is also being promoted and planned to be added to the grid in a large capacity. Bangladesh has already become the largest user of the solar home system (SHS) in the world. A Gas Development Fund was created in 2009 to ensure exploration of oil/gas through BAPEX. The Energy Security Fund was created in 2015 to ensure the availability of sustainable energy in the long term. As a result of these initiatives, gas production capacity in the country has increased from 1,744 million cft in 2009 to 2,750 cft in 2018. The Bhola gas field has been found recently and is likely to become the largest gas field in the country. LNG imports have started with the participation of private sector investment. High-quality distribution transmission Installation of power transmission and distribution lines have been significantly increased, giving access to electricity to about 90 per cent of the population in 2018, against 47 per cent in 2009. Within 2021, everyone in the country is expected to have access to electricity. Currently, there are about 3.11 crore customers enjoying power; the number was 1.08 crore in 2009. A total of approximately 174,000 km of new distribution lines have been built in the last nine years, taking the total current length to 450,000 km. Moreover, system loss in power distribution has been reduced to less than 10 per cent, compared to almost 14.5 per cent in 2009. In 2008-09, aging of receivables from consumers was 2.44 months, while now it has improved to 1.89 months. One of the primary successes of the power transmission sector in the last 10 years has been creation of a stable 230 KV power backbone network. Earlier, this was dependent on 132 KV, resulting in high power loss and low voltage in the transmission of power over long distances. Through this initiative, among others, the transmission loss has been reduced by almost 14 per cent. From minimal higher voltage lines/grid substations, the country now has 3,325 km of 230 KV and 560 km 400 KV transmission lines with 11,485 MVA of 230/132 KV grid substations, 1,560 MVA of 400/230 KV grid substations and 650 MVA 400/132 KV substations. The country also has 6,551 km of 132 KV transmission lines along with 17,298 MVA of 132KV/33KV substations. Overall, the power grid can now handle more than 15,000 MW of power. Another 38,577 MVA of substations and 5,984 km of transmission lines are in various stages of implementation with a view to catering to the 2021 vision of transmitting 24,000 MW of power. In both power transmission and distribution sectors, a large part of the products are locally manufactured, thus improving the local capacity to support such a behemoth rollout and also saving valuable foreign currency. This has been possible due to a strong patronage of the power and energy ministry and relevant distribution authorities/companies. Additionally, 50,000 new jobs have been generated by the engineering products manufacturing units. It may not be possible to meet the requirements of Vision 2021, 2030, and 2040 in power transmission and distribution only through goverment/public initiatives. Hence, policies are being currently formulated to draw private investment in these segments to replicate the massive success attained through this initiative in power generation. In addition, policy is being formed so that power producers can sell electricity directly to consumers.