Bangladesh Takes a U-Turn in Energy by Cancelling Plans for 10 Coal-Fired Power Plants

published: 2021-07-23 9:30 | editor: | category: News

Bangladesh has recently announced the cancellation of plans for 10 large coal-fired power plants in order to accelerate the development of renewable energy in the country.

Nasrul Hamid, the State Minister for Power, Energy and Mineral Resources, commented that the particular decision was finalized after taking into account the progress that energy technology has made, as well as the suspension on coal-fired power generation by dozens of countries based on eco-protection reasons. Bangladesh has also planned to elevate the ratio of renewable energy to 40% by 2041. Hamid further commented that the country will be planning for the import of hydroelectricity from Nepal and Bhutan in the future.

The 10 coal-fired power plants that was scrapped total to 8,451MW in capacity. One of them is the ambitious project announced by the current Prime Minister Sheikh Hasina in January 2009 that is worth several billions of US dollars. The other "scrapped" plants include a 1,320MW power plant planned for the relatively fragile Maheshkhali Island, as well as a 1,200MW power plant planned with Japan.

This outcome is certainly not surprising since Bangladesh began the planning consisting of a new inspection on 26 developing coal-fired power plants and a preservation of merely 3 units during August 2020. Hamid stated during the online seminar then that coal-firing will only occupy 5GW among the 40-41 planned energy capacity, and the country is currently pondering on a full extrication of coal-fired power generation.

Coal-fired power generation is no longer an affordable power generation system for Bangladesh. Mohammad Hossain, the Director of Power Cell, urges a pristine energy project for the country, and pointed out that coal-fired power is not a cheap option since imported prices are getting more expensive.

The low cost of renewable energy has been generating enormous pressure to coal, whereas the recent plummet in petroleum and natural gas prices has also derived price competitiveness for these two fossil fuels. The once ambitious coal-firing projects of the country is now introducing a significant level of burden amidst national lockdowns and scission of supply chains under the pandemic, since the Bangladesh Power Development Board (BPDB) has to also provide a subsidy for plant operators that do not fully utilize coal-fired power generation through the “capacity payment” method.

Hence, Bangladesh merely achieved a utilization of 43% in coal-fired power generation between the fiscal year of 2018 and 2019, and has to pay plant operators US$1.1 billion. The MPEMR has paid 1/3 of its budget to power plants that have lost money due to idling between 2020 and 2021.

Most of the coal-fired power plants in Bangladesh are located in coastal areas; in those areas, not only is the population dense, but there are also important eco-protection regions. Sharif Jamil, the Secretary of the Poribesh Bachao Andolon (POBA), proposed to cancel the coal-fired power plant that is located at the largest mangrove in the world, and has been thanking the government for taking the courageous first step.

Possessing a total capacity of 1,320MW, the specific coal-fired power plant costs US$1.7 billion, and is able to provide a prominent degree of power for the rapidly developing Bangladesh; however, it is located at the largest mangrove Subdarbans that spans across India and Bangladesh, which is also an important habitat for Bengal tigers. This has resulted in protests from local residents and environmental groups. The United Nations Educational, Scientific and Cultural Organization commented in 2016 that factory pollution is very likely to create irreversible damages to Sundarbans.

Coal-firing is not necessarily the primary power generation source for Bangladesh. The country currently has a total installed capacity of 19,000MW, of which 70% is occupied by natural gas power plants, followed by renewable energy such as oil-firing, hydroelectricity, biofuel, solar, and wind. However, the demand for power is only going to increase for developing countries, and Bangladesh hopes to expand on the development of renewable energy in the current phase, alongside a continuous investment on natural gas.

Most of the power plants in Bangladesh work with China, Japan, and India. Thus, any changes to the energy policy of the country will also generate attention. Among the countries that are working with Bangladesh, China dominates the engineering, procurement and construction of the power plants, as well as the equity investment market. Companies that have signed the most EPC contracts of coal-fired power plants with Bangladesh include China Power Investment Corporation, China Energy Engineering Group, and NEPC. Chinese companies have participated in contracts equivalent to 16.5GW, followed by Japanese companies as the second largest EPC contractor at merely 2.4GW.

 (Cover photo source: pixabay)

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