Bangladesh has recently approved the Integrated Energy and Power Master Plan (IEPMP) in November 2023, which aims to drive the country’s energy and power sector development through 2050. While having a long-term plan provides policy certainty, there are concerns that the IEPMP overlooks certain key factors such as overcapacity, the role of renewable energy, and risks associated with unproven and expensive technologies and fuels.
The Bangladesh Power Development Board’s (BPDB) latest annual report reveals that its development plan already differs from the IEPMP’s short-term demand projection. Additionally, the IEPMP assumes that renewable energy, like solar and wind, is intermittent and requires additional reserve margin, which could lead to increased power system overcapacity and inefficiency. Moreover, the utilization of unproven and costly technologies and fuels in the mid- to long-term could further harm the financial health of the power sector.
However, since the IEPMP is a living document, it can be updated in the future based on the country’s needs and relevance. This provides an opportunity to address the concerns and make necessary adjustments.
In terms of power system overcapacity, the IEPMP projects that the country’s peak power demand will reach 27.1 gigawatts (GW) in 2030, with a 7% annual growth rate. To meet this demand, the IEPMP estimates the need for an installed power capacity of 35.4GW, including a 31% reserve margin. However, the BPDB’s annual report indicates that under-construction and upcoming power plants will result in a combined installed capacity of 45.32GW before 2030. Even after phasing out old power plants, the installed capacity will exceed the IEPMP’s estimate by 4.22GW. This will lead to a higher reserve margin of 46%, which is significantly higher than what the IEPMP considers. Furthermore, if projects currently in the tendering and contracting stages are commissioned before 2030, the reserve margin will increase even further.
The overcapacity issue is a cause for concern as it reflects inefficiency rather than prudence, impacting the financial health of the power sector. Streamlining the BPDB’s development plan by reducing the high installed capacity to a more realistic level would be an appropriate solution. It is worth noting that there is no urgent need to rapidly expand the system capacity, as the maximum demand recorded last summer was 16.22GW, significantly lower than the current installed capacity of 25.93GW (excluding renewable energy and captive systems). Similarly, the maximum demand in December 2023 was only 10.92GW.
Another aspect that needs to be revisited is the additional reserve margin to accommodate renewable energy. The IEPMP projects that the maximum peak power demand will reach 70.5GW in 2050, requiring a system capacity of 84.6GW with a 20% reserve margin. The IEPMP assumes that the power system will have 26.2GW of renewable energy capacity in 2050, beyond the installed capacity. However, this assumption seems questionable for several reasons. The cost of battery storage is expected to decrease significantly in the coming decades, making solar energy with storage more affordable for evening applications. Additionally, wind power is more stable and can generate energy during both day and night. Therefore, setting up a renewable energy capacity of 26.2GW beyond the installed capacity of 84.6GW would lead to inefficiency, overcapacity, and higher system costs. It would be more reasonable to downgrade the system size while maintaining confidence in renewable energy.
The IEPMP also emphasizes the use of unproven and expensive technologies and fuels such as carbon capture and storage (CCS), ammonia co-firing, and hydrogen. However, assessments of selected CCS projects indicate that they often underperform, with some demonstrating less than a 50% carbon capture rate over their lifetime. The cost of ammonia co-firing with coal-fired plants is expected to be considerably higher than solar and wind power with battery storage systems. Similarly, blending hydrogen with gas-based plants may not be cost-effective.
In conclusion, while the approval of the IEPMP provides a long-term plan for Bangladesh’s energy and power sector development, there are concerns regarding over
