Power Sector in Fiscal 2021-22: Budget raises question on will for clean energy
The proposed budget of fiscal 2021-22 failed to reflect the country's recently-adopted stance of shifting from coal to renewable energy, raising questions on the government's commitment to clean power generation.
The ongoing fiscal year has been an eventful one for the power sector as the government has publicly announced abandoning coal-based power generation, said Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, yesterday.
On different international platforms, the prime minister announced Bangladesh's commitment to shifting towards clean power generation, he said in a dialogue styled "The Power Sector in the National Budget for FY2022: Perspectives on Allocative Priorities and Reform Agenda".
The 8th Five-Year Plan (fiscals 2021-25), which was unveiled in December last year, did not properly reflect the shifting stance on power generation, focusing on further enhancement of generation capacity mainly based on fossil fuel, according to Moazzem.
The budget for fiscal 2021-22 was expected to be one of the first official documents that would reflect the government's political stance and policy commitments.
But there was little reflection of the government's commitment to moving towards a carbon-neutral economy in Finance Minister AHM Mustafa Kamal's budget speech in the parliament on June 3, Moazzem said.
"Coal-based power plants are still being financed," he said, while presenting the keynote paper at the webinar.
At present, renewable energy accounts for only 730 MW of electricity generation capacity, which is only 2.86 percent of total capacity.
And none of the projects under the Sustainable and Renewable Energy Development Authority (SREDA) has been included in the annual development programme for fiscal 2021-22, the CPD said.
The ADP allocation for the incoming fiscal year includes nine coal-fired power project with allocation.
"This raises a question about the ministry's position regarding government's stance on abandoning coal-fired power plants," Moazzem said.
He went on to urge the ministry of power, energy and mineral resources to put a stop to all kinds of activities related to coal-based power generation particularly those which are in the pipeline.
Despite being burdened with overcapacity, the budget for fiscal 2021-22 -- which has 15.6 percent more allocation from the power sector than the current year -- has more allocation for generation.
"Overcapacity has increasingly become a concerning issue," he said, adding that as much as 60 percent capacity is currently unutilised.
And yet, in the incoming year, only 38 percent of the ADP allocation for the power sector is enhancing the country's transmission and distribution capacity, with the lion's share going towards generation.
In fiscal 2020-21, the length of transmission and distribution lines has increased at a slower pace compared to that of generation (3.7 percent and 5.9 percent respectively vis-à-vis 8 percent).
The dearth of transmission and distribution lines are mentioned as major reasons for load shedding.
"Surprisingly, official data indicates no load-shedding in the country between July 2019 and June 2021," Moazzem said.
Adding to the problem of overcapacity is the extension of tenure of most of the quick rental power plants despite the official stance on gradual phasing them out, according to the CPD.
And most of the quick-rental power plants are remaining unutilised.
"Without exiting these power plants it is difficult to create space for demand for renewable energy in grid areas," Moazzem said.
CPD Chairman Rehman Sobhan questioned why many dated and inefficient power plants are still operating.
"Those should have been retired by now."
He also urged the government to identify how much of the excess capacity has been attributed to distribution failure.
"In a country which has the lowest per capita consumption of energy in the world, they should know such a thing as a demand failure," he said, adding that there is a big mismatch among planners and policymakers and there is no regulatory authority for coordination of the installation and distribution.
He went on to call for free electricity for people rather than letting the power plants sit idle.
Letting the plants remain idle is a "massive mis-utilisation of valuable resources".
Sobhan acknowledged the capacity growth and the availability of power as one of the great success stories of this government.
The excess capacity of energy generation exists in paper only and not in reality, said M Tamim, professor at the Department of Petroleum and Mineral Resources Engineering at the Bangladesh University of Engineering and Technology (BUET).
The government is committed to reducing carbon emission and efforts are on way to phasing out coal energy, said Mohammad Hossain, director general of Power Cell.
Quick rental power plants will be gradually phased out.
"If we take the captive power to the national grid, the difference between efficiency and supply will be reduced, we are working on it," he added.
There is a need to look for renewable energy beyond solar and wind energy, for which more research is required, said Mohammad Alauddin, chairman of SREDA.
Imran Karim, president of the Bangladesh Independent Power Producers' Association, recommended that Bangladesh should have the capacity to toggle between various fuels to reduce energy generation cost.
Asif Ashraf, director of the Bangladesh Garment Manufacturers and Exporters Association and managing director Urmi Group, called for tax incentives to businesses that generate solar energy.
Rooftop solar energy can be a good source of renewable energy in Bangladesh, which can be used beyond industries, said Mahmood Malik, executive director and chief executive officer of Infrastructure Development Company Limited.
DM Majibor Rahman, president of Solar Mini-Grid Association, proposed a core committee of engineers for research and analysis for efficient generation of solar energy.
The inter-agency coordination is highly important with a view to ensure efficient power distribution at different district and upazila levels, he added.
The budget for fiscal 2021-22 is business-as-usual and no special initiatives are taken into consideration for the power and energy sector, said Farseem Mannan Mohammedy, director of the Centre for Energy Studies at BUET.
Fahmida Khatun, executive director of the CPD, highlighted the progress made by the power and energy sector.
"Uninterrupted power supply is crucial. Otherwise, the production cost and efficiency of industries are hampered."