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Power overcapacity tops 100pc in Nov

Dec 8, 2023

| Emran Hossain

Bangladesh’s power overcapacity has reached the point where the country has more power plants sitting idle than in operation. A month before winter officially hit, Bangladesh’s power overcapacity exceeded 100 percent in November amid forecasts of it rising further this month.

Winter substantially reduces electricity consumption, which is going to get lower than usual this year as political uncertainty looms overhead with programmes like blockades and strikes. Lower electricity consumption means a greater fleet of idle power plants, which leads to the payment of a higher capacity charge, a mandatory government payment to idle power plants.

The overcapacity, however, does not necessarily mean that there is no demand for electricity, given that 72 percent of the country’s more than 169 million people depend either on firewood, crop residue, animal dung, or charcoal for cooking. ‘The overcapacity is real, but that is not generated by fulfilling the entire power demand,’ said Hasan Mehedi, a power sector researcher and also the member secretary of the Bangladesh Working Group on Ecology and Development, a platform of green activists.

‘The overcapacity rather refers to transmission and distribution systems lagging far behind and a disproportionate growth in power generation capacity,’ he said. Last week, the BWGED released a report stating that unused power capacity means Bangladesh’s capacity charge payment requirement from November to February would be around Tk 4,200 crore.

Compared with the past year, the capacity charge payment is likely to be increased by a fourth to Tk 18,810 crore in 2023–24, not only because of arbitrary power generation capacity expansion but also because of slower-than-expected industrialisation. The BWGED report showed that peak electricity demand in November was 12,608MW against an installed capacity of 25,951MW. In December, peak power demand is projected to drop to 10,733MW, sending power overcapacity to 149 percent.

‘The high level of power overcapacity could also be a signal to economic collapse,’ energy expert Ijaz Hossain told New Age. The fall in the demand for power compared with high summer is huge and could not be explained by the drop in daily temperature or loosely enforced political programmes such as strike and blockade, he said.

An analysis of daily power generation data released by the Power Grid Company of Bangladesh showed that peak electricity demand reached 11,000MW only once in the past two weeks, for two hours in the evening of November 20. Compared with the highest electricity demand during peak hours of the past summer, recorded on April 19 with 15,648MW, the electricity demand during peak hours dropped significantly. In off-peak hours, power demand dropped to 7,000MW or even less, the PGCB data showed. ‘This could be happening because of the closure of industries,’ said Ijaz.

The struggle of Bangladesh’s industries to grow was evident throughout the tenure of the incumbent government, with power sales to industries dropping by 10 percentage points since 2009. Over the same period, domestic power consumption increased by 10 per cent, indicating that power sector investment with massive loans rather facilitated its unproductive use.

For the past year, industries have been particularly hurt by the dollar crisis, impacting the import of raw materials and the opening of LCs. The dollar crisis is believed to be partly triggered by expenses in the power sector, largely because of capacity payments and fuel imports, both of which drain the country’s foreign currency reserves.

The BWGED report said that the capacity charges would add Tk 1.80 to generate each unit of electricity at the end of this year. The government has paid Tk 104,962.81 crore since 2009-10 leading to a 4.4 times rise in power generation costs over the past 15 years.

The cost of producing a unit of electricity stood at Tk 10.17 in 2022–23. With the fall in power generation, the plant load factor dropped by nearly 3 percent in November compared with July, the new report said.

The term ‘plant load factor’ describes the relationship between a power plant’s actual energy production and the maximum amount of energy it might produce in a specific amount of time. In July, 9,240 gWh was generated at a 49.9 percent plant load factor. The generation decreased to 6,796.63 gWh in November at a 47.1 percent rate.

The plant load factor may further decrease to 6,410 gWh in December 2023. The power generation capacity, however, will continue to grow, with 729MW of new power generation capacity coming online this month. The power generation capacity will continue to grow abnormally, increasing by 3,500MW by June 2024. Bangladesh has increased its power generation capacity by over five times since 2009.

Bangladesh has one of the lowest per capita electricity consumptions with 488 kwh, lower than Bhutan with 11,599 kwh, India with 1,218 kwh, Sri Lanka with 734 kwh, and Pakistan with 579 kwh. ‘The story unfolding today could have been different had the government invested in renewable energy,’ said Hasan Mehedi, member secretary, BWGED. Less than 5 per cent of Bangladesh’s generation capacity is sourced from renewable energy. ‘The government should come to its senses,’ he said.

News Link: Power overcapacity tops 100pc in Nov

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