Bangladesh Energy Situation

Overview People's Republic of Bangladesh   120px-Flag of Bangladesh.svg.png   Capital Dhaka Official language(s) Bangla Government Parliamentary Democracy President Zillur Rahman Prime Minister Sheikh Hasina Wazed Total area 147,570 km2 Population 164,400,000 (2009 estimate) GDP (nominal) $105.402 billion (2010 estimate) GDP Per capita $641 (2010 estimate) Currency Taka (BDT) Time zone BST (UTC+06) Calling code +880

Energy situation Bangladesh is one of the world's poorest and most densely populated nations (population of 154 million, 1,000 inhabitants/km²), with grand parts of its people living in poverty. Data from the last Household Income and Expenditure Survey 2005 revealed that 40% of the country’s population was classified as poor, with incomes below the upper national poverty line. In rural areas this rate is even higher, counting 44% of the population as poor (urban areas 28%). One fourth of the population is considered extremely poor (urban: 15%; rural: 29%), having incomes below the lower poverty line. Access to modern energy services is one of the reasons for poverty and low economic development.  Energy Supply About 80% of the population of Bangladesh live in rural areas. The rural economy is characterized by slow growth, high unemployment, insufficient infrastructure and widespread poverty. Due to the lack of electricity supply in rural areas, the rural population depends mainly on biomass as a source of energy. Over 70% of total primary energy consumption is covered by biomass, mainly agricultural waste and wood. Electricity Bangladesh grid map.jpg Different types of power plants generate electricity and synchronize it with the national grid. There are some isolated diesel power stations at remote places and islands which are not connected with the National Grid. Terminal voltage of different generators are 11 KV, 11.5 KV and 15.75 KV. In the Eastern Zone (eastern side of river Jamuna), electricity is generated from indigenous gas and a small percentage through hydro power. File:Bangladesh installed capacity fuel.jpg Bangladesh installed capacity fuel.jpg In the Western Zone, Coal and imported liquid fuel is used for generation of electricity. The fuel cost per unit generation in the Western Zone is much higher than that of the Eastern Zone. Therefore, as a policy, low cost electricity generated in the Eastern Zone is transferred to the Western Zone through the 230 kV East-West Inter connector transmission line. The installed capacity in Bangladesh is about 5,500MW (December 2008). Bangladesh´s electricity supply strongly relies on gas: More than 80% of the power plants are fired by gas. Hydro power is responsible for 4.4% of the total electricity supply. A list of all power plants is provided by BPDB here (16kB). According to reports, Bangladesh at present generates 3,800 MW power daily against its pick hour demand of 5,500 MW everyday. Prime Minister Sheikh Hasina on Wednesday (4.11.09) said the government has taken plans to set up solar power plants to generate 280 MW by 2013. She told the parliament that the country, which has now short of about 1,200 to 1,700 MW power, would get rid of the power crisis by 2011 as 1,487 MW of power will be generated and added to the national grid by then. Bangladesh has signed a protocol deal with Russia on Oct. 21 after series talks on cooperation in the field of peaceful usage of atomic energy as the country plans to install a nuclear power plant in Pabna district, some 216 km northwest of capital Dhaka. Energy Consumption Energy demand in the household sector Most Bangladeshi households in rural areas (99%) as well as urban areas (66%) use biomass such as wood, cow dung, jute sticks or other agricultural wastes for cooking. Inefficient and poorly ventilated clay stoves produce fine particles, polycyclic aromatic hydrocarbons, carbon monoxide, dioxins and other carcinogens (ROUSE 2004). Housewives are exposed to high levels of these toxins between three and seven hours a day. Research revealed that this indoor air pollution (IAP) occurs not only in the kitchen but only slightly lower in the living area therewith affecting also other family members such as children. The World Health Organisation (WHO) has estimated that more than 46,000 women and children die each year as a direct result of exposure to indoor air pollution, while many more suffer from respiratory diseases, tuberculosis, asthma, cardiovascular disease, eye diseases, and lung cancer. Right behind unsafe water and inadequate sanitation, indoor air pollution is the second biggest environmental contributor to illness worldwide (WHO 2007). Bangladesh Rural Household Consumption by Source2.JPG Although the estimated per capita consumption of timber and fuel wood is one of the lowest in the world, biomass is becoming increasingly scarce and costly. The natural growth of forests as well as afforestation measures are too low to meet the consumption of the population due to inefficient burning of biomass for cooking purposes and high population growths, putting pressure on the economic situation of biomass-purchasing households. Poor rural households have to spend a significant amount of time on biomass collection. Wastage of biomass is depriving the soil of nutrients, resulting in unsustainable low levels of organic matter in the soil. The figure shows the distribution of the energy consumption of rural households. Nearly one half of the total consumption is for firewood. Annual Household Energy Consumption: All Divisions (average per household) Heating Energy Type All Uses Cooking Parboiling Other Cooling Lighting Amusement Biomass (kg) Fuelwood 1,186.21 1,064.84 28.60 92.77 — — — Tree leaves 501.51 470.67 29.99 0.85 — — — Crop residue 708.18 538.86 164.41 2.72 — — — Dung cake/stick 523.90 503.68 16.07 4.16 — — — Sawdust 8.40 8.36 0.02 0.02 — — — Non-biomass Candle (piece) 15.86 — — — — 15.86 — Kerosene (liter) 28.98 1.76 — 0.07 — 27.16 — Natural gas (Tk) 9.59 9.59 — — — — — LPG/LNG (liter) 0.05 0.05 — — — — — Grid electricity (kWh) 143.83 0.25 — 4.00 49.50 80.74 9.34 Solar PV (kWh) 0.53 — — — 0.04 0.48 0.01 Storage cell (kWh) 0.55 — — — — 0.14 0.41 Dry-cell battery (piece) 15.01 — — — — — — Source: BIDS Survey 2004   Electricity Bangladesh electricity consumption generation Capacity.JPG The government’s vision of electrifying the entire country by 2020 through grid expansion may not be realistic due to inaccessibility and low consumer density in many rural areas, as well as financial constraints. To reach the government’s vision of universal electrification, renewable energy sources, in particular solar energy will have to play a vital role for off-grid electrification. Within the reach of the national grid Bangladesh is still reeling under 600 - 1200 MW of ‘load-shedding’. A situation which deteriorates during irrigation seasons, when the demand-supply gap reaches up to 1500 MW. Domestic and industrial sectors consume about 43% and 44% electrical energy respectively, i.e. a total of about 87% of power consumption occurs in these two sectors. Out of this, a large part of electrical energy is consumed for lighting. All power sector experts acknowledge that the maximum power gap occurs primarily during the evening. A way to manage the evening load is the introduction of energy efficient lights/lighting systems. Access rate Bangladesh is one of the world’s lowest energy producers. Electricity, critical to economic growth, has reached only about one-third of households, despite the country’s successful rural electrification program. With the exception of kerosene, commercial fuels are beyond reach for many. Bangladesh’s reliance on biomass for cooking will continue for several decades; Today only 40% of the Bangladesh population is connected to the electricity grid and in the rural areas, where 80% of the population lives, only 22% have electricity. A mere 6% of the entire population has access to natural gas, primarily in urban areas. Biomass fuels, collected mainly from the local environment only two decades ago, are fast becoming a marketed commodity as access to local biomass becomes ever more difficult. The stark reality is that many rural residents are dependent on such fuels as agricultural residues, dung, and even leaves and grass for cooking. Market situation for different energy technologies and services Solar Energy Solar photovoltaic: Solar photovoltaic (PV) systems are in use throughout the country with over 300,000 household-level installations having capacity of about 15 MW (November 2008). Scaling-up of solar PV systems assisted by the development partners are being implemented through Infrastructure Development Company Limited (IDCOL), Rural Electrification Board (REB), Local Government Engineering Department (LGED), Bangladesh Power Development Board (BPDB), NGOs and Private Organizations implementing solar energy program. There is a strong potential for solar energy within the country. Solar Thermal Power/Concentrating Solar Power (CSP)': The technology involves harnessing solar radiation for generation of electricity through a number of steps finally generating mechanical energy to run a generator. This technology needs to be disseminated in the country to supplement the power supply. Wind Energy Wind Energy has also made some inroads but its potential is mainly in coastal areas, and offshore islands with strong wind regimes. These coastal settings afford good opportunities for wind-powered pumping and electricity generation. Presently there are 2 MW of installed wind turbines at Feni and Kutubdia. Biomass Bangladesh has strong potential for biomass gasification based electricity. More common biomass resources available in the country are rice husk, crop residue, wood, jute stick, animal waste, municipal waste, sugarcane bagasse etc. This technology can be disseminated on a larger scale for electricity generation. Biogas Biogas mainly from animal and municipal wastes may be one of the promising renewable energy resources for Bangladesh. Presently there are tens of thousands of households and village-level biogas plants in place throughout the country. It is a potential source to harness basic biogas technology for cooking, and rural and peri-urban electrification to provide electricity during periods of power shortfalls. Hydro Power  Microhydro and minihydro have limited potential in Bangladesh, with the exception of Chittagong and the Chittagong Hill tracts. Hydropower assessments have identified some possible sites from 10 kW to 5 MW but no appreciable capacity has yet been installed. There is one hydro power plant at Kaptai established in the 1960s with present installed capacity of 230 MW. Other renewable Sources Other renewable energy sources include bio-fuels, gasohol, geothermal, river current, wave and tidal energy. Potentialities of these sources are yet to be explored. Key problems of the energy sector Bangladesh is an energy-starved country: Only 40% of its 155 million people are connected to the electricity grid and, in the rural areas, where 80% of the population lives, only 22% have electricity A mere 6% of the entire population has access to natural gas, primarily in urban areas Electricity supply is not reliable and peak demand cannot be met Substantial amount of energy is used inefficiently Most people in the rural areas depend on kerosene lamps for light 80% of all Bangladeshis cook with biomass, such as rice straw, dried leaves, jute sticks, cow dung, or wood. Dissemination of solar home systems (SHSs) is being promoted mainly by private sector companies and NGOs; presently, projects are mainly based on the direct-sale approach. This approach is successfully demonstrated by an IDA/GEF-supported project, which provides participating organizations (mostly NGOs) with refinancing funds for micro-financing of SHSs. The concept comprises a buy-down grant and an institutional development grant for the participating organizations to build capacities for promotion of SHSs in rural areas. The buy-down grant is on a sliding scale. As financing of the project is coming to an end in August 2008, it is proposed to apply the experiences made to continue the route to commercialization of SHS dissemination. The existing financing structures provided by the Infrastructure Development Corporation Limited (IDCOL) will be used for provision and management of refinancing loans, and the micro-finance organizations (NGOs), which are already experienced in promoting and financing of SHSs, will be involved in promotion and selling of SHSs. Funds for refinancing will be provided by IDCOL, whereas the proposed partnership project will only provide the buy-down and the institutional development grants. Policy framework, laws and regulations Poverty Reduction Strategy All mentioned problems related to inefficient biomass and indoor air pollution use are addressed in the Bangladesh Poverty Reduction Strategy Paper (PRSP), chapters 5.H.1 ‘Conservation of Nature’ and 5.H.2 ‘Combating Pollution’: "The relationship between the amount of the fire wood use and level of income is clearly positive and monotonic. This means that the poor has much less access to quality fuel for cooking. Income poverty thus translates into energy poverty." (p. 164) "Population pressure on land has been leading to conversion of forest land and land under tree cover into other uses. This at the same time further lowers the supply of biomass and fuel wood for cooking raising their market value including further deforestation and cutting down of trees. Smoke due to fuel wood burning also is a major cause of a significant rise in the level of indoor air pollution affecting adversely the health of women and children." (p.164) "Air pollution needs to address both the outdoor and indoor sources of pollution. […] Indoor air pollution is mainly caused by cooking fuels such as firewood and dried cow dung. Most of the poor families use these as fuel and women and children are the main victims of indoor air pollution. Due to air pollution the number of people suffering from respiratory diseases is on the rise." (p. 167) The PRSP derives the following national strategies to address the mentioned problems: "For controlling indoor air pollution use of natural gas, biogas and LPG may be encouraged through various means including policy supports for their lower relative prices as well as more efficient and cost- effective cooking stoves." (p. 167) The introduction of energy efficient cook stoves was set one of the key targets to control air pollution in rural settings. "Building coalitions with NGOs for wider dissemination of fuel-efficient cooking stoves" and "Promote R&D to change building and construction standards and designs for pollution-free kitchens" were the respective planned actions on the policy agenda for the fiscal year 2005/06 (p. 301). General Energy policy, Energy strategy The Bangladeshi Energy Strategy of 1996 with its actualisation in 2002 is the main document of the promotion of RE It focusses on energy supply in rural areas. In December 2009 the "Renewable Energy Policy for Bangladesh was ratified. It was intended to integrate this policy paper into the New Energy Policy (NEP). The NEP was developed in 2006 by the "Renewable Energy and Energy Efficiency Programme" in cooperation with the UNDP. The Renewable Energy Policy (Download PDF; 83 kB) contains the following parts: Overview of potentials of RE sources Institutional arrangements in the RE sector (above all the responsibilities of SEDA) Resource, technology and program development Investment and fiscal incentives Regulatory Policy Specific strategies (Biomass, renewable energies, rural electrification, energy access strategy etc.) Important Laws and regulations The Private Sector Power Generation Policy (Download PDF; 135kB) shall attract private investment for installing new power generation capacity on build-own-operate (BOO) basis. Number of Fiscal Incentives are provided in the Policy for the private power companies. Some of them are as follows: Exemption from corporate income tax for a period of 15 years. Exemption from Customs Duties (CD), VAT (Value Added Tax) and any other surcharges in importing plants and equipment. Repatriation of equity along with dividends allowed freely. Exemption from income tax for foreign lenders to such companies. Avoidance of double taxation case of foreign investors on the basis of bilateral agreements. Remittance of up to 50% of salary of the foreigners employed in Bangladesh. Companies are eligible for all other concessions which are available to industrial projects. The Renewable Energy Policy (see above) provides incentives for renewable energy. Some of them are as follows: all renewable energy equipments and related raw materials in producing renewable energy equipments will be exempted from charging 15% VAT. a network of micro-credit support system will be established especially in rural and remote areas to provide financial support for purchases of renewable energy equipment. SEDA will consider providing subsidies to utilities for installation of solar, wind, biomass or any other renewable/clean energy projects. Renewable energy project investors both in public and private sectors shall be exempted from corporate income tax for a period of 5 years from the date of notification of this policy in the official gazette and it will be extended periodically following impact assessment of tax exemption on renewable energy. An incentive tariff may be considered for electricity generated from renewable energy sources which may be 10% higher than the highest purchase price of electricity by the utility from private generators. Furthermore a lot of procedures will be simplified and investment in renewable energy and energy efficiency projects will be facilitated. Short explanation to what degree EnDev activities are consistent with the national poverty reduction and energy policy Institutional set up in the energy sector, activities of other donors Please confine your explanation to areas relevant for the intended project activities Governmental institutions MPEMR: The Ministry of Power, Energy, and Mineral Resources oversees sector management.  File:Bangladesh Power Sector-Current Structure.JPG Bangladesh Power Sector-Current Structure.JPG BERC: The Bangladesh Energy Regulatory Commission has authority over consumer protection, approval of tariffs and pricing, issuance of generation and distribution licenses, and promotion of competition. Power Cell: Within the MPEMR power division, the Power Cell oversees power-sector reform. REB: The Rural Electrification Board oversees operations of consumer-owned rural electric cooperatives (PBSs). It performs supervisory and regulatory duties to ensure that technical standards are met and performance is monitored. LGED: The Local Government Engineering Department SEDA: The Sustainable Energy Development Agency acts as a focal point for sustainable energy development and promotion, ‘sustainable energy’ comprising renewable energy and energy efficiency. (is not established yet) BPDB: The Bangladesh Power Development Board operates most publicly owned generators and some urban distributors; it acts as a single buyer, purchasing from public and private generators and selling to distributors. Private sector (enterprises, NGOs) PGCB: The Power Grid Company of Bangladesh, a wholly owned subsidiary of the BPDB, operates the national transmission grid, schedules grid operations, and wheels energy to distributors. DESA: The Dhaka Electricity Supply Authority (not yet functional) distributes energy and conducts commercial operations in Dhaka and adjoining areas, except for Mirpur and Gulshan. DESCO: The Dhaka Electric Supply Company distributes energy and conducts commercial operations in the Mirpur and Gulshan jurisdictions of the Dhaka metropolitan area. WZPDC: The West Zone Power Distribution Company is responsible for regional distribution in Khulna. Activities of other donors, activities of NGOs Short explanation to what degree EnDev activities will be coordinated with other donor activities The ADB as the mayor donor took the coordinating role and acts as the chief negotiator. All international donor activities in the energy sector are coordinated by the Local Consultative Group in the ADB. Other important international actors in the energy sector are World Bank Japan USA Great Britain Short explanation to which degree EnDev will be in line with capacity development needs of the partner Other major activities in the country financed by BMZ or DGIS Activities on governmental level Private sector activities Activities of NGOs Reference to the planned EnDev activities Planned cooperation Further Reading Restoring Balance: Bangladesh's Rural Energy Realities (ESMAP Report) Energy Access, Efficiency, and Poverty - How many Households are Energy Poor in Bangladesh? (World Bank Policy Research Working Paper)