It is remarkable that Bangladesh was dubbed an Asian Tiger, but I am not ready to accept the title just yet.
A resilient economy and positive social indicators are worth the accolades, though all we’ve done is play catch up.
A tiger is agile, always ahead of its target. Except, the targets we set are to meet yesterday’s goals.
In particular, the Power Development Board’s (PDB) plan to achieve grid connectivity using coal power electricity is deep in the 20th century thinking.
As an Asian Tiger, we should be thinking about the future of energy in terms of forward looking technology. Think solar for rural electrification, electric public transit, and offshore wind on the longest coast in the world.
PDB’s Power System Master Plan has coal generating 50% of all electricity by 2030. It’s a sharp increase from the 2017 base of 2%.
Why that is environmentally disastrous has been widely discussed. Less familiar is the fact that coal power plants are financially irresponsible. Natural gas is significantly cheaper than coal. And, per unit of natural gas input generates more electricity than a unit of coal.
The performance of coal is in fact so abysmal, that in 2016, four of the 10 largest coal companies went bankrupt. Even China, the world’s largest coal consumer, has consistently decreased the purchase of coal for the last two years. It cancelled 103 new coal power plants earlier this year.
Global markets sent a clear signal that the era of coal fired power plants is over. Yet, that same bygone era is where PDB plans Bangladesh should head to.
To praise cheap natural gas is not to endorse its use. It’s simply a bridge fuel till renewables can efficiently come online. Of course, the real solution to the hydrocarbon dilemma is renewable energy, which we have consistently failed to adopt.
In 2008, the government of Bangladesh implemented the Renewable Energy Policy (REP). By 2015, renewable energy should have accounted for 5% of all generation, and by 2020, 10%. It’s hardly surprising that the REP adaptation is already behind on its promises for renewable energy.
To superimpose the coal heavy Master Plan on the failure of the REP will pretty much guarantee missed economic benefits of renewables. Meanwhile, the other Asian Tigers and the BRIC countries race ahead to implement cheap clean energy.
In one case, the World Bank predicts that energy storage is set to grow 40% per year in developing markets. Energy storage units are used to stock excess renewable energy, essentially making clean electricity very cheap and very accessible.
Is this mechanism effective?
Right now, we pay to import coal or natural gas, then pay yet again to run it through a furnace and a boiler to generate electricity. To get the electricity from the plant to our homes it goes through the grid, which is itself very capital intensive.
It is remarkable that Bangladesh was dubbed an Asian Tiger, but I am not ready to accept the title just yet
Said differently, to reach the 30 million Bangladeshis still without electricity, we are looking at billions. But, deploying renewables can cut this process to simply buying solar panels and energy storage units for year-round uninterrupted electricity.
Bangladesh already has a public-private program like this set up, where IDCOL and Rahimafroze successfully connected 16 million homes. Instead of burning money in coal power plants, the PDB should look at how to scale existing programs.
Access to electricity is crucial for economic development, and translates to children doing homework or entrepreneurs running village stores after dark. If we want to be an Asian Tiger, we need to ensure that like South Korean children, Bangladeshi children are not using candle light to read.
Now for renewables to become viable for commercial use, two things need to happen and neither are implausible. One, a domestic renewables industry will need to exist.
This could be giants like Rahimafroze mass producing both solar panels and storage units. And the other change would be industrialists replacing diesel generators with solar panels.
Blanketing the rooftops of sprawling factories can generate sufficient electricity for operation. The capital expenditure is roughly the same, with the added benefit of zero monthly costs for diesel.
An Asian Tiger should take steps for creating a strong renewables industry spanning from the production of solar panels to skills training for installing these panels. In parts of the West, renewable energy in fact employs more people than coal or other hydrocarbons.
The technical nature of the job will also create a high-skilled labor market, exactly what is needed to transition into a more developed economy.
It is also an opportunity for the much needed diversification of our economy without letting go of our competitive advantage -- a large labor force.
So many opportunities
Using relatively inexpensive labor, Bangladeshi industrialists can make a dent in the solar industry, otherwise dominated by the Chinese. But to get the ball rolling, they will need government support. That won’t be easy if GoB spending is tied up in coal plants.
Research and development (R&D) will further facilitate the complete transition to an Asian Tiger status. Technology paved the way for the growth in the South Korean and Taiwanese economy. At the bedrock of technology innovation is R&D. The GoB must allocate funds to sponsor energy breakthrough.
It’s hard to believe that we have the longest coastline in the world, and haven’t tapped into off-shore wind. Bangladesh University of Engineering & Technology (BUET) houses global thinkers and PDB’s Master Plan will have to include research grants for experts at BUET or other institutions.
Research coming out of these facilities will directly shape our energy policy and policy implementations. The global trend to incorporate automated vehicles and public transit running on electricity will soon reach Bangladesh.
And that will only be one part of larger infrastructure changes we will see in our lifetime. We will need to create an environment where scientists and experts guide the way forward.
Bangladesh more than doubled installed electricity capacity from 5,800MW to 13,500MW between 2010-2015. But the next 13,500MW of power present a unique opportunity for Bangladesh to establish itself as a Tiger, an economic force to reckon with. The current plan is riddled with outdated technology -- namely, coal.
It’s not too late though
The economics and technology of renewables is new, and with the governtment’s commitment to abandon coal Bangladesh can be a pioneer. We can usher in a nascent renewables industry, spend on R&D, and introduce a highly skilled labor sector. We’re on the cusp of a bright future and we will have to be a Tiger and pounce on the opportunity.
Arman Shah is a student of Policy & Finance at Duke University and expected to graduate in May 2017.