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Reliance on fossil fuels makes Bangladesh an outlier

  • Published at 11:13 pm April 22nd, 2018
Reliance on fossil fuels makes Bangladesh an outlier
Renewable energy, once regarded as prohibitively expensive, has become an ever-cheaper source of power over the last decade. But even as solar, wind and other renewable energy costs are reaching a historical low, the Bangladesh government’s reliance on increasingly expensive coal and nuclear projects has raised questions about the direction of Bangladesh’s power-sector policies. A recent report from the International Renewable Energy Agency (IRENA) has shown that the per megawatt installation cost and the per unit power generation cost has declined both in case of solar and wind power. The cost of installing 1 MW capacity of a solar power plant used to stand at BDT 35 crore in 2010. It has been reduced to BDT 11 Crore by now. The installation cost of 1 MW onshore wind turbine has come down to BDT 12 crore from BDT 15 crore since 2010.  The average per unit power generation cost of solar photovoltaic has also been decreased by a sharp 72% since 2010. Similarly, in India, renewable energy is now cheaper to build than operating most of India’s existing coal power plants. Currently, per unit solar and wind electricity is being produced at lower than BDT 3.5. The cost of battery is also declining which is considered to be an indispensable part of renewable energy.  Li-ion batteries have seen an average cost decline of 14% per year in between 2007 and 2014 and projected to come down even more. In 2016-2017, the installation of renewable energy in India exceeded coal for the first time, adding twice the capacity of coal. As currently, most coal plants in India run around half of the time, and nearly every Indian coal plant violates the country's new air pollution standard (it would cost millions for each coal plant to achieve the new compliance standard), the India’s Central Electricity Authority has proposed shutting down nearly 50,000MW of coal capacity by 2027. According to a recently published Forbes Magazine article, as coal plants are running less often than before, and generate lesser profit, running the already uneconomic plants are becoming less and less attractive in India. Bangladesh bucking the trend? Bangladesh appears to be swimming against the tide, with the government pursuing high-profile coal and nuclear plants such as the Rampal coal-fired power plant and the Rooppur nuclear power plant. Apart from the higher installation and generation cost, there appear to be a number of hidden costs associated with both coal and nuclear. The Bangladesh government so far has allocated as much as 13 billion US dollar for the construction of Rooppur nuclear power plant. The radioactive waste management and the decommissioning mechanism would expect to escalate the overall cost many fold. Similarly, in order to facilitate the transportation of imported coal, a massive coal terminal, a deep water port at Payra, and a 240 km railway deal has been signed lately (between Bangladesh Government and DP Rail) which would cost around 10,000 crore taka all together. On the contrary, renewable resources do not require extra transportation or infrastructure cost, neither does it involve much environmental and pollution cost. It is important to note that the global cost of coal plant induced pollution has reached an all time high. In 2013, China pledged to spend as much as $275 billion (in 5 years) to deal with rampant and life-threatening pollution in its urban centers. The Health and Environment Alliance published a report titled as “Hidden Price Tags’, which assessed that in 2013 and 2014, India spent as much as $16.9 billion on oil, gas and coal subsidies, while the health costs associated with air pollution-linked diseases was estimated to be eight times more ($140.7 billion). The report claimed that G20 governments spent about $444 billion in subsidies to fossil fuel companies in 2014, but the health costs of these subsidies in the form of respiratory and cardiovascular diseases were as high as $2.76 trillion (six times more than the subsidy amount). According to economist and activist Professor Anu Muhammad, a large number of fossil fuel subsidies (including direct cash and tax breaks) increase the price gap between fossil fuels and renewables, which makes fossil fuels seem to be cheaper than renewable energy. Jacked up prices hurt consumers While global figures on renewable energy are showing a revolutionary trend in cost reduction, the end consumers of Bangladesh continue to pay a high cost for their solar systems. As the price of solar system is declining rapidly, private companies are taking advantage of the absence of government regulation on price by charging the rural users as much as BDT 30 for each unit of electricity, while the urban users pay almost 5 times lesser. Recently a number of private companies in Bangladesh have been awarded with several solar power projects by Bangladesh Power Development Board (ranging capacity from 30 MW to 200 MW). These long term contracts are alleged to be done in a non-transparent way through which Bangladesh Power Development Board would have to continue to purchase each unit of solar electricity at around USD 0.15(BDT 12.00) for the next 20 years. In this way the government will remain stuck with a fixed payment rate (in dollar terms) even when the price of solar generated electricity comes down drastically in near future. According to Sheikh Reaz Ahmed, Director of the Sustainable and Renewable Energy Development Authority (SREDA), “The benefit of the fast falling cost of renewable can only be realized if proper tax incentives are introduced, local manufacturing plants are encouraged, and policies of Feed-in-Tariff and net energy metering are immediately formulated.” However, despite SREDA being the central agency for renewable energy in Bangladesh, an alleged power struggle between SREDA and the Ministry of Power and Energy has limited the actual authority of SREDA to adopt appropriate policies in order to take advantage of the fast-falling cost of renewable technology worldwide, leaving Bangladesh looking increasingly isolated.
Mowdud Rahman is an engineer and researcher and Maha Mirza is a  researcher and activist.