Redesigning IEPMP an urgent need

The Integrated Energy and Power Master Plan (IEPMP) should be revisited to design a clear pathway for improving the Power Development Board's (PDB) financial strength and Bangladesh's energy security, according to an article in Energy Outlook, a quarterly publication by the South Asian Network on Economic Modeling (SANEM).

The article, written by energy analyst Shafiqul Alam, said the IEPMP provides no roadmap to contain the PDB's deepening revenue shortfall.

"Further, it puts the country at the risk of imported fossil fuel lock-in and a disorderly energy transition relying on unproven technologies, such as carbon capture and storage (CCS) and ammonia."

Alam added that the IEPMP has raised more questions than answers.

Bangladesh approved the IEPMP in June 2023, with high hopes of accelerating the renewable energy transition and enhancing national energy security.

"However, the master plan has thus far given little signal in that direction," Alam said.

According to the article, the PDB's annual revenue shortfall compelled the government to pay a cumulative subsidy of $6.88 billion between fiscal years 2020-21 and 2022-23.

However, the IEPMP has no answer for the PDB's diminishing financial strength.

"One of the key reasons behind PDB's revenue shortfall is the industrial sector's tepid demand growth in grid electricity consumption. Due to a lack of reliable grid electricity, industries combined operate around 3,000 megawatts (MW) of gas-fired captive generators even as grid electricity remains underutilised," it said.

It added that the IEPMP's natural gas demand outlook suggests industries may significantly depend on gas-fired captive generation beyond 2040.

Under different scenarios, the IEPMP's proposed energy mixes will make Bangladesh more import-dependent, exposing it to the high price volatility of the international energy market and raising concerns over foreign currency reserves, the article added.

Mentioning that imports of liquified natural gas (LNG) would soar by 4.35 to 9.85 times in 2050 compared to 2023 levels, it said annual LNG import costs may stand between $8 billion and $18.2 billion in 2050.

"The economic burden will drastically increase if the LNG price spikes," it added.

The IEPMP incorporated unproven technologies like CCS and ammonia co-firing, which may derail the country's energy transition, the article further said.

"The IEPMP admits that hydrogen technologies are economically inconvenient for Bangladesh."

Mentioning that the IEPMP has limited focus on renewable energy, the article concludes that a revised plan should help enhance the country's resilience against sudden price spikes and supply issues in the international fuel market by moving towards utilising local energy resources, including renewables.