'Solar to be cheapest option for Bangladesh by next year': experts

While the world is moving towards renewable energy as it is much more environmentally-friendly than fossil fuel-based power plants and requires no additional fuel costs, Bangladesh is moving at a snail's pace in this regard, said two researchers of BloombergNEF.

They said the amount of investment required for gas-based power plants is cheaper in Bangladesh at present, but added that solar plants would be the cheapest option by next year. By 2030, solar plants with battery storage -- which provides solar power for a longer period -- will be the cheapest option.

In October last year, BloombergNEF published a study, titled "Bangladesh Power Sector at the Crossroads", where they calculated the levelised cost of electricity (LCOE) compared to required investment.

The study said the installation of a combined cycle gas turbine power plant costs investors $95 per megawatt hour (MWh) on average, while coal-based plants cost $126 per MWh, and solar plants cost $113 per MWh. If additional batteries are required for solar plants, the cost increases to $213 per MWh.

By 2025, the cost of combined cycle gas turbine power plants will increase to $96 per MWh and coal-based plants to $122 per MWh. At the same time, the cost for solar plants will fall to $70 per MWh while those with batteries will cost $141 per MWh.

By 2030, solar plants with battery storage will become a significantly cheaper option, standing at a cost of $87 per MWh on average.

Two researchers of the study, Ali Izadi-Najafabadi and Isshu Kikuma, are visiting Bangladesh, and held a gathering with journalists on January 27 at a city hotel.

During a brief presentation, the energy think-tank's researchers said investment in energy transition technologies have been increasing over the last two decades, crossing the $1 trillion mark in 2022. The investments are mostly in solar, followed by transportation electrification.

They added that the cost of solar, wind, and battery technologies have also significantly declined.

Since 2015, the combination of solar and wind have accounted for about 80 percent of new power capacity additions globally, aiming to reduce carbon emissions and global warming. In 2022, solar was the most popular new power-generating technology installed across the world.

On the other hand, some countries, like Indonesia, have installed additional coal-fired power plants.

Similarly, Bangladesh still relies on fossil-fuel based power plants for 97 percent of its power generation and has plans to install an additional 4.5GW coal and 5.2GW gas-based plants over the next three years.

Starting in 2030, it is considering co-firing ammonia with coal and blending hydrogen with natural gas to reduce carbon emissions. To achieve any tangible emissions reduction, an existing coal power plant would have to be retrofitted to be capable of co-firing ammonia with coal at energy ratios above 50 percent.

"At such high ratios, however, costs would be far higher than solar plus batteries or wind plus batteries," the researchers said.

According to them, the key barrier to not expanding into solar energy in Bangladesh is its "system".

"Our prediction and analysis are based on the investment cost. This is not the price of electricity. The price will depend on how you [the government] deal with the investors to give their return in the next 15 to 20 years," said Ali Izadi, the head of the Asia Pacific of BloombergNEF.

He added: "In Bangladesh, the government might give higher interests to investors to attract investment. Mostly, the power purchase agreements were signed in a bilateral way, which was not competitive. To get a better deal, you must go for an open tender process."

The government should identify suitable land where they can build renewable-based power plants first. Then they should go for an auction, Kikuma suggested, adding that whoever quotes the lowest prices should be given the contract.