Power Generation: Overcapacity a new headache

The Daily Star January 23, 2021

Rose to 60pc last year amid fall in electricity demand during pandemic; experts warn of financial risks for govt

As much as 60 percent of the country’s power generation capacity remained unutilised in 2020 because of a lack of demand for electricity.

The growing overcapacity has significant financial implications for the government and might affect the costs of electricity, experts said.

The unused capacity was 57 percent in 2019, said a report by the Institute for Energy Economics and Financial Analysis (IEEFA) released on Wednesday.

The power generation against capacity was 45 percent in fiscal year 2017-18 and around 48 percent the year before, according to Bangladesh Power Development Board (BPDB) data.

Power plants have the daily capacity of generating 20,383MW of electricity, but the maximum power generation in a day was 12,738MW, according to the BPDB.

If power generation doesn’t increase by 10 percent over the next five years, the utilisation will fall below 40 percent, the report warned.

Meanwhile, power plants capable of generating 15,294MW are being constructed and around 21,000MW will be added to the national grid by the end of 2025. By the same time, about 5,501MW existing capacity will be reduced, said the BPDB annual report from 2020.

In accordance with the demand, between 8,000MW and 12,000MW of electricity is being generated every day.

Engineer Shamsul Alam, energy advisor for the Consumer’s Association of Bangladesh, said, “It is possible for a baseload power plant to keep running round the clock. But most of the power plants approved by the government are peaking power plants. These plants run three to four hours each day during peak hours. These plants are the results of wrong planning.

“It is a mystery why the power generating capacity is being increased this way. Most of these plants were not constructed through solicited, open tender competitions.”

There are allegations that some people built the small power plants just to take the money against the plant’s generating capacity.

The government has to pay a 100MW power plant around Tk 90 crore per year, said a BPDB official preferring anonymity.

Tk 7,500 crore was spent in subsidies for power in FY 2019-20, which was almost as much as the capacity charges of private power plants.

The BPDB pays for the oil, gas, coal or any fuel used in the private and government-owned plants.

The authorities, however, hold different views on capacity.

“The annual surplus should not be counted. We will have to count the demand and maximum generation,” BPDB Chairman Belayet Hossain told the Daily Star.

He said that the BPDB has the electricity generation capacity of around 20,000MW and generated 13,000MW.

“Of the capacity, 35 percent is needed for various reasons. We need five percent for the plant’s own use, 10 percent for maintenance, 10 percent for spinning capacity and another 10 per cent for system loss,” said the BPDB chairman.

“We are doing what we have planned. We expect the demand to rise, we don’t want to suffer shortage,” he added.

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